Photo: Microsoft

Microsoft said Monday it would acquire ZeniMax Media, the parent company of Bethesda Softworks, one of the largest privately held game developers and publishers in the world, for $7.5 billion in cash. 

Why it matters: The deal brings an unprecedented level of gaming expertise and resources, including intellectual property, talent, and technology, to Microsoft's Xbox. It will also help further lift Microsoft's cloud gaming suite, Xbox Game Pass.

The state of play: The mega-deal is happening just weeks ahead of Microsoft's new Xbox launch in November.

  • Bethesda publishes hit games like Doom, The Elder Scrolls and Fallout. They all will be added to Xbox Game Pass, which now has over 15 million subscribers.
  • The acquisition gives Microsoft eight additional creative studio teams, growing from 15 to 23. 

The deal also presents an enormous industry challenge to Sony, which has pioneered the production of games for years, and is also set to release its new PlayStation 5 in November.

The big picture: The move comes as a cloud gaming boom is taking over tech.

  • Worldwide cloud video game revenue is expected to grow to nearly $4.5 billion USD by 2024, up from roughly $500 million in 2019, per the report.
  • Tech giants are looking to move gaming software and processing to the cloud in an effort to eliminate the need for players to buy individual copies of games and expensive specialized hardware required to play them.

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