Something often overlooked in assessments of Bethesda is the stake owned by private equity in ZeniMax, the parent company of BGS. Private equity firms acquire huge, often controlling stakes in companies and try to wring cash out of them, often culminating in an inital public offering of stock if they can show improved earnings performance over several years. Providence Equity Partners invested hundreds of millions into ZeniMax – $300 million in 2007 and $150 million in 2010 and still owns a huge chunk of the company to this day. This is unusual for a private equity firm, usually by now they have sold out and moved on, which suggests that whatever they want in terms of an investment return, they haven’t gotten yet.
A New York Times profile of Providence from 2015 focuses on all the “bad bets” the firm made on companies, including a for-profit college and security company that went bankrupt after a scandal. ZeniMax is mentioned in the article:
But some investors expect that performance to improve on potential gains on several investments including Asurion, a cellphone insurer; ZeniMax Media, a video gaming company; and wireless tower companies in India and Latin America. https://www.nytimes.com/2015/04/26/business/the-firm-that-grew-too-fast.html
This is from the year that Fallout 4 was released. Despite these hopes it appears that Providence hasn’t made any gains on ZeniMax, because they haven’t sold it yet. Indeed if we look at the games released since 2015, only Doom appears to have done well; Wofenstein, Prey and Dishonored 2 were disappointments. We can extrapolate from this a growing pressure on ZeniMax from their investor Providence and in turn, pressure ZeniMax must have put on Bethesda to create something to make a lot of money as fast as possible, which in this case turns out to have been tapping into all the big trends in gaming, multiplayer, survival, games-as-a-service, microtransactions, etc., in order to generate wads of cash to pump up profits. We might also see Bethesda Game Studios recent acquisitions in Texas and Montreal as an attempt to grow and create impressive returns on investments, involving mobile and other low-overhead, quick turnaround money-makers.
And this is just a microcosm of what is happening throughout the “AAA” world of videoggaming, where investors and CEO’s – whose pay is supposed to be linked to investor returns – are trying any which way they can to improve profits. This is the big money trap of the video game industry, which leads to “crunch,” to abrupt layoffs, to shoddy business practices such as “loot boxes.”
It would be one thing if the all the ZeniMax owners were patient, genuine long-term investors or perhaps the original founders or family members. In such a case, simply being profitable is often enough. But when video game companies become publicly traded (EA, Activision, et. al.) or owned by private equity (ZeniMax/Bethesda), Wall Street calls the tune. And that, often ends badly for both devs and gamers.