Sony first unveiled its plans to acquire Bungie for $3.6 billion on January 31st. We learned immediately that the studio would be a so-called independent subsidiary, and its games would remain multiplatform. Reactions to the news were wildly different at the time; Wedbush Securities’ analyst Michael Pachter, for example, said without qualms that Sony had vastly overpaid for Bungie. Bungie went for $4 million per developer. And most deals are between $250,000 and a million. I’ve seen deals as close, you know, as high as $2 million per developer. This is crazy talk. Just to compare and contrast, EA bought Respawn about three or four years ago for $700 million with 400 developers. And those guys generate $700 million a year in revenue. Bungie does about $200 million in revenue. So I think Sony vastly overpaid. I think this was a statement that we’re not going to let Microsoft get ahead of us, so we’ll just buy something out of desperation. It’s not really a deal that makes a whole lot of sense to me. The announcement happened shortly after Microsoft unveiled its massive $70 billion deal to acquire Activision Blizzard. Analysts were comparing the two, with DFC Intelligence stating the large difference spoke to the financial muscle Microsoft had compared to Sony. On the other hand, speaking to Wccftech MiDiA Research’s Karol Severin explained how both companies could find the deal very lucrative. PlayStation is going after live services, which Bungie has a lot of expertise in. Sony has to go after live service more aggressively than ever before, given the traction in the gaming space and the model being increasingly offered to and adopted by consumers. The multiplatform decision will be in a similar tune. Multiplatform is becoming table stakes, so it’s right for Sony to pursue in order to minimise competitive pressures from others and maximise revenue potential. As I said many times in the past though - Xbox’s future is cross platform, PlayStation’s future is cross-entertainment. PS is following the market in terms of cross platform, but it can lead in terms of drawing synergies for gaming from across entertainment (in video, music, sports and social in particular). Lastly, despite Destiny 2 being the key current title at the moment, Bungie is, of course, no one-hit wonder. It stood behind the creation of Halo, and even though it no longer owns it, it does count towards its track record of producing hits with longevity. If Bungie can continue this success in the future, help Sony grow live-services communities, and contribute to activating Sony’s cross-entertainment potential, the deal could prove to be very lucrative for both sides. Indeed, Sony Chairman, President, and CEO Kenichiro Yoshida recently highlighted what Bungie can bring to the PlayStation family. In the games space, our efforts center on Bungie, the acquisition of which we agreed to this year. Bungie’s strength is in live services. Rather than having creators produce a game by themselves, they learn from user feedback to continuously evolve the story and realize an endless game world. Subject to the completion of the acquisition, we would like to learn more about live services from Bungie, and we also plan to launch more than 10 live game services from the PlayStation Studios by the fiscal year ending March 31, 2026. Our acquisition of Bungie also represents a major step forward in becoming more multiplatform. For its part, Bungie is aiming to take advantage of Sony’s cross-media expertise to bring its original IPs to cinema and TV. There’s no word yet on a Destiny adaptation, but we reckon it won’t be long before it happens. The developer is also working on new projects financed four years ago by NetEase with a $100 million investment. Moreover, a rumor floated last week that they’ve been working on an unannounced mobile FPS game with NetEase, though it is unclear whether it’d be based on the Destiny IP or something else entirely.
