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Microsoft tried to buy Nintendo 20 years ago "but they just laughed their asses off"

DeepEnigma

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What if Microsoft bought Nintendo in the run up to the original Xbox? The last 20 years of video games would look pretty different, I imagine. Well, it turns out Microsoft actually tried to make it happen.

In an oral history on the creation of the original Xbox published by Bloomberg (paywall), those involved with the console reveal they tried to use Microsoft's millions to secure Xbox exclusives, and actually met Nintendo to see if they would consider being acquired.

But, according to Kevin Bachus, former director of third-party relations, that meeting didn't go so well.

"Steve [Ballmer, ex-Microsoft CEO] made us go meet with Nintendo to see if they would consider being acquired. They just laughed their asses off. Like, imagine an hour of somebody just laughing at you. That was kind of how that meeting went."

Then head of business development Bob McBreen revealed that Microsoft also met with Nintendo in January 2000 to work through the details of a joint venture in which Xbox would build the hardware for Nintendo games to be played on. That one, too, didn't work out.

"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," McBreen said.

"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."



The Bloomberg piece is well worth a read, as it's packed with fun anecdotes about Xbox's early years. There's a great one about Microsoft getting Konami on-board with Xbox, and it turns out Microsoft also tried to buy Madden maker EA and Final Fantasy maker Square, but both said no. An attempt to buy Mortal Kombat maker Midway didn't work out, either.

So! Mario on Xbox? Zelda on Xbox 360? Kirby on Xbox One? And, imagine this: Metroid on Xbox Series X? What might have been, indeed.

The Bloomberg feature, by the way, reminds me of our in-depth feature Why Xbox failed in Japan, which includes some cracking anecdotes about Microsoft's attempt to make a success of its console in the country.


 

DeepEnigma

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AJUMP23

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I’ve never understood how this works.
It depends. They can buy public shares and do a hostile takeover type of thing, but the family may own amount of controlled shares so they have controlling interest.
I don’t know what happened after Yamauchi died but I am sure his family maintained control. His son in law built Nintendo of America.
 
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AmuroChan

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Correct me if I'm wrong but couldn't they just buy enough stock to be majority shareholders?

That only works if there are 51% of the total shares available to the public for purchase. Even then, it's virtually impossible for one person or one entity to own every share of that 51%. So the easier route is to just acquire the company outright.
 
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jroc74

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Lmao. This is amazing.

I admire Nintendo sticking it out and not panicking because of hardware sales. They made a smart move with the Switch and they should continue the Switch line forever.
 

A.Romero

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Correct me if I'm wrong but couldn't they just buy enough stock to be majority shareholders?
That's a hostile take over.

I'm not sure how Nintendo ownership is these days but a while ago most of the company was owned by the Yamaguchi family. Microsoft would need to own 51% to have control so all the other stock holders can be overridden.

Hostile take overs not always do well. A couple of years ago Virgin threaten to do it with Ubisoft and Yves said that they would get a shell of the company because all the talent would be sacked.

It was a good decision by Nintendo.

Today is Wednesday so Microsoft might be able to acquire Sega.
 

DeepEnigma

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Correct me if I'm wrong but couldn't they just buy enough stock to be majority shareholders?
That only works if there are 51% of the total shares available to the public for purchase. Even then, it's virtually impossible for one person or one entity to own every share of that 51%. So the easier route is to just acquire the company outright.
Japan has rules in place to prevent this as well from foreign entities.
 

Woopah

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I’ve never understood how this works.
A company isn't owned by management it's owned by shareholders. Nintendo is a publicly traded company so their shares are owned by many many different people and organisations.

Those people can buy and sell their shares to whoever they want, so Microsoft could approach the shareholders and offer to buy the shares even if Nintendo's management didn't want them too (this is known as a hostile takeover, and it's what nearly happened to Ubisoft recently).

Having said that, there are steps Nintendo could take to try and thwart Microsoft and an acquisition would be a lot easier if Nintendo's management were on-board. Clearly they weren't so Microsoft didn't attempt it.
 

ethomaz

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Correct me if I'm wrong but couldn't they just buy enough stock to be majority shareholders?
I don't believe any company in the world put more than 50% of their shares to public trade.
They just release 10% of the shares with no power for decision in the board.

BTW Japan rules doesn't allow that to happen too.
 
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Entroyp

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I don’t understand the hardware comment. The N64, or even the GC were very good hardware. It’s not on Nintendo’s business strategy to put together a console that is powerful but loses multiple billions of dollars for the company at the same time (Like the original Xbox).
 

Evil Calvin

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That's a hostile take over.

I'm not sure how Nintendo ownership is these days but a while ago most of the company was owned by the Yamaguchi family. Microsoft would need to own 51% to have control so all the other stock holders can be overridden.

Hostile take overs not always do well. A couple of years ago Virgin threaten to do it with Ubisoft and Yves said that they would get a shell of the company because all the talent would be sacked.

It was a good decision by Nintendo.

Today is Wednesday so Microsoft might be able to acquire Sega.
You mean Vivendi.....
 

Bryank75

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Even harder for foreigners to buy Japanese companies now, thanks to these new regulations....


As you can see, Toyota and Sony and several others are considered CORE companies that are completely protected from takeovers.

Nintendo and others are non-core but still have significant protection.

It's even harder if you want to buy more than 10%, needs government approval and is highly regulated and limited.
 

Harlock

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They should try to buy Sony, which already lost your soul for the western.
 

UnNamed

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Wasn't this thing an old story from 2000? I remember the exact story in 2004/2005 with Yamauchi saying something like kiss my japanese ass.

Edit: It was 2002.
 
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Jeeves

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Even harder for foreigners to buy Japanese companies now, thanks to these new regulations....


As you can see, Toyota and Sony and several others are considered CORE companies that are completely protected from takeovers.

Nintendo and others are non-core but still have significant protection.

It's even harder if you want to buy more than 10%, needs government approval and is highly regulated and limited.
Interesting. I don't think it's a stretch to call Nintendo a national treasure of Japan, so it seems practically impossible for something like this to happen.
 
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I don't believe any company in the world put more than 50% of their shares to public trade.
They just release 10% of the shares with no power for decision in the board.
This is only really true for tech companies that have dual class shares so that the founders can keep voting control (and can only get away with it because the stocks are popular enough that people will own them anyway). It is considered good corporate governance for companies to have equal voting shares these days, and a lot of the big asset managers (who hold a significant percentage of the shares) have started being vocal about it. The real reason it's tough for a hostile takeover is that it is basically impossible to buy a majority of shares of a company without people knowing, and as soon as they know the shares will significantly raise in price, making it a very, very expensive takeover.

Most company purchases are tender offers, where the buyer basically says they will buy every share for $X, and the current shareholders can decide if they want to sell. You can do a hostile takeover this way, but it gives the company plenty of time and notice to form a defense.

If anyone wants to read a funny hostile takeover bid, here is Carl Ichan screaming in caps at the board of directors of Clorox:

 
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ArtemisClydeFrog

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Wasn't this thing an old story from 2000? I remember the exact story in 2004/2005 with Yamauchi saying something like kiss my japanese ass.

Edit: It was 2002.
Yeah I thought I read about this somewhere. Kinda interesting to think how things would have played out differently.
 

nkarafo

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I don't see why would Nintendo accept to sell themselves. They are doing pretty well and even at their worst they still show profits.

Even if they were interested, Microsoft would have to pay a LOT to get them. Like, the most money ever spent on an acquisition in the history of mankind.
 
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Azelover

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Correct me if I'm wrong but couldn't they just buy enough stock to be majority shareholders?
As the rules are right now, the japanese government would not allow it.

It's called a hostile takeover, when you try to buy a majority stake out of the stock market.

I'll save you some time and just tell you in short: It's not gonna happen.
 
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AllBizness

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Correct me if I'm wrong but couldn't they just buy enough stock to be majority shareholders?
Not that simple since Nintendo is a Japanese company, pretty sure they wont allow a western conglomerate to snatch up one of their most prosperous companies that makes their country a leader in an industry. Same goes for their publishers as well. It's why I laugh everytime a rumor pops up if Microsoft buying one of those giant Japanese publishers. Japan will never let that happen. United States not going to let some foreigners buy Microsoft, Apple, Google, or Intel ect..
 
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I don’t understand the hardware comment. The N64, or even the GC were very good hardware. It’s not on Nintendo’s business strategy to put together a console that is powerful but loses multiple billions of dollars for the company at the same time (Like the original Xbox).
The N64 was "okay" hardware; if you watch any videos on its architecture you learn very quickly it was severely RAM-bottlenecked and the cartridge size limitations only compounded that, contributing to the blurry look many games had. The Gamecube OTOH was a very solid design hampered only by the disc media, otherwise it and OG Xbox shared more in common with each other than the PS2 shared with either.

The main contributing factor to OG Xbox's losses were due to Intel and Nvidia being stingy on price reduction; Sony felt that with the latter when it came time for PS3. The reason Nintendo's got good deals with Nvidia is because Nvidia basically pissed away Sony and Microsoft insofar as console hardware for probably forever, due to earlier screw-ups.

Not that simple since Nintendo is a Japanese company, pretty sure they wont allow a western conglomerate to snatch up one of their most prosperous companies that makes their country a leader in an industry. Same goes for their publishers as well. It's why I laugh everytime a rumor pops up if Microsoft buying one of those giant Japanese publishers. Japan will never let that happen. United States not going to let some foreigners buy Microsoft, Apple, Google, or Intel ect..

Uh, given how much some of those companies work with the CCP and have various Chinese investors, you can say that is already happening. There's also a lot of growing Chinese investors in Japanese companies, which is why I'm weary of things like Sony trying to work more closely with Tencent (which they are incidentally doing by making an investment in companies like Epic).

I agree that Japanese government would very likely stop Sony or Nintendo from being outright purchased by a foreign country's company(s), but I think you'd be surprised that they wouldn't have too much a problem if, say, Sega or Square-Enix were to be purchased by such. Those companies aren't as critical to Japan's economic national sovereignty as some think. Same can be said of Capcom.
 
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BabyYoda

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I'm not exactly modern day Nintendo's biggest fan (greedy prices and underpowered hardware for two), but it's clear that Microsoft and the rest of the big tech giants are the nearest equivalent we have in the real world to the Borg...well that and the CCP of course!