Who should Microsoft buy next, and why is it Konami?

Luke Albigés - March 10th 2021

Imagine, if you will, that you have a gigantic warehouse packed with gorgeous sports cars, old and new. It's row upon row of performance vehicles, with everything from modern supercars to priceless vintage rides all nestled safely beneath protective covers that don't look like they've been moved in years. By the exit sit several notably different cars, banged-up but reliable rides from back in the Nineties that you still take out from time to time, while the rest of the showroom-like garage slumbers eternally. Not that cars sleep, obviously, but since we're already imagining things, let's just imagine that they do, okay? Cool. Congratulations on the great imagining! In this thought experiment, you are Konami, and those cars? They're the classic gaming franchises that you pay so little attention to that you may as well not own them at all, while fans long to see them just one more time.

Fancy hazarding a guess at how many Xbox games Konami put out last year? Be quick then, because I'm about to tell you. Two. Just two games: Skelattack and an updated version of an old Yu-Gi-Oh! game were Konami's only published Xbox titles in 2020. Even back in the days of the original Xbox — the massive and unsightly gametraption from the US of America which enjoyed minimal support from Japanese studios — Konami managed to release at least that many games every year, right up until the launch of the 360. Crazy. Still, it's been clear for a few years now that Konami was shifting its focus away from video games and towards other sectors. The proof is right there in the firm's own recent financial reports, where 'video games' are the very last two words in the description of its Digital Entertainment division, getting lower billing than card and mobile games. That's either telling or poetic... hard to say which. It's "Puppet Show and Spinal Tap" all over again, and it makes me so sad.

As an Old Person™, the Konami classics were a huge part of both my childhood and my formative gaming years. I'd play the dodgy 8-bit home computer versions of things like Gryzor (Contra) — I'm not sure how, look at the bloody state of it — when I couldn't get out to an arcade to be wowed by the real thing, and have fond memories of taking the meagre pay packet from my weekend job to an amazing indie game store upstairs in the same mall and exchanging it for classics like Suikoden and Vandal Hearts. There are so many amazing games and series, old and new, just laying dormant in the Konami Vault, so much money just being left on the table. Pixel Puzzle Collection was brilliant, yes, but it can't be the epitaph for the likes of TwinBee, Gradius, and Goemon. It just can't. And if Konami won't do anything with its legion of fan-favourite franchises, perhaps somebody with a Shagohod-load of cash to throw around should take the reins and make a lot of people very happy while making a good chunk of their investment back.

Microsoft. I'm talking about Microsoft. The clue is right there in the title. Microsoft should buy Konami. Like, right now.

Why would Microsoft buy Konami?

Microsoft has been pretty aggressive with acquisitions of late, and has made it clear that it's still in the market for new talent. Most of its pick-ups were fairly low-key studios — teams with very particular skill sets that would clearly sit well in the Xbox family — but then MS stunned everyone by announcing that it would be acquiring Bethesda. You're right, Anchorman meme, that did escalate quickly! Now we know that Microsoft isn't afraid to throw around billions of dollars for the right acquisition, all bets are off. In the wake of the announcement, folks were throwing around articles based on the most ludicrous ideas. Will Microsoft buy Nintendo? Is Microsoft buying Apple? Will Microsoft acquire Netflix? Is Microsoft going to buy the moon and terraform it to look like the Xbox logo? No to all of the above, obviously. People just need to think a little smaller, and think with their brains rather than their #12-will-shock-you-doctors-hate-hims.

Current share counts/prices and rough costings at the time of writing are pretty broad but suggest a loose valuation on Konami to sit somewhere around $6-9 billion, most likely somewhere in the middle. I'm no analyst or economist, nor could I be bothered to waste one's time with my hypotheticals, but I did a little internet research and it's 2021, so I obviously know more about this from a quick Google search than those so-called 'experts' do from their years of training and experience anyway. At that kind of costing — potentially around the same price MS paid for Bethesda — would a Konami acquisition really offer anything like the value of Bethesda's catalogue? Yes, and then some. Let's break it down further.

Think of the exclusives

'Exclusives' and 'first-party titles' are effectively interchangeable in this instance, and I'll openly admit that I flip-flopped between the two terms here. I'd usually lean towards the latter (let's not fan the console war flames, eh?), but the former ended up winning me over. Why? I'll tell you with just two letters: P and T. Welcome to the worst episode of Sesame Street ever.

PS4 consoles with that infamous P.T. demo — a brief interactive teaser for a potential Silent Hill reboot, starring that guy from The Walking Dead who Kojima later made walk around the apocalypse strapped to a sassy baby in a jar, because of course he did — installed have been known to sell for a small fortune, which speaks volumes to how much people want to see some of these defunct franchises brought back to life. And that's just one. Silent Hill as a console exclusive would be massive... we've seen the evidence of that first-hand. So what next? Metal Gear? Again, huge. I genuinely think Konami on its own would struggle to fill that Kojima-shaped hole in the dev team, but what if they simply used this perfect and absolutely hypothetical opportunity to go for a fresh start, and use all tools at their disposal? Metal Gear Solid 6, by a studio like Arkane. New start, new story, new characters, same utter nonsense narrative, amazing mechanics, and endlessly quotable dialogue. I would play the hell out of that.

This is a huge part of this argument for me. Most of Konami's classic franchises are so rusted over at this point that the heart and soul of the dev team behind them has moved on. Kojima's rampant nonsense continues elsewhere via his own studio, key members of the Suikoden team also set up their own team to work on a spiritual successor to the popular JRPG via crowdfunding (something Castlevania legend Koji Igarashi previous pulled off spectacularly with Bloodstained)... like, if Konami even wanted to get these franchises back up and running, where would it even begin? Outsourcing, as with Castlevania: Lords of Shadow? Wishful thinking that the remaining staff can carry a project? Asking janitors how much experience they have with character animation and narrative design? None of that seems likely, or it would have happened already.

No, it couldn't and wouldn't happen without a significant change in management, especially with Konami continuing to be profitable even without much of a traditional gaming presence. Perhaps me even wanting to see these series come back is grounded in selfishness, in nostalgia, in entitlement. But I don't think that's the case. Just the mere thought, the dream, of what great things new teams could accomplish with the assortment of all-time classic brands that Konami is sitting on makes me genuinely excited for a thing that will probably never happen. MercurySteam did an amazing job with Lords of Shadow (and, to a degree, its sequel), so just imagine the wonders that would be possible under the Xbox Game Studios banner. Give Ninja Theory a crack at Castlevania; get Tango Gameworks on Silent Hill; let Arkane try to make sense of Metal Gear, or just reach out to Platinum, apologise profusely for screwing them around with Scalebound, and offer them Revengeance 2 to make up. The untapped potential well runneth over, and that's not something wells are supposed to do. Somebody needs to grab a bucket and get busy.

It's a foothold in Japan

In news that should surprise nobody, the market that single-handedly made Sony's delightfully dinky PlayStation Portable a viable format has never had a whole lot of love for Microsoft's chunky western consoles. And not for want of trying, of course — we've seen mascot games (I love you, Blinx, but just no), Japan-developed exclusives from some pretty big studios (including several FromSoftware games and Lost Odyssey from some high-profile Final Fantasy alumni), involvement from anime legends such as Akira Toriyama on Blue Dragon... whatever it has tried over the years, Microsoft has always stood out as a gaijin in the Japanese market. And while recent numbers make it look like even Sony is struggling in Japan at the moment as Switch dominates the market, this kind of move could be exactly what Microsoft needs to make a play for Japan. It wouldn't just be paying lip service to Japanese developers with the odd game here and there, or another attempt to how-do-you-do-fellow-kids into the market with some one-off release. No, it would mark a long-term investment, and in some of the most well-known franchises ever to come out of Japan, no less. I feel like there would certainly be some resistance at first, but if MS could be seen to be pulling the strings to get some of those classic franchises back onto both the arcades and the home gaming scene, it wouldn't be long before public opinion started to turn around. A high-level acquisition of or ongoing deal with one of the Japanese greats — Capcom or Square being the only two bigger options, for my money — now seems like the only way for MS to make a meaningful impact on this territory, if it still intends to do so. Which, based on the recent proud reporting of record sell-through of Xbox Series X|S hardware in the east, it seems like it does.

But when you've already courted Mr. Dragon Ball and Mr. Final Fantasy for exclusive content yet still struggle to break the Japanese market, you're really left with just two options: go even bigger, somehow, or give it up. Since it doesn't look like the latter is happening, I believe the former to be more likely, if perhaps not to this industry-shaking degree. We'll talk about other potential candidates for acquisition a little later, but none of the other companies are anywhere as likely as Konami, in my opinion. Capcom and Square both historically have much closer ties with Sony than Microsoft, as does FromSoftware, and its games are typically better received in western markets anyway so that one doesn't really feel like it fits the brief. The closest direct comparison I can think of that would have any real chance of happening is Koei Tecmo, but I'd place that several rungs below Konami. For some odd reason, I just don't feel like a new Musou game every three weeks holds quite the same sway as Metal Gear and Silent Hill as console exclusives. Weird. The newly finalised Bethesda acquisition does give MS its very own Japanese studio in the form of The Evil Within developer Tango Gameworks, of course, but I'm not even going to pretend that's anywhere near on the same level as a deal with any of the above firms, nor could it be without an absolutely absurd level of additional investment. I will, however, take this opportunity to remind Microsoft that it would do well to hand Shinji Mikami and his team a blank cheque attached to a memo that simply says, "GO NUTS."

Make PES the champ again

Okay, we started the last section with no surprises, so let's flip that on its head here. I'd wager that a fair few people wouldn't realise that PES is actually, and by no small margin, Konami's most successful franchise. Ever. Back in the PS2 and Xbox era, 'Pro Evo' was the vernacular term for football games in general just as 'FIFA' could be seen to be today, but some questionable substitutions led to Konami's clear half-time lead being utterly demolished as EA's shift towards matchday authenticity made its series the go-to footy game for the majority, despite the games being sort of awful. Konami's series had, since the 16-bit era, been a fantastic sportsball game, with outstanding gameplay that more than made up for its lack of official licenses and likenesses. But as soon as EA started to break away from its man in that respect, it absolutely ran away with the game. Konami never had a chance to keep up with EA and PES, in just a couple of years, went from being the darling of the soccer gaming world to being a mid-table no-hoper, a pretender, a try-hard. Everything about FIFA (arguably bar the actual gameplay) was on the money, with official kits, teams, players, likenesses... the works. And that side of things only improved as the tech behind it did. PES, meanwhile, had to make do with the odd official team or league while the rest of its players and stadia were fictional, an approach that only served to make the games look half-baked and woefully outplayed. In those few short years, PES actually became its very own West Midlands Village, trying to come from behind to eke out a draw at Trad Bricks Stadium against an opponent with way more money to throw at their team.

Rewind back to no surprises: EA and FIFA won.

Right now, there's realistically no way back for PES. Moving towards a simple yearly roster update model — absolutely the right play for annual sports titles, for what it's worth — while the competing (and winning) title is still churning out yearly full-price releases could be construed as much as a white flag as it could a realisation of the honest, decent thing to do within the genre. With EA's stranglehold on the digital soccer market, a partially licensed product is simply never going to be able to compete on the same terms, and the cost of going the whole hog most likely wouldn't even be worth it anyway. The solution? Move the goalposts. Not, like, actually move them in the game. That would be rubbish. No, it's a metaphor, silly. Change the rules. Make something not designed to compete, but to coexist. Throw a little more money at PES to get it just enough smaller licenses to build a full themed game around. Or, in fact, maybe even go completely the other way and lean into playing as nobodies or fictional sportsmen/women.

Even within existing PES lore, there's a precedent for the thrill of taking no-named players from rags to riches, thanks to both a run of spoonerised and otherwise butchered player names over the years and the talented (and not-so-talented) lads from the Master League starting team. Legends like Castolo, Espimas, and Minanda live on in our hearts to this day, and it remains every bit as easy to grow invested in pretend players as it was way back when Sensible Soccer was best-in-class and had players running around with names like Sausage, Toodlepip, and Phil Mitchell. Ah, good times. There's also the small matter of having a solid sports game as a console exclusive, something that has worked remarkably well for platform holders in the past... even PES itself was once a de facto PlayStation exclusive (a big get for Sony at the time), while MS too saw decent success with the Links golf games, and those are far from the only historical examples. Speaking of which...

You can buy into history

One factor that has been working against Microsoft from the start of its Xbox adventure is the sheer head start that its competitors have on it in terms of gaming legacy. Nintendo has been around for well over a century at this point (you can tell: its online gaming infrastructure is only a minor improvement over the 1889 benchmark), while even just the one-generation lead that Sony has over Microsoft on the console scene shows just how big a deal that really is. That extra time — be it four years or 40 — to try out ideas and develop brands goes an incredibly long way in this industry. By the time Microsoft joined the console party with a selection of unknown quantities alongside its big black box, Sony was already three Tekkens deep and had set up for some of the most successful sequels of the generation with the likes of Final Fantasy, Gran Turismo, and Metal Gear Solid. Nintendo, meanwhile, had six consoles and almost 500 games under its belt before setting the dinky GameCube against the Xbox, not to mention several major franchises with almost two decades of history. Between third party studios being more attracted to the more established platforms (or even tied into existing arrangements with them) and those other platform holders having the ability to go back to the well to bring back their older games and series at will, Microsoft had its work cut out for it. The solution? Bust out the wallet and buy some friends.

In this instance, MS made the canny move to court Sega, penning an 11-game deal that brought classic Sega franchises such as Jet Set Radio, Panzer Dragoon, and Crazy Taxi to Xbox with new exclusive releases. The later acquisition of Rare was just another example of how Microsoft needs to spend to grow its back catalogue beyond its own years, and will need to keep doing so even just to catch up to Sony's one-generation head start, let alone Nintendo's lead of several decades. Most acquisitions only bring with them a limited chunk of gaming history, whereas Konami's catalogues spans everything from the early years of arcade gaming in the 70s all the way up to present day, more or less. The mere idea of a Komprehensive Konami Kollection (don't actually call it that, the abbreviation is horrendous) made with the same degree of love as Rare Replay fills my inner retro nerd with childlike glee, and it'd work on an Xbox level as well to some degree, what with Frogger, Contra, and Gyruss having been among the earliest Xbox Live Arcade releases for the 360. We've seen with the likes of Killer Instinct, Banjo-Kazooie: Nuts & Bolts, Battletoads, and now The Initiative's Perfect Dark that Microsoft is happy to put out new games that trade on IPs it has picked up rather than created, and Konami's library is stacked with similarly tantalising games and brands, across a huge number of different genres.

Diversification is always good

Ask pretty much anyone in business and they'll tell you just how important it is to diversify both portfolio and revenue streams. If you put all of your eggs in one proverbial basket, all it takes is for that basket to be taken away by something outside of your control and all of a sudden, everything is all eggy and gross. Microsoft has a good range of products and services to protect it against such an eggy fate, sure, but Konami is the very picture of diversification — a video game company that doesn't even need to make video games any more to turn a tidy profit. The firm has fingers in so many pies that it's honestly hard to keep track, covering everything from card games to sporting goods, and from gambling to real estate... little wonder the firm is barely putting out any games these days when it's doing literally everything else. Konami Holdings Corporation is made up of almost 20 different companies, many of which operate in completely different fields, and while it's unlikely that Microsoft would be interesting in taking on the lot, that's not to say there wouldn't be options. Acquiring the lot and then selling on the parts it didn't want or need would be one (extremely messy) way to go about it, or perhaps MS could strike a deal with a partner firm (or firms) in another sector, splitting the cost and dividing the huge business in a way that sees everyone get only the parts they want.

Acquisition or no, Konami's model is still a good one to look at for a business as large as Microsoft. Of course, it doesn't always work out — remember when Square set up Square Pictures to branch out into movies, only to fold the division a few years later after Final Fantasy: The Spirits Within failed to recoup even half of its lofty $137 million production costs? — but risk is a major part of business. The more strong pillars you have holding up your firm, the less it matters if one or two crumble. That Konami can remain in such rude health even without a major mainstream gaming presence speaks volumes to how much more lucrative the group could be with extra earnings on the gaming side, although it would likely take a new parent company to add that sector back into the mix rather than just shifting resources around to do so.

If MS doesn't, Sony might

Sony famously doesn't have Microsoft's vast coffers to fall back on, so an outright acquisition on this scale is likely off the table. Still, the house of PlayStation has shown on many an occassion that it is unafraid to splash the cash on an exclusive deal or two — even as recently as picking up Deathloop to be a timed PS5 console exclusive, despite the studio now being owned by Microsoft — so it's not beyond the realms of possibility that Sony could strike up deals with Konami to option individual IPs. There have been rumours about it doing just that circulating for a while now, actually, and barely a major gaming event has gone by in the last few years without someone claiming that Sony will be showing off a new Silent Hill game. It makes sense, off the back of the rise and almost immediate fall of P.T. before it ever amounted to anything more than a demo, and we also know that Sony is inclined not just to offer hard cash but also development assistance from its internal teams.

Given Sony's close ties with Kojima, there's an outside bet that it could even be able to 'Parent Trap' Kojima and Konami into working together one last time to send Metal Gear off with a bang. It's obscenely unlikely, sure, but I feel as though an exclusive of that caliber, with or without the mad lad himself, would be a massive get for whoever managed to score it. There might also be the option to acquire IP rights rather than whole businesses or the entire group, and that would be true for any potential investor: if Konami has no plans to return to, say, Metal Gear or Castlevania in any significant way, surely it'd be in the company's interest to make a quick buck by offloading rights to all future games (or even just a limited amount, or for a limited time) rather than leaving the brands to gather dust? Konami has so many celebrated brands that other studios must be sizing up with dollar signs in their eyes at this point, so I feel like it's only a matter of time before somebody offers Konami a bunch of money to play with its rusty old toys.

What other studios could Microsoft target?

We're dealing purely in hypotheticals here, so the answer here is technically 'any,' and I've already mentioned a few that I don't see happening (Capcom, Square, Sony) and that I don't think would offer as much value (Koei Tecmo and any smaller studios, basically). There is one more target that fits similar criteria to Konami that bears mentioning, though, and that's Sega. Both firms have similarly rich gaming backgrounds dating back to the 1960s, both have seen significant declines in traditional gaming output in recent years, and both have rather diverse portfolios that extend beyond the gaming sphere. As I mentioned, Microsoft and Sega have had a strong historical working relationship as well, and the original Xbox was packed with amazing exclusives and firsts from the Japanese team. Sega had a few famous examples of regional differences between consoles, like the Genesis/Mega Drive change or the different swirl colour on the Dreamcast logo, but a deal here could see Sega pull that same kind of trick one last time — simply rebrand the Xbox Series S as the Dreamcast 2 and watch the money roll in.

From a business compatibility perspective, I actually reckon Sega may even be a better fit for Microsoft than Konami. But when you get into the franchises and games that would come pre-installed with any of these Japanese giants, I'd give Konami's portfolio the edge in the modern market. Sega has tons of amazing games that could be brought back, many the exact kind of niche/hardcore Japanese fan service that would fill a gap in Microsoft's first-party operations, even, but it feels like the days of Sonic being a system seller are long passed. I think a deal like the one MS and Sega had in the OG Xbox days might be better here than a full-blown acquisition... while perhaps not a massive deal for mainstream audiences, just imagine the sway that new (and exclusive) games in the Virtua Fighter, Sega Rally, Skies of Arcadia, and Jet Set Radio series would hold over fans, especially those who are old enough to remember when Sega itself made consoles. Would I buy an expensive new piece of hardware just to play Virtua Fighter 6? You would have to Splash Mountain me into the mouth of the Satan Shark to stop me. Also, I just realised that Hatsune Miku games might end up exclusive to Xbox if this were to actually go ahead, and that's wild. Now I want this to happen. But no, I digress, and we're almost done here, so let's wrap this up so I can go play VF5 and have a bit of a cry.

Will Microsoft buy Konami?

'Probably not' is the simple answer here. Rumours of Microsoft being in talks with Japanese studios popped up soon after the Bethesda news broke, but were promptly snuffed out by Phil Spencer in a GameSpot interview, although that doesn't mean there's no chance of something like this happening down the line. I think I've made a fairly solid case as to why I think it should, either by way of a full acquisition or a smaller-scale deal of some kind, but there are a few potential issues that I can see. For me, the main one is that I can't see MS being interested in quite a few sectors of Konami's overall business, especially Japanese sports stuff which feels way outside of Microsoft's wheelhouse, although I also wonder whether it would be hesitant to get into the gambling sector as well. Something like this would differ greatly from the recent Bethesda deal, in which all studios under the ZeniMax umbrella have active and/or in-development titles which will let them hit the ground running as Xbox Game Studios. In Konami's case, is anything (besides perhaps a version of PES for the new consoles) even in the works? It feels like the time frame on this one would potentially be a hell of a lot longer before it started to deliver the goods, and given how long games take to create these days, it's unlikely we'd see anything major until the tail end of this generation. While I don't feel like the quality of what is (probably not even) up for grabs here is in question, there's no doubt that there would be risks in picking up a company that is, for all we know, going to have to start more or less from scratch on any triple-A release.

That bit in brackets just above is another thing I want to mention... would Konami even want to sell up? If the group believes it still has the means to prosper and grow on its own, it'd naturally be in its best interest to do just that. There's also the matter of pride to consider, and on multiple levels. Would a company with such a strong legacy in gaming really want to be bought out by one so clearly its junior in gaming terms? Would a long-running Japanese firm really be comfortable with an acquisition from a major American corporation? Would Konami even be interested in a deal that didn't involve the entire group, and would MS be into one that did? These and many more questions we don't have the answers to, and it'd only take a single 'no' to kill this thing completely. So while I don't think it's especially likely that Microsoft will actually end up acquiring Konami, I do believe that it'd be awesome — and genuinely beneficial, on a lot of levels — if it did. The timing of it might not be right, especially coming off the back of another massive outlay on talent, but I'd still love to see it for reasons that are not entirely selfish. Mostly, sure, but I'm fine with that. Just hurry up and make Revengeance 2, you cowards.

Well, that was a lot of words about something that will most likely never happen. Still, it was a fun journey and I hope I raised some interesting talking points, if nothing else. Hopefully you enjoyed the ride, and I'd love to hear which studios you think should be next on Microsoft's shopping list, so hop on into the comments and let us know!