Microsoft overnight announced it has acquired ZeniMax Media and its game publisher, Bethesda Softworks — famous for the Doom and Fallout franchises — for $A10.4 billion ($US7.5 billion) in cash to bolster its own game development and subscription services.

Microsoft, which produces the Xbox console, is developing a Cloud-based gaming service and already owns 15 video game studios, says the addition of ZeniMax media will add eight more studio teams and underscores its commitment to games.

The planned acquisition includes publishing offices and development studios in several countries with over 2,300 employees, including Bethesda Softworks, Bethesda Game Studios, id Software, ZeniMax Online Studios, Arkane, MachineGames, Tango Gameworks, Alpha Dog, and Roundhouse Studios.

Bethesda’s franchises include The Elder Scrolls, Fallout, Doom, Quake, Wolfenstein, and Dishonored, among others. Microsoft says it will be adding Bethesda’s “iconic franchises” to to its gaming subscription service Xbox Game Pass.

The next generation of video game consoles launch in November, and Microsoft is trialling a subscription approach to sales. Consumers can buy the console through a monthly subscription service which includes payments for the console and access to Xbox Game pass, Microsoft’s Netflix-like service.

“Gaming is the most expansive category in the entertainment industry, as people everywhere turn to gaming to connect, socialise and play with their friends,” said Satya Nadella, CEO, Microsoft. 

“Quality differentiated content is the engine behind the growth and value of Xbox Game Pass — from Minecraft to Flight Simulator. As a proven game developer and publisher, Bethesda has seen success across every category of games, and together, we will further our ambition to empower the more than three billion gamers worldwide.”

Microsoft says it expects the deal to close in the second half of fiscal year 2021 following regulatory approval.

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