Sony is offering Bungie employees a $1.2 billion incentive program in an effort to keep them at the company following the buyout.

remember_spinal

remember_spinal

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Sony is offering Bungie employees a $1.2 billion incentive program in an effort to keep them at the company following the buyout.
In its recent Q3'21 earnings report, Sony confirmed it plans to spend a sizable portion of its Bungie buyout offer on retention. Sony says it is prepared to pay 1/3rd of its $3.6 billion buyout proposal, or roughly $1.2 billion, on a long-term incentive plan that will reward Bungie employees who stay with the company.

Sony will pay the remainder $2.4 billion for a direct buyout of Bungie's private shares. The bonus is aimed at keeping Bungie's current staff intact after the acquisition.

Deferred payments are planned across multiple years following the buyout closure. The company is prepared to pay about $792 million in deferred incentive payments in the first two years after the deal ends.
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Seems the actual cost they paid for Bungie itself was 2.4B
 
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Bitmap Frogs said:
That is so bizarre.
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It's not, it's necessary.

Considering this is a creative industry, if you're not able to keep the talent then what exactly are you paying for?

This is especially true for Bungie considering you're only really getting one widely recognised IP as part of the deal.

Salty Popsicle said:
Is this normal for a buyout or did they think Bungie employees would not like the news of no longer being independent?
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Varies from deal to deal. If employees don't have any equity in the business then they have little to no financial incentive to stick around, something like this will mitigate that. But yes, it is common that employees move on after a merger (some will even leave before the merger is complete). People tend to worry that the culture and structure of the company will change for the worst do will seek out other opportunities.
 
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Makes sense. It'd be like buying Kojima Productions and Kojima just goes off and makes another studio. You would have essentially bought dead weight if the talent leaves. I'm sure Microsoft did the same with Activision.
 
This feels weird.

I'm sorry, I know it's supposed to be a good thing, but this is becoming ridiculous very fast.
 
Bungie is kind of the Antonio Brown of development houses. Getting them on the team is the easy part, keeping them content with being there is more problematic. If Sony didn't get the principles and IPs locked in, I can see where the possibility exists for this to be one of the worst investments in gaming history.
 
The company I work for got bought last year and I've received like 10 retention bonuses since then. Normal thing to do in these situations. It would be more newsworthy if they didn't do anything.
 
Bitmap Frogs said:
That is so bizarre.
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Actually the biggest war inside the industry is keeping all the talent working for and with you.

Sony is using this acquisition to set an example: "If we acquire you there's a chance you can remain independent and your workers well paid".

This explains why this acquisition was over 3b.
 
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Azelover said:
This feels weird.

I'm sorry, I know it's supposed to be a good thing, but this is becoming ridiculous very fast.
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well Bungie is bleeding top staff since forever. and it is also often seen in other studios that get bought that people will leave soon after a buyout.
 
Azelover said:
This feels weird.

I'm sorry, I know it's supposed to be a good thing, but this is becoming ridiculous very fast.
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It's weird to want to retain the talent you mostly paid almost specifically for their knowledge in online gaming?

The devs get hefty bonuses this way and sony doesn't have to worry about people leaving, why is that not a good thing? Usually in company buyouts its the exact opposite where there are huge layoffs due to redundancy
 
hopefully it's not skewed so heavily into the upper management side. That's a lot of money and I'm sure the Bungie devs are thrilled
 
remember_spinal said:
It's weird to want to retain the talent you mostly paid almost specifically for their knowledge in online gaming?

The devs get hefty bonuses this way and sony doesn't have to worry about people leaving, why is that not a good thing? Usually in company buyouts its the exact opposite where there are huge layoffs due to redundancy
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Exactly. Like I said, I know it's a good thing. But what happens now? Is Activision's employees going to demand this from Microsoft? Usually getting the company should be enough. We're entering crazy territory here as far as my intuition goes, and I usually listen to it, to a degree.
 
Azelover said:
Exactly. Like I said, I know it's a good thing. But what happens now? Is Activision's employees going to demand this from Microsoft? Usually getting the company should be enough. We're entering crazy territory here as far as my intuition goes, and I usually listen to it, to a degree.
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ActiBliz was bleeding staff to begin with. You can be sure Microsoft is going to try and keep as much of the good talent on board as possible.
 
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Unknown? said:
Makes sense. It'd be like buying Kojima Productions and Kojima just goes off and makes another studio. You would have essentially bought dead weight if the talent leaves. I'm sure Microsoft did the same with Activision.
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Microsoft won't have necessarily needed to for Activision because all employees that are worth a damn will have stock options.
 
Azelover said:
Exactly. Like I said, I know it's a good thing. But what happens now? Is Activision's employees going to demand this from Microsoft? Usually getting the company should be enough. We're entering crazy territory here as far as my intuition goes, and I usually listen to it, to a degree.
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You can be certain retention compensation is included in the price. Maybe not all employees are offered a bonus but high-level employees will certainly be incentivized to stay on.
 
Bitmap Frogs said:
That is so bizarre.
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ChuckeRearmed said:
No, I believe it is not a standard practice. But it shows how important Bungie is for Sony.
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I have a friend who works at Turtle Rock and was told they got retention bonuses last Christmas and will get them again this year if they stay.

I'm no longer in the games industry, but this also happened to me at a software firm I used to work for. This is exceptionally common.
 
BennyBlanco said:
The company I work for got bought last year and I've received like 10 retention bonuses since then. Normal thing to do in these situations. It would be more newsworthy if they didn't do anything.
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Same except we got it in stock, i work for a major railroad!
 
Unknown? said:
Makes sense. It'd be like buying Kojima Productions and Kojima just goes off and makes another studio. You would have essentially bought dead weight if the talent leaves. I'm sure Microsoft did the same with Activision.
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Almost like he would Abandon you. GHG GHG
 
Tripolygon said:
Retention compensation is standard practice and yes it shows that the important part of the buyout was the talent behind the studio and not the IP specifically.
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I mean if it was for their IPs then that would have been the dumbest purchase yet... neither Destiny nor Marathon are worth that amount of money.

it was pretty clear that they bought them to help with the dozen or so GaaS games they have in development as Bungie seems to maintain their game pretty well and seems to have people there that understand how to run such games.
 
So, the actual purchase from was USD$2.4b, with a sizeable investment on retaining the talent that Bungie. As others have commented, this shows us where Sony believes the worth of Bungie is: its people. Given their stated goal of launching 10 (!!!) live service games in the next four years, this makes a lot of sense.
 
Is it possible that all the high-profile devs that left the studio for Certain Affinity will want to come back? Sounds like a great place to work now 😃
 
Bungie is a private employee held company, Sony have to cut the employees invested in the company a check, the employees own most of the company shares.
 
ChuckeRearmed said:
No, I believe it is not a standard practice. But it shows how important Bungie is for Sony.
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I'm not a mergers and acquisitions lawyer but fortunately one of the links in the main thread was a piece by Hoeg Law and directly from a Mergers and Acquisitions lawyer, there is nothing unusual there.
There were other analysis posted from similar people, although Ithat is the only name that I remember. It seems that it's essentially dictating where the money goes, how much of it goes to the actual company itself and how much of it goes directly to the leaders of that company.
 
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It's normal given the purpose of the deal which is not buying IPs (they have just Destiny and the new game they're developing), but having the talents and know-how to build AAA live services and share that knowledge among other Playstation studios. They want Bungie to help them grow and expand as a publisher into different and important genres like live services that they have neglected being historically focused on single player games.

So they're not even paying the 3.6 billions immediatly but it's 2.4 billions plus a 1.2 long term/deferred payment if conditions are met.
 
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That's so fuckin weird to me. Bungie has never been that much of an exceptional cluster of wizards IMO. Historically more talented then 343 for sure, but billions-worth? Nah. But what do I know, I'm just flinging notions around.
 
01011001 said:
I mean if it was for their IPs then that would have been the dumbest purchase yet... neither Destiny nor Marathon are worth that amount of money.
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Not really, the IP is worth that amount considering It is a similar amount Microsoft paid for Minecraft and both IPs generate a similar amount in revenue.
01011001 said:
it was pretty clear that they bought them to help with the dozen or so GaaS games they have in development as Bungie seems to maintain their game pretty well and seems to have people there that understand how to run such games.
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Yea it was pretty clear that they paid for the talent as it is stated many times but now it is even clearer by the extra 30% on top for the bonus.
 
nemiroff said:
That's so fuckin weird to me. Bungie has never been that much of an exceptional cluster of wizards IMO. Historically more talented then 343 for sure, but billions-worth? Nah. But what do I know, I'm just flinging notions around.
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after Halo Infinite I would argue they're not better than 343
 
Salty Popsicle said:
Is this normal for a buyout or did they think Bungie employees would not like the news of no longer being independent?
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Retention plans are very common with mergers and acquisitions. They are used as an incentive to keep key people on board through transition. Rarely are they offered to everyone but the size of the plan means they probably will try to keep almost everyone in this case.
 
I mean its a great move. If youre acquiring Bungie to bolster your multiplayer and live services, you might want to retain the talent behind that.
 
Unknown? said:
Makes sense. It'd be like buying Kojima Productions and Kojima just goes off and makes another studio. You would have essentially bought dead weight if the talent leaves. I'm sure Microsoft did the same with Activision.
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Yeah, if you buy Kojima Productions, you'd have to have him sign pretty lengthy non-compete and structure his payments in a certain way that makes financial sense.

Kojima Productions is a good studio to look at, but I wouldn't pay through the nose for them at this point.
 
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