Microsoft nearly shut down Xbox before Bethesda acquisition claims report

Artwork of Xbox consoles, games, and accessories — Things could have gone very differently back in 2021 (Microsoft)

Xbox’s buyout of Activision Blizzard was a last ditch effort to keep Microsoft’s gaming division afloat, according to a new report, but things could have gone very differently.

Between low sales of the Xbox Series X/S and the pivot towards multiplatform releases, it’s clear Microsoft is on the backfoot in the current console generation.

The string of multi-billion dollar acquisitions over recent years is another sign, with the $75.6 billion deal for Activision Blizzard single-handedly keeping Xbox’s profits up, at a time when console sales continue to plummet.

A new report has reinforced how this strategy seemingly came from a place of desperation, where the only alternative was to shut down Xbox altogether.

According to a report on The Information, Microsoft CEO Satya Nadella ‘faced a choice’ regarding Xbox’s future in 2021, which was one year after the launch of the Xbox Series X/S.

‘The company could either acquire major game studios to drive more subscriptions to its nascent Game Pass subscription service,’ the report reads. ‘Or it could wind down its games business entirely, Nadella told two people at the time.’

As we know, Microsoft took the first option, buying Bethesda for $7 billion in 2021, before the acquisition of Activision Blizzard in 2023.

Before the latter purchase, Microsoft reportedly targeted having over 100 million Game Pass subscribers by 2030. For context, as of February 2024, the service has 34 million subscribers, so if it still stands, it would have to triple its current user base over the next five years – which currently seems impossible.

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If the report is accurate, this would explain a lot about Microsoft’s current marketing strategy, which highlights how you don’t need an Xbox console to access Xbox Game Pass on mobile, PC and other devices.

If Xbox was on the brink back in 2021, this puts further pressure on its confirmed plans for the next console generation. Xbox has repeatedly said its next hardware will see the ‘largest technical leap ever in a generation’, although it’s still unclear how that’s possible, or how it’s connected to Microsoft’s plans for a handheld device.

While it might be sometime before we hear about Microsoft’s next gen plans, the company is set to showcase its upcoming games line-up in a Developer Direct on Thursday, January 23.