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[Mibu no ookami]

If Sony were to purchase Take Two Interactive, that would be absolutely a juggernaut move and if I am being honest here its the move MS should have went after instead of the ABK deal. GTA, Red Dead, 2K Sports, Mafia, Bioshock, Borderlands, etc. Not to mention many of those IP's would translate extremely well to the silver screen via Sony Pictures.

I don't know, the deal makes perfect sense because as others have pointed out, no matter if you like consolidation or not, its happening and if you don't play the game the game will eventually play you.

Sony just saw the Mario movie make a billion dollars. They know a GTA movie would be huge a red dead series would be huge.

Sony could buy T2 for 30 billion and EASILY make that money back within 10 years.

 

[Captain Toad]

Take2 makes more money from mobile gaming than they do console.

They bought Zynga like a year ago.

Well then, I definitely don't want Sony to buy them.

 

[IntentionalPun]

How many major studios do you think there are now?

There are 5 major studios, but Sony is basically tiny now. The reality is to compete with Disney, Sony Pictures is going to have to buy/merge with someone.

Compared to literally 3 console companies.

Not "major console companies", 3 console companies lol

Like I said there's a lot of consolidation in media, but it's nothing compared to the console market.. where Take2 is a major player, and Playstation is the most major player (by far really, revenue wise.)

 

[Mibu no ookami]

To me, companies like Take Two and Activision seem like high risks. Tens of billions for companies that the vast majority of their income comes from one major franchise.

What if something changes in the future and the public just completely loses its interest in GTA or Call of Duty? Not something that is likely to happen over night, but there's no guarantee they can maintain their dominance forever.

T2 makes money from A LOT of different games and if they get into the soccer business, they'll make even more money. T2 has a much better portfolio and track record than Activision. If GTA6 sells HALF of what 5 sells... that's 90 million copies...

 

[bentanchorbolt]

Sony just saw the Mario movie make a billion dollars. They know a GTA movie would be huge a red dead series would be huge.

Sony could buy T2 for 30 billion and EASILY make that money back within 10 years.

Agreed. It's also a good deal for Sony because they desperately need diversity in their lineup of games. Sony games thus far all follow a particular formula and bringing in other developers and IPs would go a long way towards making the platform more valuable to more gamers. Also, I would kind of like to see what would happen to Rockstar if they were given 1st party treatment by Sony. If GTA and RDR are already as good as they are, how much better would they be working alongside Sony support studios and the ICE Team?

 

[Kilau]

If Sony were to purchase Take Two Interactive, that would be absolutely a juggernaut move and if I am being honest here its the move MS should have went after instead of the ABK deal. GTA, Red Dead, 2K Sports, Mafia, Bioshock, Borderlands, etc. Not to mention many of those IP's would translate extremely well to the silver screen via Sony Pictures.

I don't know, the deal makes perfect sense because as others have pointed out, no matter if you like consolidation or not, its happening and if you don't play the game the game will eventually play you.

How much work do you think little Tom Holland can handle?

 

[Mibu no ookami]

Compared to literally 3 console companies.

Not "major console companies", 3 console companies lol

Like I said there's a lot of consolidation in media, but it's nothing compared to the console market.. where Take2 is a major player, and Playstation is the most major player (by far really, revenue wise.)

The console industry is worth 20 billion, the movie industry is worth 92 billion. Disney buying Fox was like Sony buying Nintendo... and it was allowed. Regulators aren't going to stop Sony from buying T2. They would primarily show that the game doesn't sell nearly as well on Xbox and that the vast majority of sales are on PC, which they will show they won't foreclose because it would cost too much. They'll at worst get away with behavioral promises of putting GTA6 on PC and Xbox.

 

[ChorizoPicozo]

Take 2 is impossible for Sony.

Other than that, this news is quite shocking.

I heard Jim is about to buy the UK.

 

[Baki]

Sony's market cap is limited by the fact they are a Japanese company. The Japanese stock market only recently returned to it's 1990 ATH. It's literally been 33 years of going nowhere for the JP stonks, and Sony is hamstrung by this.

I've seen speculation that if Sony were an American company, their market cap would be be around $300-400 million instead of $120 million. This is still a fraction of the market cap of the tech megacaps, especially $2 trillion Microsoft, but it's more reasonable than what it appears to be now.

Agreed. Compare SONY to Disney (which has similar revenue/profit profile to Sony, but I'd argue Sony revenue is of higher quality) and you can see that Disney trades at 50X trailing P/E ratio and a 23X forward P/E ratio. While Sony trades at 16X forward and trailing P/E ratio.

This is a non-cash dividend. They're still going to use the money to invest in their core businesses.

Yes, the dividend is a stock for the new Sony life company. They're not raising money by selling Sony Life. They're spinning it off as the balance sheet requirements for a finance company is restrictive. Spinning off the finance arm allows Sony to be more ambitious with debt.

Fox made sense at that time, due to their business.
But this is take 2 which is quite limited to gaming. And they can't make their games exclusive as they will lose a lot of money in the process. And as you said, regulators won't approve this merge.

They have more benefits from square enix as that is cheaper option and can print alot of money and has immense connection with PS.

PS is 3x bigger earner than Sony Pictures. PS is Sony's most important division. I imagine the apetite for investment in PS is larger than the Pictures division. If it makes sense from a regulatory perspective, I can see why T2 would be a key target for Sony. Major live service IP and expertise (GTA/RDR/NBA 2K), good PC presence (Civ, Xcom) and a strong mobile arm (Zynga). The only sticking point is that T2 is quite expensive when you consider their earnings ($4.8B revenue, $757M profit). That translates to a 28X P/E ratio at their current market cap ($21B).

Compared to SE, which trades at a much lower PE ratio, T2 starts to look very expensive, even if their revenue and potential is of higher quality. SE ($2.56B revenue, $380M profit) is valued at $5.6B. A 13X P/E ratio. SE would be a good buy because it's quite cheap and has a good presence on mobile and live services.

Fox made sense but T2 doesn't? What does Fox do outside of TV and movies for Sony Pictures? T2 is no more limited, not to mention the transmedia potential of GTA, Red Dead, and Mafia. Gaming, not movies is Sony's chief business, if they were willing to go upwards of 50 billion on Fox, they can and will certainly go as far as 30 billion on T2.

Regulators aren't going to block a 30 billion dollar acquisition after greenlighting Microsoft on consoles (CMA) and collectively (EU). Maybe the FTC would try to block but I doubt it and they likely wouldn't be successful in court (just like they wouldn't with Microsoft).

Fox was a cashflow generating machine, even if a lot of cashflow is from legacy cable/sports. T2 is a great company but it's also quite overvalued considering benchmark P/E and P/S ratios.

 

[bentanchorbolt]

How much work do you think little Tom Holland can handle?

He just needs to play Jin Sakai in the big screen adaptation and he will have hit the trifecta.

 

[Stardust_Dragon]

I would think at this point, now after acquiring Bungie, Sony would be better off just continuing to invest in growing the size of some of their current studios they already own rather than making another large gaming acquisition. Still, if they absolutely had to buy something no matter what, I would think Sega would be a much safer buy considering it would be far cheaper than Take Two, and they have some good IPs though I think Sega has some toy-related divisions that Sony would want to spin off if they did acquire Sega.

 

[Lokaum D+]

Is this the new "sony is dead thread" ?

 

[Yoboman]

NeoGAF: "Consolidation is BAD! Microsoft shouldn't be ALLOWED to buy ABK! They'd make COD exclusive and RUIN gaming!"
Also NeoGAF: "Sony needs to buy Take 2! GTA6 as PS exclusive is the smartest move! Can't stop the PlayStation domination!"

My preference is no consolidation, but if ABK gets through Sony need proportional response

 

[Mibu no ookami]

Disney didn't have to buy Pixar, it didn't have to buy LucasFilm or Marvel, and it didn't need to buy Fox.

The idea that Sony doesn't have to buy T2 is just short-sighted. You buy the big players now before someone else does, you buy the small players tomorrow.

 

[Mibu no ookami]

My preference is no consolidation, but if ABK gets through Sony need proportional response

There's going to be consolidation. There is Tencent, Apple, Netflix, Nvidia, Google, and Amazon all of which want to be major players in gaming. They will absolutely buy publishers and developers.

 

[RoboFu]

Why are you guys talking about buying something when they are selling off parts?

 

[Ansphn]

Take 2 is impossible for Sony.

Other than that, this news is quite shocking.

Sony has an excellent standing with the bank of Japan. They can burrow a whole lot of money.

 

[Captain Toad]

Is this the new "sony is dead thread" ?

No, quite the opposite.

 

[Baki]

Disney didn't have to buy Pixar, it didn't have to buy LucasFilm or Marvel, and it didn't need to buy Fox.

The idea that Sony doesn't have to buy T2 is just short-sighted. You buy the big players now before someone else does, you buy the small players tomorrow.

If the ABK merger is approved, I predict Sony will buy T2. If the merger is not approved, Sony might reserve their dry powder for other opportunities. At a $30B price tag, Sony would be paying a 39X P/E ratio for T2. As a strategic buyer, they can certainly unlock a lot of value from T2, but it's definitely an expensive purchase that's going to go through the regulatory ringer.

 

[ReBurn]

I hope Sony doesn't get too upset at you guys spending their money to buy another video game publisher. They might have other plans for it.

 

[Yoboman]

There's going to be consolidation. There is Tencent, Apple, Netflix, Nvidia, Google, and Amazon all of which want to be major players in gaming. They will absolutely buy publishers and developers.

Only Microsoft has bought publishers, stop the

 

[Mibu no ookami]

If the ABK merger is approved, I predict Sony will buy T2. If the merger is not approved, Sony might reserve their dry powder for other opportunities. At a $30B price tag, Sony would be paying a 39X P/E ratio for T2. As a strategic buyer, they can certainly unlock a lot of value from T2, but it's definitely an expensive purchase that's going to go through the regulatory ringer.

Sony has been overdue for major acquisitions in the gaming space. They should have been doing it for years. They've struggled with profitability because they're so tied to the box they sell, and sell for a loss.

They really got beat to the punch in the movies business. Gaming is too critical for them to be caught on the back foot again. Even if ABK is blocked, which it probably will be. Sony can't really afford Microsoft or a slew of others buying T2 either. When Microsoft announced the ABK, billions of dollars fell off Sony's market cap. They were overbought yes, but the reality is it was seen as a dagger to its business and its growth potential.

 

[Mibu no ookami]

Only Microsoft has bought publishers, stop the

Amazon just bought MGM after launching Amazon Prime Video. They're serious about gaming. They'll buy a publisher.

Apple and Netflix are in the exact same boat.

Tencent is buying companies up left and right and will absolutely buy a publisher as well.

Ubi Soft has put themselves on the market, but has no buyers. T2 and EA will be purchased sooner rather than later.

 

[bitbydeath]

Why are you guys talking about buying something when they are selling off parts?

From the OP link.

Sony Group Corp. is weighing a partial spinoff and separate listing for its financial unit in two to three years, a major decision aimed at bankrolling an investment push in gaming and electronics.

 

[Captain Toad]

I hope Sony doesn't get too upset at you guys spending their money to buy another video game publisher. They might have other plans for it.

It's only like 30 to 50 billion dollars. Quit being so frugal.

 

[AmuroChan]

T2 only makes sense business wise if Sony makes them an independent arm like Bungie and allow them to continue to publish their games everywhere.

You may then ask, what's the point? Well, the point is money. They'll get to take in 100% of the profit of every GTA, NBA2K, Red Dead, etc copy sold on a PlayStation and 70% everywhere else. Right now, they just get the 30% cut as the platform holder.

 

[lh032]

if its help them, sure.
and i dont even know what is a Sony Financial group.
Banks?

 

[Pop]

Is this the new "sony is dead thread" ?

Nope, this is Sony going all in on entertainment thread.

 

[Baki]

Sony has been overdue for major acquisitions in the gaming space. They should have been doing it for years. They've struggled with profitability because they're so tied to the box they sell, and sell for a loss.

They really got beat to the punch in the movies business. Gaming is too critical for them to be caught on the back foot again. Even if ABK is blocked, which it probably will be. Sony can't really afford Microsoft or a slew of others buying T2 either. When Microsoft announced the ABK, billions of dollars fell off Sony's market cap. They were overbought yes, but the reality is it was seen as a dagger to its business and its growth potential.

If ABK is blocked by regulators, then T2 is likely off the table because of GTA. I think Sony is going to be aggressive with M&A, and they should be, as it's one of the remaining verticals where they are the undisputed #1.

I think the big targets for Sony include:
- MiHoYo
- Epic Games
- Take Two

Any one of these 3 fit into their ambitions on live services, mobile, PC and IP. IP is important and Take Two has the most IP out of the three. Now, if regulators would allow it (likely won't), I imagine Sony would absolutely try to approach Nintendo for a merger. The price would be quite reasonable ($60-70B) and Sony would be at an advantage as a Japanese company. However, its very unlikely to happen, as I can't imagine a scenario where Japanese regulators would approve such a deal.

 

[hemo memo]

I honestly didn’t know that Sony market cap is that low. I mean Netflix or Tencent can buy them if they want.

 

[Baki]

I honestly didn’t know that Sony market cap is that low. I mean Netflix or Tencent can buy them if they want.

Japanese government provides insulation against foreign takeovers for Sony. Also, Netflix market cap is only $165B and makes less profit and revenue than Sony. So would never be a suitor. Sony is undervalued because they are a Japanese company & have a complicated conglomerate structure that makes it hard for analysts to forecast earnings.

 

[Mibu no ookami]

If ABK is blocked by regulators, then T2 is likely off the table because of GTA. I think Sony is going to be aggressive with M&A, and they should be, as it's one of the remaining verticals where they are the undisputed #1.

I think the big targets for Sony include:
- MiHoYo
- Epic Games
- Take Two

Any one of these 3 fit into their ambitions on live services, mobile, PC and IP. IP is important and Take Two has the most IP out of the three. Now, if regulators would allow it (likely won't), I imagine Sony would absolutely try to approach Nintendo for a merger. The price would be quite reasonable ($60-70B) and Sony would be at an advantage as a Japanese company. However, its very unlikely to happen, as I can't imagine a scenario where Japanese regulators would approve such a deal.

Regulators aren't blocking ABK because of CoD and CoD is an annual cash cow with a specific playerbase. You're also talking Overwatch and WoW.

Epic Games would have far more regulatory issues due to UE.

They certainly wouldn't allow a merger with Nintendo.

 

[Mibu no ookami]

Japanese government provides insulation against foreign takeovers for Sony. Also, Netflix market cap is only $165B and makes less profit and revenue than Sony. So would never be a suitor. Sony is undervalued because they are a Japanese company & have a complicated conglomerate structure that makes it hard for analysts to forecast earnings.

Sony also has a poison pill in Spider-Man. No one can buy Sony without immediately losing the rights to Spider-Man as they would revert back to Marvel in the case of a buyout.

The only company on the planet that it makes sense to buy/merge with Sony is Disney and they'd almost certainly have to sell Sony Pictures in order to do it.

 

[ReBurn]

Regulators aren't blocking ABK because of CoD and CoD is an annual cash cow with a specific playerbase. You're also talking Overwatch and WoW.

Epic Games would have far more regulatory issues due to UE.

They certainly wouldn't allow a merger with Nintendo.

Regulators would certainly frown upon a ~$30B deal that would allow Sony to take Rockstar and 2K games away from competitors and potentially enrich Sony's subscription and cloud offerings. If the company with the weakest competitive position in gaming would burn the world down with a huge acquisition regulators aren't going to give a pass to the company with the strongest competitive position. I would be surprised if anything bigger than Bungie is in the cards for any of them.

 

[Baki]

Regulators aren't blocking ABK because of CoD and CoD is an annual cash cow with a specific playerbase. You're also talking Overwatch and WoW.

Epic Games would have far more regulatory issues due to UE.

CMA blocked due to cloud. So it's possible that Sony and T2 might be allowed to pass. Sony is a small player in cloud and doesn't have MS advantage with Windows & Azure (which were name dropped in the CMA response). I'm not an expert on regulators, so my opinion on this topic is uninformed.

EDIT: I think MiHoYo would be the top choice but hardest to buy as it's founder controlled and so there's no shareholder pressure to sell at the best price.

They certainly wouldn't allow a merger with Nintendo.

Technically, foreign regulators classed Nintendo as operating in a different market to PS/Xbox. This would also be a situation that would unlock significant customer benefits as Nintendo console owners would receive Sony games and PS5 console owners would receive Nintendo games.

That said, I think it's 99.9% not going to happen. I just wanted to throw a crazy wild card out there because the finances around the deal make sense.

Sony also has a poison pill in Spider-Man. No one can buy Sony without immediately losing the rights to Spider-Man as they would revert back to Marvel in the case of a buyout.

The only company on the planet that it makes sense to buy/merge with Sony is Disney and they'd almost certainly have to sell Sony Pictures in order to do it.

Disney and Sony are the same size. I also imagine that Japan wants to keep their top companies under Japanese ownership. Especially with Sony being a top semi-conductor producer. It becomes a national security risk to allow Sony to be foreign owned.

 

[Yoboman]

Regulators would certainly frown upon a ~$30B deal that would allow Sony to take Rockstar and 2K games away from competitors and potentially enrich Sony's subscription and cloud offerings. If the company with the weakest competitive position in gaming would burn the world down with a huge acquisition regulators aren't going to give a pass to the company with the strongest competitive position. I would be surprised if anything bigger than Bungie is in the cards for any of them.

Sony would simply have them operating as an independent entity making their own publishing choices like Bungie

 

[Baki]

Sony would simply have them operating as an independent entity making their own publishing choices like Bungie

Can't be truly independent if the company is 100% owned by Sony. Otherwise MS would do this with ABK in the UK. I think the 10 year deal on GTA would be enough to satisfy regulators.

Amazon just bought MGM after launching Amazon Prime Video. They're serious about gaming. They'll buy a publisher.

Apple and Netflix are in the exact same boat.

Tencent is buying companies up left and right and will absolutely buy a publisher as well.

Ubi Soft has put themselves on the market, but has no buyers. T2 and EA will be purchased sooner rather than later.

Amazon might consider Take Two. But not sure if they want to open the purse strings in this environment. Especially as gaming is non-core, and they likely want to focus investments on AI and AWS.

 

[Mibu no ookami]

Regulators would certainly frown upon a ~$30B deal that would allow Sony to take Rockstar and 2K games away from competitors and potentially enrich Sony's subscription and cloud offerings. If the company with the weakest competitive position in gaming would burn the world down with a huge acquisition regulators aren't going to give a pass to the company with the strongest competitive position. I would be surprised if anything bigger than Bungie is in the cards for any of them.

I think you've misread the landscape here.

 

[ReBurn]

Sony would simply have them operating as an independent entity making their own publishing choices like Bungie

It wouldn't be that simple. If all it took was to say "we won't change anything once we buy them" the CMA wouldn't have blocked the ABK purchase and we wouldn't have a thousand page fanboy war going on in the Microsoft / Activision acquisition thread. Bungie is a wholly owned subsidiary of Sony. There's nothing about their relationship that makes Bungie truly independent other than Sony taking a hands off approach. You can bet if Bungie doesn't meet performance expectations that their independent status will change.

 

[ReBurn]

I think you've misread the landscape here.

I think you're caught up in wishful thinking. Sony's best future isn't to leverage debt up to 25% of their market cap to buy one company.

 

[DrFigs]

I think you've misread the landscape here.

Sony is in a different position than MS though. The marketshare argument that doesn't work against MS could possibly work against Sony, which is fairly dominant rn.

 

[Yoboman]

It wouldn't be that simple. If all it took was to say "we won't change anything once we buy them" the CMA wouldn't have blocked the ABK purchase and we wouldn't have a thousand page fanboy war going on in the Microsoft / Activision acquisition thread. Bungie is a wholly owned subsidiary of Sony. There's nothing about their relationship that makes Bungie truly independent other than Sony taking a hands off approach. You can bet if Bungie doesn't meet performance expectations that their independent status will change.

Microsofts behaviour with multiplatform publisher and developer acquisitions and no indication given they would keep ABK multiplat until regulatory pressure came is what drew in the attention. If Bethesda was still multiplat there wouldn't have been this scrutiny and it has been a staple of CMA and FTC arguments against it

In terms of Bungie independence, it is baked into the agreement and set up in a way that facilitates it. The only way Sony can influence Bungie is sacking the board or budget cuts/increases

In any case they will face scrutiny but Sony would very much set it up for independence from the day of announcement whereas MS tried obfuscate as much as possible

 

[jroc74]

Sony would simply have them operating as an independent entity making their own publishing choices like Bungie

Agree.

Microsofts behaviour with multiplatform publisher and developer acquisitions and no indication given they would keep ABK multiplat until regulatory pressure came is what drew in the attention. If Bethesda was still multiplat there wouldn't have been this scrutiny and it has been a staple of CMA and FTC arguments against it

In terms of Bungie independence, it is baked into the agreement and set up in a way that facilitates it. The only way Sony can influence Bungie is sacking the board or budget cuts/increases

In any case they will face scrutiny but Sony would very much set it up for independence from the day of announcement whereas MS tried obfuscate as much as possible

Exactly. There's no need for revisionist history.

 

[Raonak]

I think there are many who still see Sony as a console company. That just isn't the case. Under Jim Ryan they're looking to turn PlayStation into a platform rather than a box.

Has this really ever been the case? Sony and PlayStation has had a large history of diversifying their business.

And PlayStation is already a platform, and has been since PS3 days.
PS was the first to jump into cloud gaming with their purchase of on-live/gaikai, and they've had multiple attempts at making mobile games.

The reality of the situation is that PlayStation consoles are sony's best product. That's why people associate them.

 

[Crayon]

Agreed. It's also a good deal for Sony because they desperately need diversity in their lineup of games. Sony games thus far all follow a particular formula and bringing in other developers and IPs would go a long way towards making the platform more valuable to more gamers. Also, I would kind of like to see what would happen to Rockstar if they were given 1st party treatment by Sony. If GTA and RDR are already as good as they are, how much better would they be working alongside Sony support studios and the ICE Team?

Maybe I'm misunderstanding but gta and rdr2 seem to follow the same formula. 3rd person. Trees.

 

[Varteras]

I don't think Sony is looking to make a singular, massive acquisition by selling off its financial arm. Rather, I see them funneling that into a multitude of other smaller acquisitions and investments. I can see them either merging with Kadokawa or buying up their controlling stake in FromSoft while entering other legally binding agreements with them. Sony's strategy meeting seemed to indicate that they plan on expanding third-party exclusivity. They may accomplish this through purchasing partial ownership of major third-parties like Capcom or Konami. Essentially creating a web where they do not own these companies, thus dodging regulators, but still getting significant benefits from them and making it far more difficult for these companies to be pulled away from them.

It's been clear that Sony's entertainment arm, especially SIE, is their greatest growth vector and the future of the company. Removing their financial arm, as I understand it, would not only give them a huge cash injection, but also free them from the burden that operating as a bank brings. That being the requirement to maintain a certain amount of reserves to cover their liabilities. This could free them of tens of billions of dollars being wrapped up just to meet that criteria. Allowing them much more fluid usage of their cash.

 

[Baki]

I think you're caught up in wishful thinking. Sony's best future isn't to leverage debt up to 25% of their market cap to buy one company.

Sony is cash rich and have $15B cash on hand and brings in almost $10B in profit/free cash flow. They would not need to lever up to buy Take Two.

 

[bentanchorbolt]

Maybe I'm misunderstanding but gta and rdr2 seem to follow the same formula. 3rd person. Trees.

Sure if you ignore the rest of their portfolio. 2K Sports, Bioshock, Civilization, XCOM, Kerbal, etc.

 

[Yoboman]

Sure if you ignore the rest of their portfolio. 2K Sports, Bioshock, Civilization, XCOM, Kerbal, etc.

TABLE TENNIS

 

[Iced Arcade]

Thanks, I needed that