Xbox Game Studios Valued ZeniMax Media At $10.5 Billion Before Acquisition

That is $3 billion less than what they paid.

By Mudassir Hussain September 20, 2023

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The recently leaked emails reveal that Xbox Game Studios valued ZeniMax Media at $10.5 billion, $4.3 billion from operating cash flow + synergies, and $6.2 billion from terminal value.
Surprisingly, the giant company was acquired at $7.5 billion, which is considerably lower than the stated value.
It is unclear where the $3 billion discount came from, but we can safely say that this was a massive deal for Xbox Game Studios.
None of the parties have commented on this acquisition following the recent email leak.

As per the recently leaked emails, Xbox had valued ZeniMax Media at $10.5 billion before the acquisition, which is $3 billion more than what they actually paid (thanks, Idle Sloth). It is unlikely that Xbox Game Studios received a special discount in this case, and since none of the parties commented on this acquisition, the reason behind this undervaluation remains a mystery.

Amy Hood, executive vice president and chief financial officer of Microsoft since 2013, discussed the financial details of Project Atom, which was the codename for the ZeniMax Media acquisition. She considered ZeniMax to be “critical to growing a strong overall catalogue driving more hours converting into paid subscriber growth.”

Current valuation model is at $10.5 billion, $4.5 billion from operating cash flow + synergies and $6.2 billion from terminal value. We will talk you through the key drivers, value scenarios, and financial outlook,” wrote Amy Hood.

Considering how the acquisition went for $3 billion lower, this deal was a massive win for Xbox Game Studios. Although some of its exclusive titles haven’t performed as grand as expected, the big discount that Xbox received likely helped cover the losses. Even then, this was one of the biggest acquisitions in video game history, and none of the parties involved have commented on this situation since the emails leaked.

It should be noted that Microsoft made the acquisition to stop Starfield from becoming a PlayStation exclusive. It appears that Xbox hit two birds with one stone by not only achieving that goal but also doing so at a much lower price tag than what could have been.

The ZeniMax Media acquisition was a huge investment from Xbox Game Studios, and it seems like they have planned many things for the future, with The Elder Scrolls 6 being one set to launch in a few years as an Xbox exclusive. The leaked emails have revealed much of Xbox’s strategy plan stretching as far as the end of the decade.

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In those emails, it was also revealed that Phil Spencer was quite proud of the Xbox Series X|S, considering it to be a better product than Sony’s PS5. Not to mention, the Xbox Series X mid-gen refresh was also leaked via the documents, promising improved features. And despite being so confident in the Xbox Series back in 2020, the company’s CEO was frustrated not so long ago, calling 2022 a disaster due to a lack of exclusive launches.

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