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Games Entertainment

How Microsoft Tried To Buy Nintendo 286

An anonymous reader submits: "A new book, Opening the Xbox: Inside Microsoft's Plan to Unleash an Entertainment Revolution discusses Microsoft's plans to buy Nintendo for $25 billion in late 1999. By January 2000 however, talks dissolved and each company went their seperate way. Makes you wonder how the home entertainment industry would be different if they had gone through with it. Stories are at Gamers and Cube Europe."
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How Microsoft Tried To Buy Nintendo

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  • What about sega? (Score:2, Insightful)

    by CmdrTaco (editor) ( 564483 ) on Saturday April 27, 2002 @11:00PM (#3423112)
    This brings up an interesting point. Sure, Microsoft has always been known to gobble up smaller companies and absorb the market share that they previously held. But with the antitrust trial, would it really have been a good idea to buy Microsoft?

    If Microsoft really wanted to be immediately successful in the console market, they should've bought Sega late last year. The Dreamcast was a great system, and with the Microsoft marketing machine behind it and a potential sequel, there would be almost guaranteed success. Plus, Sega could be bought for a whole lot less money (especially now).

  • Typical M$ (Score:0, Insightful)

    by Eil ( 82413 ) on Saturday April 27, 2002 @11:08PM (#3423145) Homepage Journal

    While this is new news, it's also old news. Microsoft's policy on innovation: If you can't beat 'em, buy 'em.

    I was just pointing out today to a friend how Windows XP's feature to send in bug reports to M$ Central was first pioneered (that I know of) by Netscape.
  • Internationally.. (Score:2, Insightful)

    by Anonymous Coward on Saturday April 27, 2002 @11:11PM (#3423154)
    ..this would only have helped put MS ahead in the game. Outside of North America, XBox sales are weak (to say the least). It goes to reason, however, that with the Nintendo name behind the console (including the good hardware/game engineering that goes into Nintendo products) that the Japanese and European markets would have taken MS' offering a little more seriously.
  • Shigeru Miyamoto (Score:1, Insightful)

    by alphaseven ( 540122 ) on Saturday April 27, 2002 @11:15PM (#3423166)
    Why didn't they just offer a tenth of that 25 billion to Miyamoto? He's the Steven Spielberg of video games, and he'd be the primary boon for buying Nintendo (aside from the Pokemon liscense).
  • by BurritoWarrior ( 90481 ) on Saturday April 27, 2002 @11:51PM (#3423276)
    According to the artivle, the Xbox project was originally called project Midway????

    They have got to be kidding, naming a project after the naval battle in WWII that turned the tide in the Pacific. Thus, in MS' mind, they are "at war" with the Japanese over the game console industry and hope to "turn the tide" with the Xbox.

    How utterly distatsteful to people who gave their lives in such battles, and how *especially* disgusting and disrespectful that must be to the Japanese.

    I am dumbfounded. How about Toyota calling the next Camry project Pearl Harbor.

    Microsoft continually amazes and disgusts me beyond belief.
  • Midway (Score:3, Insightful)

    by The Monster ( 227884 ) on Sunday April 28, 2002 @12:21AM (#3423367) Homepage
    They have got to be kidding, naming a project after the naval battle in WWII that turned the tide in the Pacific
    Uh... you ever hear of the Midway division of Bally? You know, the folks who bought the US
    rights to Pac-Man from Namco (a Japanese company)? I always thought their name was based
    on the notion of a carnival Midway; I suspect that Namco's executives, if they even thought about
    it, either shared that idea, or didn't care so long as they got paid.

    Fight wide posts! Put in your own <br>

  • by Fat Casper ( 260409 ) on Sunday April 28, 2002 @12:22AM (#3423369) Homepage
    I'm impressed. You managed to use "insight" and "opinions of the general populace" in the same sentance while keeping a straight face. Just keep on holding your breath- Jon Katz ought to put your question on the front page next friday or so.

  • Xbox is in trouble (Score:5, Insightful)

    by Bethor ( 172209 ) on Sunday April 28, 2002 @12:47AM (#3423438)
    I think Microsoft will never be a big player in the videogame industry, regardless of how much money they pour into it.
    They need to dominate both the American and Japanese markets to stand a chance.
    Here are some of the things that will stop them:

    - Most important video game developers are Japanese. Those companies have strong relationships with Sony and/or Nintendo. You simply can't buy your way into a closed industry in Japan. I know, I work there.
    - Culture clash. Japanese gamers don't like the Xbox. It's big, ugly and all the exclusive games are very American.
    - Microsoft has absolutely no way to force anyone to buy an Xbox. Their Windows/Office tactics don't apply here.
    - MS actually looses money on each Xbox they sell. If they don't have a big market share a couple years from now (and they wont), they will NOT keep trying. Not even M$ can afford to do this.

    If I was Microsoft, I would make Xbox2 run PC games directly. No porting needed whatsoever.

  • by Rayonic ( 462789 ) on Sunday April 28, 2002 @12:49AM (#3423444) Homepage Journal
    I know it'll take a while before DQ8 sees the light of day, but the mere announcement of a DQ8 exclusive would create a whole lot of positive vibes for the Xbox. Add to that a few announced-but-missed release dates and the possibility of MS hurrying them along (with cash, etc.), and you're looking at whole lot of sold X-boxen.

    Not saying that it's right, but it's what they should do.
  • by edwdig ( 47888 ) on Sunday April 28, 2002 @01:09AM (#3423481)
    Notice how Nintendo is pricing their products to be cheaper than Microsoft's. Microsoft makes a move to cut prices, so does Nintendo. Nintendo now knows MS's price points, and their strategies, further enabling them to stay ahead.

    I don't think Microsoft would've approached Nintendo if they weren't serious about a buyout attempt. Nintendo learned their leson from the Playstation ordeal.

    MS came to Nintendo and said "This is our plan. Want to be part of it?" Nintendo said, "Maybe, tell us more." MS gives Nintendo their full strategy, at which point Nintendo blows them off.

    No matter what your market position is, knowing what the costs of your competitor's product is, and what their strategy is definately helps.
  • Re:Makes sence (Score:3, Insightful)

    by Paul Komarek ( 794 ) <komarek.paul@gmail.com> on Sunday April 28, 2002 @01:13AM (#3423488) Homepage
    What's weird is that they wanted Nintendo to throw their brand and expertise away by cancelling the GameCube and backing the very new, very experimental, very strange Xbox. Seems idiotic to me.

    -Paul Komarek
  • Re:Whew! (Score:2, Insightful)

    by JMMurphy ( 533825 ) on Sunday April 28, 2002 @01:35AM (#3423531)

    Years ago, after reading about all the shifty crap that Nintendo pulled in this book [amazon.com], I started thinking of them as the Microsoft of Japan. Price fixing, exclusivity deals with retailers to lock out competitors, the lockout chip feature in their carts, lots of different stuff. Nintendo and Microsoft already have a lot of similar pages in their respective playbooks.

    Remarkably, Nintendo has still managed to release games and systems that were of very high quality. I'm sure there are a number of MS haters who would quickly forgive them if Windows and various other products weren't so horrifically bad.

    Not to mention the fact, of course, that Nintendo has done very little to stifle any actualy competition in the console market (outside of the average, everyday stuff, of course). Price fixing and required licensing of third party software is fairly standard.

    As far as exclusivity deals with retailers... Hah. First of all, Sony has used a number of strongarm tactics itself. Secondly, a number of retailers refused to carry Nintendo products, because of policy disagreement, (I believe TRUS was one, though I'm not sure) and came *crawling* back once they realized the sales that they were losing. Nintendo didn't necessarily force themselves on anyone, but ended up being mutually beneficial to both parties.


  • by Anonymous Coward on Sunday April 28, 2002 @01:38AM (#3423536)
    I beg to differ...

    I company with $59 Billion in cash can afford to do pretty much whatever they want to do.

    That money in a money market fund would generate $1.7 Billion a year in intrest.... So unless they lose >$1.7 Billion a year, they are fine.
  • by foniksonik ( 573572 ) on Sunday April 28, 2002 @02:16AM (#3423628) Homepage Journal
    I don't know... that might be more helpful.
  • by DoomPlague ( 317095 ) on Sunday April 28, 2002 @02:17AM (#3423636) Homepage
    Believe it or not, Nintendo is that big. They make more than twice as much in revenues in the game industry as anyone else and they have a lot of valuable intellectual properties.
  • by NanoGator ( 522640 ) on Sunday April 28, 2002 @05:06AM (#3423937) Homepage Journal
    "Notice how Nintendo is pricing their products to be cheaper than Microsoft's."

    Correction: Notice how Nintendo is aware that parents don't want to spend a lot of money for a game system?

    Their price motives have nothing to do with what they learned from MS. It has to do with the fact that $200 is far closer to an 'impulse buy' than a PS2, XBOX, or any of the other ridiculously priced systems. Even Sega knew this when they made the Dreamcast.

    If you want more proof that Nintendo's pricing is a result of careful planning vs. leveraging of 'MS Price points...' (which they would not have known back in 99, heh), then crack open a GameCube, then crack open a PS2 and an XBOX. What you'll find upon opening a GameCube is that a bunch of guts won't fall out. It's a very clean, elegant design. They didn't add DVD player capability (i.e. no royalties to pay to MPEG/DVD groups...), it's small so it requires fewer resources, and there's only one main circuit board plus a riser card for the controller inputs.

    Nintendo's pricing is based on knowledge of what people who buy games spend their money on, not based on what they couldn't have known about MS. Remember, it may sound great to have a DVD player built into a game machine, but this machine's main focus is kids. Parents buy the game machine. They look at price tag, not features.
  • by NanoGator ( 522640 ) on Sunday April 28, 2002 @05:13AM (#3423952) Homepage Journal
    "Then they go to plan B - offer a similar product for free at a vastly reduced price (or free) - force them out of business - then you have a monopoly! "

    Harldy a winning strategy. If MS were to drop the price of the XBOX, they'd go DEEPER into the hole on each machine sold. As it is, it costs like $400 or $500 to build one of the machines. Nintendo, however, is either close to break even point, or even making a profit on their $200 machine.

    MS cannot legally undercut the price of the XBOX, it's called 'Dumping'. The FTC would strangle them over it. (In theory, so far the US gov't doesn't seem too wild about telling MS no to anything.) I vaguely remember Atari threatening to sue Sony over it when the Playstation was announced to be $200 (I think it was released at $300, though...) for similar reasons. (Anybody remember that?)

    Nintendo could easily afford to drop the price of the Gamecube even farther. It'd either be extremely bold or extremely stupid of MS to try to get into a price war with them. That's not MS's biggest problem though.

    XBOX just doesn't have the winning titles yet. There are some okay games for it, but they really need a Miyamoto on their side. One of the things that kind of drove me away from being a game player is the lack of imagination and thought being put into games. If MS were smart, they'd drag out every Miyamoto and RARE game ever made and devote a group to figuring out why they're fun. Then, they need to set up a division intended to make games like these. (not copy them, I mean continue the spirit of them.)

    MS would be smart to make better games, that'd be a far better strategy than trying to beat them at price. That is unless they start giving away XBOX's along with the purchase of Gateway PC's....
  • by fons ( 190526 ) on Sunday April 28, 2002 @09:12AM (#3424273) Homepage
    If I was Microsoft, I would make Xbox2 run PC games directly. No porting needed whatsoever.

    I've always wondered why there's a relativly big HD in the Xbox. Not for the stupid music options, surely. And it's way too big to save games.

    The HD would make sens if a future OS upgrade would make playing PC-games possible. Cause you need a HD to install those games on.

  • by NanoGator ( 522640 ) on Sunday April 28, 2002 @11:16AM (#3424605) Homepage Journal
    "That's because the design is skimpy and lean, not because it's 'clean, elegant design.'"

    Really? Then how come this 'skimpy and lean [design]' isn't getting it's butt kicked by the presumably not-so-lean XBOX? XBOX might have a little bit of power superiority over GC, but not $100 (or twice the price of the GC) better.

    Nintendo *always* puts all kinds of effort into making sure that the circuitry is as elegant and simple as possible. If you don't believe me, look at the Game Boy, Nintendo 64, and SNES. They always put extra development time into this. Some would say that's why Nintendo often misses their planned launch dates.
  • by NanoGator ( 522640 ) on Sunday April 28, 2002 @07:06PM (#3426351) Homepage Journal
    "Making better games is only part of it. You also need a large library in general to really make money. If you have a large library with many companies developing for you, you're more likely to find some real gems in that library.

    I agree, sort of at least. I think Nintendo has proven that's not an unbreakable law. The Nintendo 64 was creamed by Playstation in terms of how many games were available. Yet, the N64 still made Nintendo a good deal of cash that they aren't complaining about. They were #2 to Sony in terms of how many ppl have a PS vs. N64, but Nintendo still got a good dosage of cash. Why? Because Nintendo also made some killer games for the N64 that sold really well. (With some help from Pokemon for the Game Boy)

    Nintendo is in the unique situation where no matter how popular another console is, they still have an audience that'll follow them around. They'll still make oodles of money provided they keep their standards up.

    Sega was in that position to an extent, unfortunately they relied on rehasing Sonic and Virtua Fighter a little too much. (I don't care what anybody says, a Mario sequal is always incredibly different from it's predecessors. Sonic games were essentially an extension of previous games.) They had a loyal audience, but they blew it.

    Sony doesn't have that. Microsoft doesn't have that. Niether company does any interesting in-house games. That will hurt them in the long run. Nobody has any real reason to stick with Sony or MS. Final Fantasy 7 was a good reason to have a PS back in the 95 gaming era, but Sony no longer has that exclusive today. You'll be able to play an FF sequal on another platform before too long, but you'll never play a Mario game on Sony or XBOX.

    Consider that for a bit. Nintendo is likely to always be successful, even if they're #2 to somebody else. But the #1 place will always be up for grabs. It might have been Sony last time, but it could be anybody this time.

MESSAGE ACKNOWLEDGED -- The Pershing II missiles have been launched.