Nintendo “laughed their asses off” when approached by Microsoft regarding a possible buyout 20 years ago, a former executive has recalled.
That’s according to a new Bloomberg feature covering the origins of Microsoft’s Xbox business, in which a group of key individuals discuss its early attempts to purchase various game companies, including the Super Mario firm.
“The first company we reached out to buy was EA. They said, ‘No, thanks,’ and then Nintendo,” recalled Microsoft’s then head of business development, Bob McBreen.
“Steve made us go meet with Nintendo to see if they would consider being acquired,” added Kevin Bachus, Xbox’s then director of third-party relations. “They just laughed their asses off. Like, imagine an hour of somebody just laughing at you. That was kind of how that meeting went.”
McBreen added: “We actually had Nintendo in our building in January 2000 to work through the details of a joint venture where we gave them all the technical specs of the Xbox. The pitch was their hardware stunk, and compared to Sony PlayStation, it did.
“So the idea was, ‘Listen, you’re much better at the game portions of it with Mario and all that stuff. Why don’t you let us take care of the hardware?’ But it didn’t work out.”
According to McBreem, Microsoft also attempted to purchase Square, the maker of Final Fantasy, and Midway Games, the now-closed publisher behind Mortal Kombat.
“We had a letter of intent to buy Square,” he explained. “In early November 1999, we went to Japan. We had one of those big dinners with their CEO and Steve Ballmer.
“The next day, we’re sitting in their boardroom, and they said, ‘Our banker would like to make a statement.’ And basically, the banker said, ‘Square cannot go through with this deal because the price is too low.’ We packed up, we went home, and that was the end of Square.”
On Midway, Bachus said that after discussions, Microsoft eventually decided that a potential deal didn’t make sense.
“They were very serious about wanting to be acquired, but we couldn’t figure out how to make it work because we’d immediately get them out of the PlayStation business, and we didn’t need their sales and marketing group, and so that left us with not a lot of value.”
One crucial acquisition Microsoft did eventually make was for a then-little-known PC developer called Bungie. At the time, the deal faced some backlash internally and externally, according to Bachus.
“I got a voicemail from Neil Nicastro, the CEO of Midway, saying that we were the dumbest people in the industry, that he could understand maybe not wanting to buy them, but why would we buy a PC game developer? Everybody kind of thought that was dumb,” he said.
“And the guys at Microsoft Japan were like, ‘We’re not going to even ship Halo because as we all know, as an immutable law of physics, first-person games don’t do well on console.’”
Halo, which also turns 20-years-old this year, went on to provide Xbox’s most critically acclaimed launch game, selling over five million copies.