Microsoft Buying EA Doesn’t Make Financial Sense, According to Michael Pachter

“Publishers make more money on the PlayStation platform than on the Microsoft platform.”

Posted By | On 30th, Jan. 2018 Under News

Rumor broke out yesterday that Microsoft is looking at buying EA- which would make sense in that they are trying to bolster up their lineup of IP and studios. However, while it seems to make sense on the face of it, it might not hold up to much scrutiny if you really get down to it. That’s what Wedbush Securities analyst Michael Pachter seems to believe, at any rate.

“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 Forbes. “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.”

This, of course, is sensible reasoning- albeit, of course, were Microsoft to buy EA, EA, as a Microsoft subsidiary, would be more concerned with Microsoft’s overall strategy, and not multiplatform game development. Conversely, there is a possibility Microsoft lets EA publish games on PlayStation and Nintendo- after all, that was how they treated Minecraft.

That is if this deal comes to pass at all- for all we know, these talks never go beyond a preliminary stage.

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