Microsoft Buying EA Would Be Troublesome Says Michael Pachter

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Xbox One

 

Microsoft’s weak first party lineup has perhaps cost it the upper hand in the console wars, with newcomers Nintendo Switch now poised above the green brand it comes as no surprise that the hierarchy at Xbox is looking to invest in more exclusives. Recently an article on Polygon suggested that Microsoft would be looking to buy publishers such as EA to solve their exclusives problem.

The argument centered around Polygon’s source who claims that EA was recently considered for purchase. However a recent article on Forbes seems to suggest that might not exactly be the case.

Forbes talked to Wedbush Securities analyst Michael Pachter regarding the rumored acquisition here’s what he had to say:

“The reason Microsoft would have trouble buying a publisher is that the publishers make more money on the PlayStation platform than on the Microsoft platform,” Pachter told me. “At best, a purchase of EA would allow them to capture 60% of net income, and likely far less, so it wouldn’t pencil out financially.  This might have made sense back in 2001 (when Xbox launched), but at these prices, it’s hard to justify. Also, keep in mind that more than half of EA revenue is licensed, so Disney and FIFA might not be happy if sales of their games were cut in half.”

So if we were to analyze what Pachter is saying it seems like Microsoft has no chance whatsoever of acquiring EA. Perhaps a better way for Microsoft would be to pickup talented developers, not big name publishers.

Sony and Nintendo have both benefited from the same process in the past as well, and I believe Michael Pachter does have a valid point that financially it does not make any sense for Microsoft to acquire EA.

What do you think ? Will Microsoft acquire EA? Let us know by commenting in the comments section below.