Xbox CEO Phil Spencer has said he wants to buy an Asian game developer, especially a Japanese studio. Nathan Brown analyst of Hit Points pointed out that Microsoft has a slim chance of acquiring companies like Sega, Square Enix or Capcom for several reasons, mainly cultural ones.
Japanese companies are very resistant to overseas acquisitions. Many companies are linked together by the keiretsu, a Japanese-style corporate organization, and acquisitions are extremely difficult. The Jinglian Association is a business group composed of member companies from different industries, who can take care of each other.
Serkan Toto, CEO of Tokyo-based game industry consulting firm Kantan Games, also said: “In some ways, Microsoft’s acquisition of a major Japanese publisher will be more sensational than its $68.7 billion acquisition of Activision Blizzard.”
Toto said any attempt to bring a hostile takeover would be suicidal because everyone would leave immediately. He added: “I can assure you that there have been attempts by game companies in the West and Asia, but they will not be successful”. He highlighted cultural and language barriers, coupled with the “diversified portfolio of key players,” such as Konami’s gym business, Sega’s resort business, as barriers to a Microsoft acquisition.
Japanese game developers have integrated, such as Bandai Namco, Koei Tecmo, and Square Enix, etc., but their integrations are all done by domestic Japanese companies. Nathan Brown analyst Hit Points pointed out that Japan was at the bottom of the list for attracting foreign direct investment in 2019.