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[SoloKingRobert]

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.

That's actually false. If Sony provides Japanese with critical infrastructure then you may have a point. Japanese prevents company's from Acquiring their critical infrastructure. Any company can acquire Sony, or their Gaming Division. My eyes are on Tencent.

 

[iamvin22]

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?

I loved working with the ICE team. Those guys just know their shit.

 

[Baki]

That's actually false. If Sony provides Japanese with critical infrastructure then you may have a point. Japanese prevents company's from Acquiring their critical infrastructure. Any company can acquire Sony's, or their Gaming Computer. My eyes are on Tencent.

Anything above 10% ownership requires approval from the foreign ministry of Japan. I don’t think the government would like the idea of losing one of the darlings of the Nikkei.

 

[SoloKingRobert]

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.

You've been saying that for years, the magic number '$15b'. Sony has been acquiring company's like Crunchyroll, becoming a Monopoly in that genre... They've just acquired Bungie.. Sony now has about $10B or less on hand.

 

[zedinen]

1.Sony will create a partial spinoff by distributing 80%+ of its ownership interest in SFGI as a stock dividend to existing shareholders.

"Sony has begun the assessment of a partial spin-off, a method in which the parent company, Sony, continues to hold a portion of its shares of SFGI while distributing the remaining shares to its shareholders through dividends in kind (non-cash dividends)"

2.COO Hiroki Totoki said at the briefing:

” Sony’s image sensor and entertainment businesses will need much bigger investment in the future. Meanwhile, you need a strong base for financial services,”

“That’s why we decided to consider using a virtual spinoff — which allows us to keep Sony’s name on the financial service arm while it gains the ability to raise cash independently.”

“In order to expand our growth over the medium to longer term, we will need the ability to invest in image sensors and the entertainment business at a completely new level,”

3.Sony Corporate Strategy Meeting

4.Totoki (COO) and Yoshida (CEO)

5.Sony Eyes Partial Spin-off of SFGI

6.Growth of Entertainment Businesses (Sales and OI exceeded 50% of Sony group)

7.The Last of Us, a "Mega-Hit"

8. Entertainment x Entertainment Synergies

9.Phil Spencer : “Whenever I run into a problem I can't solve, I always make it bigger"


G&NS invested capital (561.4 --- 1,038.1)

G&NS R&D (175,677--- 271,145)

10."Sony's best future isn't to leverage debt up to 25% of their market cap to buy one company"

 

[bitbydeath]

That's actually false. If Sony provides Japanese with critical infrastructure then you may have a point. Japanese prevents company's from Acquiring their critical infrastructure. Any company can acquire Sony, or their Gaming Division. My eyes are on Tencent.

That’s not true, I’ve dug up the document before, Sony and many other companies, and gaming publishers are protected from non-Japanese buyouts.

Here:

https://www.mof.go.jp/policy/international_policy/gaitame_kawase/fdi/list.xlsx

Even Sega is on the list.

 

[Baki]

You've been saying that years, the magic number '$15b'. Sony has been acquiring company's like Crunchyroll, becoming a Monopoly in that genre... They've just acquired Bungie.. Sony now has about $10B or less on hand.

They have 2T yen (~15B USD) on the balance sheet as of last quarter. Turns out that spending isn’t an issue when you’re reliably bringing in 1.7T yen (~13B USD adjusted OIBDA) a year.

 

[Stooky]

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.

No struggle, Sonys gaming division is the most profitable dept in Sony.

 

[Crayon]

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

Ah those are good. At the same time I'm barfing at the idea of things like that getting locked up with a platform holder. :/

 

[lh032]

That's actually false. If Sony provides Japanese with critical infrastructure then you may have a point. Japanese prevents company's from Acquiring their critical infrastructure. Any company can acquire Sony, or their Gaming Division. My eyes are on Tencent.

"Any company can acquire Sony, or their Gaming Division. My eyes are on Tencent."

Actual translation:
"My wet dream hope Tencent acquire Playstation and fuck it up so my favorite Xbox is safe."

And why the f anyone would want to sell Playstation? Its a money maker brand.

 

[Poltz]

You've been saying that years, the magic number '$15b'. Sony has been acquiring company's like Crunchyroll, becoming a Monopoly in that genre... They've just acquired Bungie.. Sony now has about $10B or less on hand.

Explain what you mean when you say “a monopoly in that genre”.

 

[hlm666]

If your T2 and going to sell your not just gonna take the sensible price your stock price would indicate, you probably use Sony to push the price up so MS/Tencent/Amazon/Meta pay more. You probably don't want to here it but if T2 is gonna be sold Sony can't afford the price the bidding war would create. The only reason MS price on activision wasn't blown up more is because the price was so big already it made everyone elses buttholes tighten and walk away from the table.

 

[Ronin_7]

Sony is looking to sell up to 80% of its Financial Group it made a wholly-owned subsidiary in 2020.

Sony Weighs Financial Arm IPO to Fuel Big Investment Push

“Sony’s image sensor and entertainment businesses will need much bigger investment in the future. Meanwhile, you need a strong base for financial services,” Chief Operating Officer Hiroki Totoki said at the briefing. “That’s why we decided to consider using a virtual spinoff — which allows us to keep Sony’s name on the financial service arm while it gains the ability to raise cash independently.”

I suggested in the past that Sony might sell off its Finance Group just two weeks ago and that they might utilize the funds from the sell off to help it invest further in its core business elements.

"Sony Group has a market cap of 115 billion dollars. That's quite small compared to some of their competitors. Their competitors are Microsoft (2.27T), Apple (2.67T), Google (1.34T), Amazon (1.06T), Nvidia (696B), Tencent (410B), and even Netflix (141B). And Sony is largely split between Video Games, Movies, Music, Electronics, and even Finances (I can see them selling off their financial subsidiary to fund expansion elsewhere). And that isn't to say that any of their much larger competitors are all in on video games (they aren't)" - Mibu no Ookami, May 3rd, 2023

Their stock has increased from 115 to 119 billion with a significant gain from today's news that they'll be selling their financial group and investing that money elsewhere. I expect they'll get a decent bump after the showcase next week as well.

Here is where the speculation fits in as to where they'll spend that money. I still think T2 is by far the best buy that Sony could get. It checks so many boxes and I think they have fairly good reason to think they could get it past regulators now that the EU ruled in favor or the Activision buy and the CMA dismissed the console concerns.

Ultimately, a deal for T2 is going to cost upwards of 30 billion dollars, which I think will be a mixture of cash, financing, and stock consideration. Aside from T2 though, it's clear that they're interested in FromSoftware/Kadokawa.

I think Jim Ryan and Sony Group senior leadership has recognized some key points here

• The absolute bullet that they MAY have sidestepped with Microsoft attempting (and likely failing) to buy Activision Blizzard King
• That they're extremely vulnerable to the large money in the industry
• That if this deal is blocked that T2 could be a likely alternative for Microsoft.
  • I think T2 and EA are the obvious next choices for Microsoft and that of the two the one that would hurt Sony more would be T2 and that T2 is cheaper to buy than EA.
• Sony also recognizes that Microsoft is embattled at the moment with the ABK deal so can't jump into T2 right now, so the timing is really key here.

Microsoft ain't buy or trying any more shit after the fiasco of ACTIVISION for the next decade or so.

At least of that scale, Sony doesn't need Take Two or EA, they need great studios that pump great games and add some more juggernauts like CD PROJEKT or Geshin Impact lads.

Easy.

 

[Ronin_7]

Wow, I knew Sony has less money than other big companies but it pales compared to them..

Sony has 15B on Hand because they changed the accounting system or they would have 50B or more.

See here:

GAAP vs. IFRS: What's the Difference?

IFRS and GAAP are the two primary financial reporting standards systems used by accountants. Learn about the main methodological and practical differences between them.

www.investopedia.com

Context matters.

 

[bentanchorbolt]

Ah those are good. At the same time I'm barfing at the idea of things like that getting locked up with a platform holder. :/

I own all platforms so it ultimately is fine with me. I try not to worry too much about what I can’t control.

 

[Ar¢tos]

Explain what you mean when you say “a monopoly in that genre”.

"Other services streaming licensed anime (ex: Netflix) don't exist if I choose to believe it that way!"

 

[Heisenberg007]

That’s the one good thing, Sony probably couldn’t afford to make it exclusive.

If any company can make those big games exclusive, it is Sony.

Think about it: these big games do not usually release on Nintendo. And Xbox represents the smaller userbase. If Sony makes, say, GTA 6 a PS5 console exclusive, they lose out on hardly 25% of the sales. But increase their revenue from 30% to 100% -- which more than makes up for the lost revenue.

Rockstar games do not launch on PC day one anyway: both GTA and RDR 2 were timed console exclusives. RDR 1 did not even release on PC.

So Sony can release the games first on PS5 and later release them on PC 6-12 months later, and literally nothing would change -- except the lost ~20-25% revenue from Xbox sales (which, again, represent the least amount of sales).

 

[ProtoByte]

If Sony ever buys a publisher, it will either be Square or Sega. I don't want either to happen, but I think the former is a genuine possibility.

TakeTwo would be off the table in multiple ways.

 

[Team Andromeda]

Playstation fans dreaming again. SONY haven't the money to buy Take Two and has historic debt. Nintendo, Apple, and Microsoft have more than enough cash in bank to buy them mind.
Take Two aren't in trouble and I doubt will be looking for a buyer, Ubisoft on the other hand, maybe open to offers and would have a better chance of being passed by the regs

 

[Mibu no ookami]

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 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.

They spent 8.5 billion on MGM just last year... Is that core?

They pay a billion dollars a year for NFL games on thursdays.

 

[DenchDeckard]

Less money than Netflix....that's wild

 

[Banjo64]

Explain what you mean when you say “a monopoly in that genre”.

Sony - monopolising anime streaming services since 1969

 

[Mibu no ookami]

If any company can make those big games exclusive, it is Sony.

Think about it: these big games do not usually release on Nintendo. And Xbox represents the smaller userbase. If Sony makes, say, GTA 6 a PS5 console exclusive, they lose out on hardly 25% of the sales. But increase their revenue from 30% to 100% -- which more than makes up for the lost revenue.

Rockstar games do not launch on PC day one anyway: both GTA and RDR 2 were timed console exclusives. RDR 1 did not even release on PC.

So Sony can release the games first on PS5 and later release them on PC 6-12 months later, and literally nothing would change -- except the lost ~20-25% revenue from Xbox sales (which, again, represent the least amount of sales).

I mean it's probably more like 10-15 percent. With over half the sales probably coming from PC, we know that the remaining majority is on PlayStation. That probably leaves more like 10-15 percent.

And then you take out the cut that would have gone to Microsoft anyways (30 percent of that) which leaves you with 7-13 percent. Sony could probably afford to foreclose GTA on Xbox. At least for a period of time.

 

[James Sawyer Ford]

I mean it's probably more like 10-15 percent. With over half the sales probably coming from PC, we know that the remaining majority is on PlayStation. That probably leaves more like 10-15 percent.

And then you take out the cut that would have gone to Microsoft anyways (30 percent of that) which leaves you with 7-13 percent. Sony could probably afford to foreclose GTA on Xbox. At least for a period of time.

I have a suspicion Sony already has nabbed GTA as a timed exclusive

Could be wrong but just how dejected Phil was when talking about competitors doing exclusive deals …in addition to doing really massive buys like Bethesda or Activision

 

[Poltz]

I have a suspicion Sony already has nabbed GTA as a timed exclusive

Could be wrong but just how dejected Phil was when talking about competitors doing exclusive deals …in addition to doing really massive buys like Bethesda or Activision

That would cost billions though.

 

[Mibu no ookami]

That would cost billions though.

A timed console exclusive wouldn't cost billions.

 

[Panajev2001a]

Wow, I knew Sony has less money than other big companies but it pales compared to them..

I thought it was clear with how much they were bullying MS and why we consumers needed MS to buy all major third party publishers just to have a chance to survive… /sarcasm .

But yeah, it puts things in perspective of why to is bad of regulators allow the “just buy your way out of competing” card to be played it is not best for the market or for consumers in general.

 

[Panajev2001a]

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!"

Moves by a $2-3 Trillion company trying to take content away from a $0.1 Trillion competitor vs the other way around (one could make the case about who is buying their way out of having to compete…) …

Anyways, big consolidation is not good for anyone when we are talking about third party publishers that ship lots of games on many many platforms. It was bad with Zenimax (Doom not being multi platform anymore sounds like a bit of a bad joke…).

 

[kyussman]

Kinda nuts when you see all those figures there of how small Sony are when compared to other companies.

 

[GHG]

Less money than Netflix....that's wild

Thinking market caps are money available to companies while disregarding cash on hand. That's wild.

 

[Heisenberg007]

I mean it's probably more like 10-15 percent. With over half the sales probably coming from PC, we know that the remaining majority is on PlayStation. That probably leaves more like 10-15 percent.

And then you take out the cut that would have gone to Microsoft anyways (30 percent of that) which leaves you with 7-13 percent. Sony could probably afford to foreclose GTA on Xbox. At least for a period of time.

Yes, I was just being lenient. And while other games may sell awfully on Xbox, GTA will do good numbers (relatively speaking).

But I totally agree that Sony can (very easily) foreclose GTA on Xbox. I think they may even do that with GTA 6 in the form of timed exclusivity, despite 0 ownership of Take Two.

 

[systemr123]

I

That’s not true, I’ve dug up the document before, Sony and many other companies, and gaming publishers are protected from non-Japanese buyouts.

Here:

https://www.mof.go.jp/policy/international_policy/gaitame_kawase/fdi/list.xlsx

Even Sega is on the list.

I heard MS is going to buy Sega on Wednesday.

 

[HawarMiran]

T2 just announced that GTA5 sold 180 million copies and RDR2 sold 53 million copies... Two of the best-selling game franchises of all time and nothing that Sony has made has ever come close to either of those games in sales.

hard to do that when you are not releasing on every platform.

 

[StealthGoblin]

If Sony were to go for Take 2 we should expect them to be bought to bolster income and game security, as well as a strong entry into the mobile space.

We shouldn’t expect exclusives. It’s a defensive move more than anything. I’d expect Sony to make MP commitments out the gate.

 

[M1987]

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!"

Sony shouldn't be able to buy Take Two just like Microsoft with ABK.Capcom,ABK,EA and take Two should stay third party

 

[DEAD ORIGINAL]

Take Two would be a great get for Playstation

 

[M1987]

Take Two would be a great get for Playstation

Shouldn't be allowed to happen.People can't complain about a monopoly when Microsoft try to buy ABK but be ok with Sony buying Take Two

 

[Goalus]

Why? And Why?

If I were MS, I would keep buying T2 shares at a regular exchange until the price is high enough that Sony can't afford them. As soon as the share price drops, I'd buy additional shares to drive up the price to keep it out of Sony's reach.

 

[Skifi28]

Shouldn't be allowed to happen.People can't complain about a monopoly when Microsoft try to buy ABK but be ok with Sony buying Take Two

I imagine they're not the same people.

 

[mrmustard]

People can't complain about a monopoly when Microsoft try to buy ABK but be ok with Sony buying Take Two

They can and you will agree!

 

[Fabieter]

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.

Ms already got Bethesda which is basically the same size as t2 so I don't l know what to tell you. Bethesda wasnt a public company but tje value would have been the same of it did.

 

[kittoo]

I am a layman, so I have no clue what the fuck I am talking about. But I would rather have them invest in their own studios and new franchises. Like imagine a GTA competitor a la Sleeping Dogs . I guess they would have more reasons to get TakeTwo besides GTA, but still I find this approach of buying big established publishers for so much money a bit wild....

Seriously. Like imagine the kind of IPs and games you could build from 30-40 billion dollars! You could build like 150 AAA games!
It's a simplified view but still

 

[Elios83]

1.Sony will create a partial spinoff by distributing 80%+ of its ownership interest in SFGI as a stock dividend to existing shareholders.




2.COO Hiroki Totoki said at the briefing:




3.Sony Corporate Strategy Meeting

4.Totoki (COO) and Yoshida (CEO)

5.Sony Eyes Partial Spin-off of SFGI

6.Growth of Entertainment Businesses (Sales and OI exceeded 50% of Sony group)

7.The Last of Us, a "Mega-Hit"

8. Entertainment x Entertainment Synergies

9.Phil Spencer : “Whenever I run into a problem I can't solve, I always make it bigger"


G&NS invested capital (561.4 --- 1,038.1)

G&NS R&D (175,677--- 271,145)

10."Sony's best future isn't to leverage debt up to 25% of their market cap to buy one company"

It's an important move because it is explicitly meant to increase the investements in entertainment which includes games and movies.
But it doesn't mean they're preparing to buy big publishers.
It's not the way they want to do business, their goal is to grow their teams so that they can develop more games simultaneously, to promote synergy between games and movies/TV series and to buy promising teams that can become top studios in the long run.
Buying a publisher can happen only if it makes a super specific sense (ex. Bungie allowing them to expand into the multiplayer GaaS genre without starting from zero).

Also extreme market consolidation and trying to buy pieces of the market shouldn't be appreciated as a practice regardless of who does it.

 

[Thirty7ven]

10."Sony's best future isn't to leverage debt up to 25% of their market cap to buy one company"

Good luck to them, clearly they are still stuck in whatever timezone they love to be stuck in. They will be dwarfed.

 

[truth411]

Because regulators

The difference is if Sony buys Take 2, they will still remain multiplatform similar to Bungie. They have to, they wouldn't be able to afford for Take 2 to be exclusive.

 

[Poltz]

Sony shouldn't be able to buy Take Two just like Microsoft with ABK.Capcom,ABK,EA and take Two should stay third party

What are they doing in this discussion, they are tiny compared to the rest…

 

[Mibu no ookami]

hard to do that when you are not releasing on every platform.

1) They don't have to foreclose
2) If they do foreclose what percentage of those sales are on Xbox and what percentage of the actual revenue is on Xbox?

T2 only gets 70% of the revenue from sales on Xbox and sales on Xbox probably represent at most 15% of overall revenue. That's not a huge loss for increased console sales.

 

[Mibu no ookami]

Seriously. Like imagine the kind of IPs and games you could build from 30-40 billion dollars! You could build like 150 AAA games!
It's a simplified view but still

The problem with your equation is that you aren't accounting for limited resources, particularly time and people.

There are only 12 months in a year, that's a finite amount of time. There is X number of people who work in the industry and have the experience to produce AAA games (this number is finite as it increases overtime, but the increase isn't exponential).

You also have to remember that eventually, the number of games you release starts to eat into each other's sales. There is only so much revenue in the industry at a given time.

This idea that you can throw 30 billion dollars into game development and see a requisite and profitable return in a given period of time, just doesn't make sense. Especially when you're guaranteed largely a certain return on a buy like T2.

 

[DenchDeckard]

Do people honestly think the CMA or FTC would ever allow Sony to buy the publisher of grand theft auto and make them exclusive...?

 

[StreetsofBeige]

Unless something drastically changed lately, pretty sure their finance arm is one of Sony's most consistent profitable divisions. Selling it would be odd.