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Sega COO Quashes Talk of Microsoft Deal in Favor of Independence

Sega Corporation has not confirmed the information about the negotiations regarding the entry into the ownership structure of Microsoft.

Sega COO Quashes Talk of Microsoft Deal in Favor of Independence

The studio behind Sonic The Hedgehog has stated that its plans do not include a deal to turn the technology giant into an element of the other business structure. The company intends to continue operating as part of a large Japanese entertainment conglomerate.

Sega has more than 60 years of history and is an important element of the foundation on which the large-scale video game industry was built. The company interacts with Microsoft but continues to remain in Sega Sammy Holdings. This statement by the company’s co-chief operating officer, Shuji Utsumi, is a response that refutes rumors about negotiations on the firm’s entry into a new ownership structure.

Court documents on the Federal Trade Commission’s lawsuit against Microsoft revealed that the tech giant was considering buying Sega to expand its Xbox Game Pass subscription. Shuji Utsumi stated that the company currently has no plans to negotiate a corresponding deal. He did not say whether the tech giant applied an official approach in the context of actions within the framework of this intention.

Analysts say that for Sega, the change of the parent company could make pragmatic sense since Sammy’s core business of producing pinball machines provides for limited growth. Hideki Yasuda, an expert at Toyo Securities, predicts that consolidation processes will take place within the gaming industry, which will be caused by developers’ attempts to compensate for the increase in costs by combining resources with other representatives of the area.

Microsoft’s current position on the deal with Sega is unknown. Legal documents state that the tech giant was exploring the prospects of acquiring a Japanese game publisher back in 2019. Since then, intentions may have changed. In addition, Microsoft is currently trying to get approval for the $69 billion takeover of Activision Blizzard.

Sega maintains relationships with platform owners from Sony Group and Nintendo, Apple, and Amazon. But Microsoft values Sega more than other companies. This was told by Shuji Utsumi. In 2021, statements were made about the study of a project to create a strategic alliance to support Sega’s initiative to develop high-budget games. But in this case, intentions did not become actions with a specific result.

Shuji Utsumi says that the company maintains excellent relations with Microsoft. He also noted that Phil Spencer and Sarah Bond from Xbox take seriously the values that are important to fans of video games. These statements can be interpreted as a hint that a merger and acquisition in the context of the relationship between Sega and Microsoft is not impossible at the level of an idea. But this is just a guess. Also, this probability is not included in the current plans of the Japanese video game developer.

Microsoft is strengthening ties with Japanese video game publishers to expand the catalog for the United States and attract Sony and Nintendo beyond the American market.

The scale of the Xbox presence in Japan is limited but demonstrates the dynamics of expansion. The number of games that Japanese companies provide for the Microsoft platform is growing.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.