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[Bryank75]

I was basing the $15B on Konami's $9.36B market cap. Who ever purchased them would have to pay a premium above their market cap.

My argument is that their isn't a publisher Sony could buy where they wouldn't be outbid by another company. Folks think if From Software came on the market they would be bought by Sony without a bidding war? These rumors are delusional. There will be bidding wars for any publisher that comes on the market. Especially after the Activision/Blizzard deal.

That's why they were outbid so easily for Bungie.... oh wait!

 

[Fredrik]

People will hate on Sony until there is no tomorrow if they buy FROM after the success of Elden Ring. Imagine FROM games arriving 3 years later on PC going forward

 

[C2brixx]

That's why they were outbid so easily for Bungie.... oh wait!

Lets not act like Bungie is on the same level of a Konami or a Capcom. I'm talking about big Publishers. There will be a bidding war should any become available.

 

[yurinka]

I was basing the $15B on Konami's $9.36B market cap. Who ever purchased them would have to pay a premium above their market cap.

My argument is that their isn't a publisher Sony could buy where they wouldn't be outbid by another company. Folks think if From Software came on the market they would be bought by Sony without a bidding war? These rumors are delusional. There will be bidding wars for any publisher that comes on the market. Especially after the Activision/Blizzard deal.

Yes, right now their price is too high for the currently available acquisitions budget. Same applies for most big game publishers in the market.

Even if they increase the budget, that's a too overpriced price for Sony's interests. If Sony would be able to choose, there are other ones with way lower price and more value for what Sony (not only SIE) could do with them, like Capcom or specially Kadokawa.

Bidding wars only exist when someone wants or needs to sell and doesn't give a fuck who buys it, as it was the case of Kotick making a tour to see who wanted to buy ABK. In many cases I think companies don't choose the highest bidder but instead the company where they fit better and can help them grow in the direction they want.

Regarding this last topic, Konami is more focused on mobile gaming, pachinko and other shits. Sony would be nice the mobile gaming part maybe, but they instead want to focus on console, grow also in pc and mobile, to get AAA teams who can develop and if possible create powerful IPs and if possible to have some IPs they can bring to movies or anime or old catalog to fill PS+. Again, Capcom and Kadokawa fill better in these areas.

They have successful AAA devs, powerful active IPs on console and PC, already existing content or IPs with potential for Sony Pictures and anime, hability to create new IP etc. Kadokawa already asked Sony for help to bring their games and manga to a more global audience, and like Capcom and Sony they also believe on make a crossmedia usage of their IPs putting them on games, anime, movies and so on. Sony can help them in areas where they are interested to grow, and where people like Tencent, MS, EA, Epic, Google, Facebook or Amazon can't help them. So even if someone else would outbid pretty likely they'd choose Sony, which also is Japanese (something I assume would help).

 

[CrashFistfight]

I was basing the $15B on Konami's $9.36B market cap. Who ever purchased them would have to pay a premium above their market cap.

My argument is that their isn't a publisher Sony could buy where they wouldn't be outbid by another company. Folks think if From Software came on the market they would be bought by Sony without a bidding war? These rumors are delusional. There will be bidding wars for any publisher that comes on the market. Especially after the Activision/Blizzard deal.

No company in the gaming space pays that much of a premium for Konami. Especially when their core business isn’t video games. If anything it would be a purchase of their video game assets and whatever studios or talent still remain. If 4bill was the rumored asking price for WB those Konami assets would be less then that.

 

[DarkMage619]

That's why they were outbid so easily for Bungie.... oh wait!

Who else was vying for Bungie? Especially someone willing to pay more than the premium Sony did.

 

[Bryank75]

Sony would be the type to buy WB Studios while not getting use of any of any of the WB licenses.

They are that bad at making deals.

You're overvaluing the IP's and undervaluing talent, strategic value etc

Lets not act like Bungie is on the same level of a Konami or a Capcom. I'm talking about big Publishers. There will be a bidding war should any become available.

In what sense? Value? Man power? strategic importance? history in the industry? IP's?

Nobody is going to buy all of Konami and they have no real talent or good teams, all you're buying is IP's.

Capcom have significant family involvement and ownership and it is doubtful they will sell to anyone, they certainly will not sell to a non-Japanese entity, potentially destroying the culture and selling out decades of gaming history to foreigners... You'd be insane to assume they would.

 

[Ass of Can Whooping]

Lets not act like Bungie is on the same level of a Konami or a Capcom. I'm talking about big Publishers. There will be a bidding war should any become available.

If MS thought Bungie was too pricey they're certainly not paying $20 billion, nevermind $30 billion, for fucking Konami LMAO

One of the reasons for a premium is to ward of competition. You're already pushing it at $15 billion

 

[C2brixx]

If MS thought Bungie was too pricey they're certainly not paying $20 billion, nevermind $30 billion, for fucking Konami LMAO

MS isn't the only one that thought Bungie was too pricey. That was pretty much the conclusion from financial analyst after the deal was announced. Again, Bungie isn't really a publisher with multiple IPs. Konami's IPs will increase their value over and above their market cap.

 

[yurinka]

Almost certainly going to be announced some time this year. I knew the moment the acquisition race heated up that Sony was going to look more intensely to their partnerships and possibly buy them in advance of their games. If they were liking what they saw. When that interview with Raymond went out and she said Sony was so impressed with their pitches that they wanted to greenlight all three of them, which would have meant hiring like crazy to give them the people they need, I knew they were going to float a big check to Haven. When it was announced that Deviation was opening a second studio in Canada, funny enough in Montreal where Haven is at, I knew Sony was backing them with a lot of extra money. Knowing they are also making a live service game, which Sony REALLY wants, and seeing them move into this new studio for their primary location before they've even put a game out... and plastered with PS5 images.... yeah. Only question now is what is the relationship between Firewalk and Probably Monsters and can Sony buy them? Hulst has said a few times now that he's very psyched about their project. Again, a live service game.

Probably Monsters is the parent company of Firewalk. In addition to Firewalk (who is working on a multiplayer game for PS), Probably Monsters has two unannounced teams more: one is working on a single player adventure and the other one in a next gen coop RPG. Their idea is that these 3 studios would collaborate with each other meaning that for example if one team is on peak production stage, their concept team can go work to help other team who is starting, and the big chunk of coders, artists etc of that game that still is in early stages since they still don't have work could go to help the other ones who are crunching.

Meaning, Probably Monster is a studio with 3 dev teams and Firewalk is one of them. Instead of buying Firewalk Sony would buy Probably Monsters. Probably Monsters still didn't publish any IP, so even if at least Firewalk has many veterans their price would be relatively cheap.

 

[Ass of Can Whooping]

Konami's IPs will increase their value over and above their market cap.

Lmao no. The market has already priced in the value of Konami's IPs.

 

[FalsettoVibe]

Lol Deviation Games plastering their walls with DualSense artwork

Tell me you're a PS Studio without telling me you're a PS Studio

Yeah......this wont be a surprise to anyone. I can see Deviation and Ember Labs getting announced this year.

 

[phil_t98]

Your question doesn't make sense. There is no such company trading as Sony PlayStation.

Right is it Sony as a whole company that’s worth that or is it the gaming division just worth that. Think that was fairly obvious what I meant

 

[Bryank75]

MS isn't the only one that thought Bungie was too pricey. That was pretty much the conclusion from financial analyst after the deal was announced. Again, Bungie isn't really a publisher with multiple IPs. Konami's IPs will increase their value over and above their market cap.

They paid 2.4 billion up front, the rest is going to be paid in bonuses and as a kind of retainer for talent... which is smart. Sometimes it is worth paying a little extra.

Analysts know shit all.... believe me, I was one.

If paired with the right talent and nurtured, Konami's IP's will do what you said but it is harder than it sounds.

 

[yurinka]

If MS thought Bungie was too pricey they're certainly not paying $20 billion, nevermind $30 billion, for fucking Konami LMAO

One of the reasons for a premium is to ward of competition. You're already pushing it at $15 billion

Bungie left MS because Bungie didn't want to work with MS again. Bungie got happy partnering with Sony for Destiny's marketing and saw interesting synergies with PS teams and Sony Pictures/PlayStation Productions to bring Bungie IPs to movies and TV show. It wasn't a matter of money.

 

[Captain Toad]

Until Sony actually buys a Publisher I'm going to remain skeptical of these rumors. People like the bring up the fact that Microsoft is in regulator review with the Activision purchase and wouldn't be able to make another purchase until that acquisitions closes. I don't think that's the case. I believe any publisher that maybe looking to sell right now is going to shop around for 2nd, 3rd, and 4th offers and would have no problem waiting a year if an offer from Microsoft meant $5B or more than what Sony was offering.

If Sony was to offer lets say $15B for Konami I guarantee you Konami would shop that offer around and would receive offers in the $20-$30 billion range easily from a multitude of tech companies.

Sony would never buy Konami. Sony values talent. Microsoft values IPs.

Konami has the IPs, but they barely have an active gaming division at all.

 

[Tripolygon]

Right is it Sony as a whole company that’s worth that or is it the gaming division just worth that. Think that was fairly obvious what I meant

You asked what the market cap of Sony PlayStation (SIE) is. Market Cap is the total value of the outstanding shares based on the current price. SIE is not a publicly-traded company, it is a wholly-owned subsidiary of Sony. The value of SIE within Sony could well be different from if it was a separate publicly traded company. That is like asking what the value of Xbox is, it is dependent on how much someone is willing to pay for it all things considered.

 

[John Wick]

To be fair, though, in that same interview, Jim also confirmed supporting PS4 for years to come.

Did he try to be sneaky and take a shot at Xbox's no next-gen exclusive game for 2 years? Absolutely, he did.

Was he entirely wrong with his statement? No, I don't think he was.

I think Jimbo was telling the truth as he saw it. PlayStation "believed in generations" (and therefore released games like Rift Apart, Destruction All Stars, and Demon's Souls), and PlayStation also had "a responsibility to support the PS4 community for several years", so they also released games like Miles Morales, Horizon Forbidden West, Ragnarok, etc. on PS4 as well.

Both things can be true at the same time, and that's what Jimbo said. Also notice that in his quote, nowhere did he say that games will be next-gen exclusive. If anything, he was talking about console features, such as 3D audio and DualSense etc.

The shot at Xbox was kind of valid from Jimbo's POV because they said "no next-gen exclusive games for 2 years at all", while Jimbo implied that they will do both, and they did. As per Jimbo, PlayStation would make PS5 exclusive games (which they did) and would also support the PS4 community for several years after (which they are doing).

Yeah I agree. Sony have always supported the previous gen. But Jimbo did himself no favours with that interview. It was the timing that screwed him royally.

 

[John Wick]

Give over for what, he should have kept his mouth shut yes, but compared to the competition ps5 had exclusives at launch so its simply wrong to say that he was lying.

That is true but he didn't need to get himself down there. Sony don't need to play with words. Let the games do the talking.

 

[Bryank75]

Yeah I agree. Sony have always supported the previous gen. But Jimbo did himself no favours with that interview. It was the timing that screwed him royally.

Just like commenting on Activision about the scandals and then something about PS comes out a few weeks later.....

and recently he said people were at peace with PC ports....

He just seems to be out of touch and have little foresight.

 

[Badlucktroll]

I was basing the $15B on Konami's $9.36B market cap. Who ever purchased them would have to pay a premium above their market cap.

My argument is that their isn't a publisher Sony could buy where they wouldn't be outbid by another company. Folks think if From Software came on the market they would be bought by Sony without a bidding war? These rumors are delusional. There will be bidding wars for any publisher that comes on the market. Especially after the Activision/Blizzard deal.

I just don’t see American companies buying these family owned Japanese companies.

 

[Panajev2001a]

That is true but he didn't need to get himself down there. Sony don't need to play with words. Let the games do the talking.

Which they did to be fair. Inside the interview the comment made sense and was not untruthful, he says plenty of stupid shit but this was not it.

 

[El Pistolero]

Troll concern? You know yourself that when Microsoft announced studio buy outs there are posts and posts from Sony fans about how that’s not the way to do it and organic growth is the way. Now that Sony started buying studios like bungee its now ok to buy and not have organic growth.

My opinion is we that both Microsoft and Sony should acquire as many studios as they can to keep google and apple out of the console market.

Oh, the Apple and Google boogymen, whose sole purpose is to justify MS gobbling up entire publishers. Fast, MS, get EA...Apple might eye it...at some point...never...

 

[CosmicComet]

You're overvaluing the IP's and undervaluing talent, strategic value etc

And pray tell what strategic value does WB Studios with none of the WB properties provide?

You can find and cultivate good talent almost anywhere. Talent is fluid and transient in nature.

You can't just find blockbuster worldwide IPs anywhere, and even harder to make them.

 

[John Wick]

WRPG sell more on PS than on Xbox and PS already has a shit ton of WRPG even if not exclusive. Sony doesn't need to have their own ones.

Even considering this, Sony recently released Horizon. How many exclusive WRPG has published Xbox?

In addition to tthis, Sony has also a lot of exclusive RPGs, way more than Xbox. Who cares if western or not. With both exclusive or multi, Sony has the RPG genre more han covered.


It wouldn't make sense to pay $15B for Konami. They don't have a single AAA dev team. Do they even have a game that sold 10M? They have a lot of old classics and 4 or 5 IPs that could be used for mid sized AAA games and other ones for small games. And a successful mobile game team, that's all. They also have an IP with potential for movies or anime (out of maybe up to 3 or 4) and Sony is already making that movie. Plus they have business like pachinko and gyms that Sony isn't interested on them.

I think several other publishers would better fit Sony, and if they would acquire Konami they would pay way less than $15B for it.

Spot on assessment of Konami. Sony are better off just buying or licensing the IP than buying Konami as whole. What's the point if they have no decent development teams?

 

[Hezekiah]

I just don’t see American companies buying these family owned Japanese companies.

Would even a Chinese company be welcomed above Sony?

 

[MHubert]

That is true but he didn't need to get himself down there. Sony don't need to play with words. Let the games do the talking.

Yes well I agree with that

 

[Bryank75]

And pray tell what strategic value does WB Studios with none of the WB properties provide?

You can find and cultivate good talent almost anywhere. Talent is fluid and transient in nature.

You can't just find blockbuster worldwide IPs anywhere, and even harder to make them.

True but the IP loses value if you don't have the right team behind it, with the right vision.

The talent, team and culture at Rocksteady for example, can be put to work on a Marvel IP or allowed create their own thing.... I am not too enthused about Suicide Squad TBH.

NetherRealm would probably retain the MK IP but they also have their culture and style and can create new characters, as they have done over decades.

COD is having massive issues due to talent leaving and the shortage in the industry at large..... for example.

 

[Varteras]

Looking at this i always find it funny how people say Sony ($129.0 bn) can't buy big companies like Capcom ($6.8 bn) or Square-Enix ($6.8 bn).

Yet Zynga ($10.5 bn) was acquired by Take-Two ($17.8 bn) for over 12 billion US dollars.

I know market cap doesn't show the entire picture specially in terms of acquisitions since it's not connected with the money each company has to spend...but when you put these numbers close to each other and how much money Take-Two spent on Zynga it helps put things in perspective.

I have been saying this for a while and i'll say it again: Now that Sony has acquired most studios close to them, they will go after videogame IPs that have always been connected to PlayStation. Capcom and Square-Enix are two i could imagine...but there's more possibilities. Specially now with PSPlus having this revamp and the synergy with movies and TV shows that PlayStation Productions want. Imagine Capcom and Square-Enix entire catalogs on PSPlus, plus all the studios in multiple countries they have. Plus the fact most Square-Enix businesses are also things that interest Sony (manga, anime, etc). There's also the fact if Sony managed to acquire big companies with lots of IPs people always connected with Sony, there's a possibility they would also leave Gamepass once those deals are over.

There's another war that's not 100% connected to studios happening right now and that's getting known IPs and content to your services. Sony knows this. They also know Apple, Google and Amazon could buy something big in the future and MS is now "on hold" after the Activision acquisition. This is the perfect timing for them, just as their new fiscal year starts.

What is interesting to me is that Sony's market cap is actually significantly lower than its net asset value. Many investors and analysts believe Sony's stock is undervalued compared to its peers. How much higher they believe it should be, I don't know. But their net asset value is $264 billion. Which is actually $20 billion higher than Walmart. Sony's asset value is actually one of the largest in the world. And that value has been gaining on Microsoft, which is currently at $340 billion. If the trend of the last 3 years continues, which it likely won't but possible, Sony will match Microsoft's net asset value in 10 years. Sony's value today is where Microsoft's was almost exactly 3 years ago. Sony is also getting better at building its reserve cash.

For the fiscal year ending in March, 2019, Sony had $25 billion in reserves, or cash-on-hand. Basically their savings account. A year later in March, 2020, that number had climbed to about $31 billion. An increase of $6 billion from the previous year. Then in March, 2021, that number climbed quite a bit higher to $44 billion. An increase of $13 billion from the previous year. Now, last year Sony spent a lot of money, including setting aside an investments and acquisition fund of some $18 billion for their entertainment divisions (Sony Interactive, Sony Music, Sony Pictures). All that spending and allocation dropped their reserve cash to $19 billion by the end of the first fiscal quarter and then a further $3 billion by the second. Down to $16 billion. But by the end of the third fiscal quarter that reserve went back up by $3 billion. Up to $19 billion again. Sony's $44 billion they had this time last year was already one of the highest in the world but even sitting at $19 billion, it is still impressive.

We'll find out this month how well Sony replenished its reserves over these last 3 months. But what Sony has shown is that they are capable of putting in $6 billion to $13 billion into their reserves in a year. That kind of replenishment gives them tons of options for purchases. Even publishers with lower market caps like Square Enix could be bought just off of the amount they replenished their reserves with. Last we heard, prior to Sony buying Haven, they still had $10 billion in their acquisitions fund that they set aside last year. It will be interesting to see if Sony just runs that out, which they had planned that fund for 3 years of purchases, or if they add more to it. Now Sony could also take out a loan if they wanted. Their long-term debt to net asset ratio was about 3% by the end of calendar 2021. They only had $8.5 billion in long-term debt versus their net assets of $264 billion. So it wouldn't be hard for them to get a loan if they wanted to make a huge purchase but didn't want to risk blowing all their cash. Which, as far as we know, is somewhere just South of $29 billion between their fund and their reserves.

Here's the catch. It's unlikely that Sony will buy a major Western publisher. Not because they lack the financial muscle to do so. They absolutely have it. It has a lot more to do with what Microsoft is experiencing right now with the Activision deal. Sony is a market leader and a very wealthy company, despite what some cretins run around spouting. They have one of the highest market caps in the world. Frequently found in the top 80 to 100 in the world. And that's with what many believe to be an undervalued stock. They have a net asset value that is only surpassed by maybe 10 to 15 companies in the world, attached to a debt that equals a mere 3% of it. Their cash reserves are rivaled or surpassed by few companies. The issue is Western regulators and cracking down on tech monopolies. Sony would be skating dangerously close to that if they picked up EA or T2. Both of which would be an unwieldly fit for the company and whose costs would likely be better spent on several smaller acquisitions. Sony's best bet for snagging bigger gaming companies would be Japan. Away from the FTC's ability to go after them and at values that won't be nearly as alarming as $30 to $70 billion.

Also, at the end of the day, the biggest question is; do these companies even want to be bought? Many of them likely don't.

 

[FalsettoVibe]

What is interesting to me is that Sony's market cap is actually significantly lower than its net asset value. Many investors and analysts believe Sony's stock is undervalued compared to its peers. How much higher they believe it should be, I don't know. But their net asset value is $264 billion. Which is actually $20 billion higher than Walmart. Sony's asset value is actually one of the largest in the world. And that value has been gaining on Microsoft, which is currently at $340 billion. If the trend of the last 3 years continues, which it likely won't but possible, Sony will match Microsoft's net asset value in 10 years. Sony's value today is where Microsoft's was almost exactly 3 years ago. Sony is also getting better at building its reserve cash.

For the fiscal year ending in March, 2019, Sony had $25 billion in reserves, or cash-on-hand. Basically their savings account. A year later in March, 2020, that number had climbed to about $31 billion. An increase of $6 billion from the previous year. Then in March, 2021, that number climbed quite a bit higher to $44 billion. An increase of $13 billion from the previous year. Now, last year Sony spent a lot of money, including setting aside an investments and acquisition fund of some $18 billion for their entertainment divisions (Sony Interactive, Sony Music, Sony Pictures). All that spending and allocation dropped their reserve cash to $19 billion by the end of the first fiscal quarter and then a further $3 billion by the second. Down to $16 billion. But by the end of the third fiscal quarter that reserve went back up by $3 billion. Up to $19 billion again. Sony's $44 billion they had this time last year was already one of the highest in the world but even sitting at $19 billion, it is still impressive.

We'll find out this month how well Sony replenished its reserves over these last 3 months. But what Sony has shown is that they are capable of putting in $6 billion to $13 billion into their reserves in a year. That kind of replenishment gives them tons of options for purchases. Even publishers with lower market caps like Square Enix could be bought just off of the amount they replenished their reserves with. Last we heard, prior to Sony buying Haven, they still had $10 billion in their acquisitions fund that they set aside last year. It will be interesting to see if Sony just runs that out, which they had planned that fund for 3 years of purchases, or if they add more to it. Now Sony could also take out a loan if they wanted. Their long-term debt to net asset ratio was about 3% by the end of calendar 2021. They only had $8.5 billion in long-term debt versus their net assets of $264 billion. So it wouldn't be hard for them to get a loan if they wanted to make a huge purchase but didn't want to risk blowing all their cash. Which, as far as we know, is somewhere just South of $29 billion between their fund and their reserves.

Here's the catch. It's unlikely that Sony will buy a major Western publisher. Not because they lack the financial muscle to do so. They absolutely have it. It has a lot more to do with what Microsoft is experiencing right now with the Activision deal. Sony is a market leader and a very wealthy company, despite what some cretins run around spouting. They have one of the highest market caps in the world. Frequently found in the top 80 to 100 in the world. And that's with what many believe to be an undervalued stock. They have a net asset value that is only surpassed by maybe 10 to 15 companies in the world, attached to a debt that equals a mere 3% of it. Their cash reserves are rivaled or surpassed by few companies. The issue is Western regulators and cracking down on tech monopolies. Sony would be skating dangerously close to that if they picked up EA or T2. Both of which would be an unwieldly fit for the company and whose costs would likely be better spent on several smaller acquisitions. Sony's best bet for snagging bigger gaming companies would be Japan. Away from the FTC's ability to go after them and at values that won't be nearly as alarming as $30 to $70 billion.

Also, at the end of the day, the biggest question is; do these companies even want to be bought? Many of them likely don't.

Good post.

 

[Bryank75]

What is interesting to me is that Sony's market cap is actually significantly lower than its net asset value. Many investors and analysts believe Sony's stock is undervalued compared to its peers. How much higher they believe it should be, I don't know. But their net asset value is $264 billion. Which is actually $20 billion higher than Walmart. Sony's asset value is actually one of the largest in the world. And that value has been gaining on Microsoft, which is currently at $340 billion. If the trend of the last 3 years continues, which it likely won't but possible, Sony will match Microsoft's net asset value in 10 years. Sony's value today is where Microsoft's was almost exactly 3 years ago. Sony is also getting better at building its reserve cash.

For the fiscal year ending in March, 2019, Sony had $25 billion in reserves, or cash-on-hand. Basically their savings account. A year later in March, 2020, that number had climbed to about $31 billion. An increase of $6 billion from the previous year. Then in March, 2021, that number climbed quite a bit higher to $44 billion. An increase of $13 billion from the previous year. Now, last year Sony spent a lot of money, including setting aside an investments and acquisition fund of some $18 billion for their entertainment divisions (Sony Interactive, Sony Music, Sony Pictures). All that spending and allocation dropped their reserve cash to $19 billion by the end of the first fiscal quarter and then a further $3 billion by the second. Down to $16 billion. But by the end of the third fiscal quarter that reserve went back up by $3 billion. Up to $19 billion again. Sony's $44 billion they had this time last year was already one of the highest in the world but even sitting at $19 billion, it is still impressive.

We'll find out this month how well Sony replenished its reserves over these last 3 months. But what Sony has shown is that they are capable of putting in $6 billion to $13 billion into their reserves in a year. That kind of replenishment gives them tons of options for purchases. Even publishers with lower market caps like Square Enix could be bought just off of the amount they replenished their reserves with. Last we heard, prior to Sony buying Haven, they still had $10 billion in their acquisitions fund that they set aside last year. It will be interesting to see if Sony just runs that out, which they had planned that fund for 3 years of purchases, or if they add more to it. Now Sony could also take out a loan if they wanted. Their long-term debt to net asset ratio was about 3% by the end of calendar 2021. They only had $8.5 billion in long-term debt versus their net assets of $264 billion. So it wouldn't be hard for them to get a loan if they wanted to make a huge purchase but didn't want to risk blowing all their cash. Which, as far as we know, is somewhere just South of $29 billion between their fund and their reserves.

Here's the catch. It's unlikely that Sony will buy a major Western publisher. Not because they lack the financial muscle to do so. They absolutely have it. It has a lot more to do with what Microsoft is experiencing right now with the Activision deal. Sony is a market leader and a very wealthy company, despite what some cretins run around spouting. They have one of the highest market caps in the world. Frequently found in the top 80 to 100 in the world. And that's with what many believe to be an undervalued stock. They have a net asset value that is only surpassed by maybe 10 to 15 companies in the world, attached to a debt that equals a mere 3% of it. Their cash reserves are rivaled or surpassed by few companies. The issue is Western regulators and cracking down on tech monopolies. Sony would be skating dangerously close to that if they picked up EA or T2. Both of which would be an unwieldly fit for the company and whose costs would likely be better spent on several smaller acquisitions. Sony's best bet for snagging bigger gaming companies would be Japan. Away from the FTC's ability to go after them and at values that won't be nearly as alarming as $30 to $70 billion.

Also, at the end of the day, the biggest question is; do these companies even want to be bought? Many of them likely don't.

It's good to have someone that knows what they are talking about around...

Great points.

Sony is also the second most valuable company in Japan (only behind Toyota) and has many things working against their value, such as Japan being in recession for so long and 'group discount' theory for diversified conglomerates. As well as their electronics business skewing their books.... which many investors and analysts do not know how to deal with.

 

[Varteras]

It's good to have someone that knows what they are talking about around...

Great points.

Sony is also the second most valuable company in Japan (only behind Toyota) and has many things working against their value, such as Japan being in recession for so long and 'group discount' theory for diversified conglomerates. As well as their electronics business skewing their books.... which many investors and analysts do not know how to deal with.

If I'm being honest, you were one of the people around here that inspired me to look deeper into these things than just say, "BUT! MARKET CAPS!"

Yeah when I look at what Sony is worth, their revenue, their reserves... I look at their market value and scratch my head. I know it SHOULD be higher than that. By maybe even 3 or 4 times its current value. I did read that lacking foreign investments has hurt their stocks. But market cap aside, Sony has a shit load more financial muscle than people think.

 

[CosmicComet]

True but the IP loses value if you don't have the right team behind it, with the right vision.

The talent, team and culture at Rocksteady for example, can be put to work on a Marvel IP or allowed create their own thing.... I am not too enthused about Suicide Squad TBH.

NetherRealm would probably retain the MK IP but they also have their culture and style and can create new characters, as they have done over decades.

COD is having massive issues due to talent leaving and the shortage in the industry at large..... for example.

An established IP is far stronger and longer lasting than a strong team.

People age, people retire, get fired, move around etc.

Bioware used to be king shit. Now their name means nothing. But the Star Wars IP they used to make their name is still as strong as ever.

I'll use another example. Batman will always remain relevant. Even when an established IP goes through a tough time, people don't blame the IP. They blame the creative team developing it. (E.g the george Clooney batman movies)

Moral of the story. Great IPs will ATTRACT the right talent over time.

Great talent has less pull for other great talent than a great property does.

If Sony announced to the public that they now owned the Batman game license, the casual reaction will be one of unbridled excitement. And so will the dev excitement; Sony will have no issue drawing talent to work on the property.

If Sony simply announced that they have the developers that worked on the Batman games the response will be a much more tepid "Cool! so they are going to make more Batman games under Sony right? Huh? No?? Umm..ok then."

Do I value the Batman IP more than a team of 200 people that could leave at any time and bring no properties to the table? Absolutely. Batman will last. Whereas that studio could close in two years.

 

[Bryank75]

An established IP is far stronger and longer lasting than a strong team.

People age, people retire, get fired, move around etc.

Bioware used to be king shit. Now their name means nothing. But the Star Wars IP they used to make their name is still as strong as ever.

I'll use another example. Batman will always remain relevant. Even when an established IP goes through a tough time, people don't blame the IP. They blame the creative team developing it. (E.g the george Clooney batman movies)

Moral of the story. Great IPs will ATTRACT the right talent over time.

Great talent has less pull for other great talent than a great property does.

If Sony announced to the public that they now owned the Batman game license, the casual reaction will be one of unbridled excitement. And so will the dev excitement; Sony will have no issue drawing talent to work on the property.

If Sony simply announced that they have the developers that worked on the Batman games the response will be a much more tepid "Cool! so they are going to make more Batman games under Sony right? Huh? No?? Umm..ok then."

Do I value the Batman IP more than a team of 200 people that could leave at any time and bring no properties to the table? Absolutely. Batman will last. Whereas that studio could close in two years.

My point was not that the IP would be worth less, it was more that a great team / great talent allows the IP to realize its potential.

I also think your Batman example highlights my point better than yours... Batman was highly unpopular after George Clooney's attempt and kinda made it a laughing stock (Bat-nipples anyone?)..... it took the incredible vision and talent of Nolan, his brother and team to rejuvenate the IP and most people didn't really catch on till the second film.

I was in the cinema for Begins and people were kinda unsure about what to expect at the time...

 

[CosmicComet]

My point was not that the IP would be worth less, it was more that a great team / great talent allows the IP to realize its potential.

I also think your Batman example highlights my point better than yours... Batman was highly unpopular after George Clooney's attempt and kinda made it a laughing stock (Bat-nipples anyone?)..... it took the incredible vision and talent of Nolan, his brother and team to rejuvenate the IP and most people didn't really catch on till the second film.

I was in the cinema for Begins and people were kinda unsure about what to expect at the time...

Not at all.

It proved my point that great IPs draw talent on the fact that it's a great IP.

People flock to things they recognize and put value in.

Granted great IPs can draw bad talent too, but great teams can draw bad talent as well, so nothing is immune to that. It's a moot point.

And no, Batman didn't become unpopular. THAT incarnation of Batman became the butt of jokes and the director's career took a hit over that for years, but Batman as a property remained extremely popular. The Tim Burton movies had only came out a few years prior and remained highly relevant in people's memories and continued getting replayed on tv constantly.

And then throughout the 90s up to the early 2000s the Batman Animated Series churned out quality season after season and went down as one of GOATs of cartoons and went down as the definitive version of Batman in media; More viewed than any single movie version.

So no, the Batman property was never uncool. Batnipples came and went as a isolated blip and the property continued strong putting out tons of toys, cartoons, animated movies without a hitch, all up until Nolan revived it on the big screen.

And in the end, Nolan didn't create an original property did he? No.

He could have made something inspired by Batman called Crowman or something. The movies could have been called Crowman Begins and Dark Ninja Rises and they could have been written and shot exactly the same with some name and costume changes and it would not be anywhere near as successful or well received as if it had the Batman property.

A popular property elevates whatever it's in. An otherwise average game can become decent just by being in the clothing of popular IP.

 

[Bryank75]

Not at all.

It proved my point that great IPs draw talent on the fact that it's a great IP.

People flock to things they recognize and put value in.

Granted great IPs can draw bad talent too, but great teams can draw bad talent as well, so nothing is immune to that. It's a moot point.

And no, Batman didn't become unpopular. THAT incarnation of Batman became the butt of jokes and the director's career took a hit over that for years, but Batman as a property remained extremely popular. The Tim Burton movies had only came out a few years prior and remained highly relevant in people's memories and continued getting replayed on tv constantly.

And then throughout the 90s up to the early 2000s the Batman Animated Series churned out quality season after season and went down as one of GOATs of cartoons and went down as the definitive version of Batman in media; More viewed than any single movie version.

So no, the Batman property was never uncool. Batnipples came and went as a isolated blip and the property continued strong putting out tons of toys, cartoons, animated movies without a hitch, all up until Nolan revived it on the big screen.

And in the end, Nolan didn't create an original property did he? No.

He could have made something inspired by Batman called Crowman or something. The movies could have been called Crowman Begins and Dark Ninja Rises and they could have been written and shot exactly the same with some name and costume changes and it would not be anywhere near as successful or well received as if it had the Batman property.

A popular property elevates whatever it's in. An otherwise average game can become decent just by being in the clothing of popular IP.

Eh.... disagree. Elden Ring didn't need Game of Thrones or Lord of the Rings to make it great.

I would also point to comics current challenges and the types of people who write and illustrate at DC and Marvel comics now..... the sales are disastrous.

New IP's are being created all the time and their potential is not limited by the popularity of legacy IP's.

 

[vivftp]

What is interesting to me is that Sony's market cap is actually significantly lower than its net asset value. Many investors and analysts believe Sony's stock is undervalued compared to its peers. How much higher they believe it should be, I don't know. But their net asset value is $264 billion. Which is actually $20 billion higher than Walmart. Sony's asset value is actually one of the largest in the world. And that value has been gaining on Microsoft, which is currently at $340 billion. If the trend of the last 3 years continues, which it likely won't but possible, Sony will match Microsoft's net asset value in 10 years. Sony's value today is where Microsoft's was almost exactly 3 years ago. Sony is also getting better at building its reserve cash.

For the fiscal year ending in March, 2019, Sony had $25 billion in reserves, or cash-on-hand. Basically their savings account. A year later in March, 2020, that number had climbed to about $31 billion. An increase of $6 billion from the previous year. Then in March, 2021, that number climbed quite a bit higher to $44 billion. An increase of $13 billion from the previous year. Now, last year Sony spent a lot of money, including setting aside an investments and acquisition fund of some $18 billion for their entertainment divisions (Sony Interactive, Sony Music, Sony Pictures). All that spending and allocation dropped their reserve cash to $19 billion by the end of the first fiscal quarter and then a further $3 billion by the second. Down to $16 billion. But by the end of the third fiscal quarter that reserve went back up by $3 billion. Up to $19 billion again. Sony's $44 billion they had this time last year was already one of the highest in the world but even sitting at $19 billion, it is still impressive.

We'll find out this month how well Sony replenished its reserves over these last 3 months. But what Sony has shown is that they are capable of putting in $6 billion to $13 billion into their reserves in a year. That kind of replenishment gives them tons of options for purchases. Even publishers with lower market caps like Square Enix could be bought just off of the amount they replenished their reserves with. Last we heard, prior to Sony buying Haven, they still had $10 billion in their acquisitions fund that they set aside last year. It will be interesting to see if Sony just runs that out, which they had planned that fund for 3 years of purchases, or if they add more to it. Now Sony could also take out a loan if they wanted. Their long-term debt to net asset ratio was about 3% by the end of calendar 2021. They only had $8.5 billion in long-term debt versus their net assets of $264 billion. So it wouldn't be hard for them to get a loan if they wanted to make a huge purchase but didn't want to risk blowing all their cash. Which, as far as we know, is somewhere just South of $29 billion between their fund and their reserves.

Here's the catch. It's unlikely that Sony will buy a major Western publisher. Not because they lack the financial muscle to do so. They absolutely have it. It has a lot more to do with what Microsoft is experiencing right now with the Activision deal. Sony is a market leader and a very wealthy company, despite what some cretins run around spouting. They have one of the highest market caps in the world. Frequently found in the top 80 to 100 in the world. And that's with what many believe to be an undervalued stock. They have a net asset value that is only surpassed by maybe 10 to 15 companies in the world, attached to a debt that equals a mere 3% of it. Their cash reserves are rivaled or surpassed by few companies. The issue is Western regulators and cracking down on tech monopolies. Sony would be skating dangerously close to that if they picked up EA or T2. Both of which would be an unwieldly fit for the company and whose costs would likely be better spent on several smaller acquisitions. Sony's best bet for snagging bigger gaming companies would be Japan. Away from the FTC's ability to go after them and at values that won't be nearly as alarming as $30 to $70 billion.

Also, at the end of the day, the biggest question is; do these companies even want to be bought? Many of them likely don't.

The reason Sony's cash on hand dropped down to 19 billion dollars from ~45 billion was due to a change in their accounting methods. I'll paste what someone else wrote on the subject:

The $45 billion included "Marketable Securities" from Sony Financial (roughly ~$26 billion). Sony switched from GAAP to IFRS, so the ~$26 billion is no longer considered "Marketable Securities" under the new accounting methodology (it is now listed as "Investments and advances in the Financial Services segment"). Thus, when these services looked at Sony's financials, they went from adding "Cash and Cash Equivalents" + "Marketable Securities" to just "Cash and Cash Equivalents."

 

[Varteras]

The reason Sony's cash on hand dropped down to 19 billion dollars from ~45 billion was due to a change in their accounting methods. I'll paste what someone else wrote on the subject:

The $45 billion included "Marketable Securities" from Sony Financial (roughly ~$26 billion). Sony switched from GAAP to IFRS, so the ~$26 billion is no longer considered "Marketable Securities" under the new accounting methodology (it is now listed as "Investments and advances in the Financial Services segment"). Thus, when these services looked at Sony's financials, they went from adding "Cash and Cash Equivalents" + "Marketable Securities" to just "Cash and Cash Equivalents."

Which still means part of the $44 billion that was being originally reported went into their $18 billion acquisition and investments fund. Which is not counted among their cash-on-hand.

 

[vivftp]

Which still means part of the $44 million that was being originally reported went into their $18 billion acquisition and investments fund. Which is not counted among their cash-on-hand.

While I'm by no means an expert on the subject I'm not sure if that's how it's calculated. In 2021 Sony noted that over the next 3 years they were setting a M&A budget of ~$18 billion dollars. That doesn't mean they set that amount off to the side on that date, or even that that budget was only referring to cash on hand. It was just Sony saying they think they'll spend that much over the course of 3 years on M&A. Sony would also be making more money during those 3 years, of course.

 

[Varteras]

While I'm by no means an expert on the subject I'm not sure if that's how it's calculated. In 2021 Sony noted that over the next 3 years they were setting a M&A budget of ~$18 billion dollars. That doesn't mean they set that amount off to the side on that date, or even that that budget was only referring to cash on hand. It was just Sony saying they think they'll spend that much over the course of 3 years on M&A. Sony would also be making more money during those 3 years, of course.

Of course but Sony didn't suddenly lose $26 billion because of how they changed their reporting on the money they have available. That money was redirected and $18 billion was set aside for acquisitions in the entertainment space. Whatever they did with the other $8 billion could be short term debt payments, stock buy backs, etc. There was a report earlier this year that after the Bungie acquisition Sony still had about $10 billion left in their acquisition fund. Kind of an odd report if that money wasn't set aside.

 

[CosmicComet]

Eh.... disagree. Elden Ring didn't need Game of Thrones or Lord of the Rings to make it great.

I would also point to comics current challenges and the types of people who write and illustrate at DC and Marvel comics now..... the sales are disastrous.

New IP's are being created all the time and their potential is not limited by the popularity of legacy IP's.

Elden Ring was a perfect storm.

It had a hardcore pedigree from Souls fanatics and being an outright spiritual successor to said beloved IP, a team adored by said fanatics, some shine from George R. R. Martin's celebrity involvement, and excellent reviews and word of mouth.

For every Elden Ring there are thousands of Bound by Flames.

 

[Perrott]

Lets not act like Bungie is on the same level of a Konami or a Capcom. I'm talking about big Publishers. There will be a bidding war should any become available.

Sony has the lead when it comes to Japanese publishers/studios. Not only because they are playing at home, but because foreign parties could only bid up to a certain extent, since the ROI on their platforms/ecosystem won't be the same as if Sony bought them instead.

For instance, when if Sony were to bid $9B for Square Enix, there isn't a single chance that:
A) Microsoft would feel like counterbidding them would be ultimately good for their businesses given how Square's tentpoles franchises barely do good on Xbox at all.
B) Sony wouldn't allow it, and outbid them anyway.

Everyone acting as if Sony was the poor kid on the block is due to a rude awakening in the long run. They are just getting started.

 

[vivftp]

Of course but Sony didn't suddenly lose $26 billion because of how they changed their reporting on the money they have available. That money was redirected and $18 billion was set aside for acquisitions in the entertainment space. Whatever they did with the other $8 billion could be short term debt payments, stock buy backs, etc. There was a report earlier this year that after the Bungie acquisition Sony still had about $10 billion left in their acquisition fund. Kind of an odd report if that money wasn't set aside.

Yeah, the 26 billion dollars is still there, it's just tied in with Sony Financial. Someone explained it a long while ago, but I don't know if that money can be touched for M&A because Sony has to have that cash on hand to run their financial services.

The 10 billion dollar amount is just the remaining about of the original 18 billion dollar projected budget, they've already spent 8 billion of it. I mean, they don't HAVE to spend that much, and conversely they can choose to spend more if they want to, it's just a guide for investors. It's like if you have all your money in your bank account and investments, and then you write on a piece of paper saying, "over the next 3 years I'm gonna set a budget of $500.00 for pizza". It's not like you're then taking steps to segregate $500.00 from your bank account specifically for pizza, you're just gonna buy pizza with the target goal of spending $500.00 when the 3 years is up. You can use money from your bank account, barter, trade favors, find money on the street... whatever, so long as you aim to have $500 worth of pizza when 3 years is over. That's the way I read this situation.

 

[yurinka]

Spot on assessment of Konami. Sony are better off just buying or licensing the IP than buying Konami as whole. What's the point if they have no decent development teams?

You also have to consider Sony is more interested on acquiring and hire talent who can develop a lot of underutilized IP they have and create new IP.

If they have many popular, underutilized IP than the ones they currently handle why would they buy more IP that is less popular than that if with that acquisition doesn't also come teams who can work on it?

To throw some of their games on PS+ and make a couple of movies using these IPs is something they are already doing, don't need to buy the company for that. If instead of buying Konami they get Namco Bandai, Capcom, Square Enix or Kadokawa in addition to get IP they'd get AAA devs teams who could release new games of these IPs, something Konami doesn't have.

Assuming all of them would want to sell, instead of spending $15B on Konami I'd spend them to buy Capcom, Kadokawa and Sega, which would approximately cost the same. That would give you tons of IPs more for gaming, cinema and anime, many top console & PC teams who are -like their IPs- market leaders on their genres, mobile gaming teams, anime and music labels and production teams, etc.

Yeah, the 26 billion dollars is still there, it's just tied in with Sony Financial. Someone explained it a long while ago, but I don't know if that money can be touched for M&A because Sony has to have that cash on hand to run their financial services.

The 10 billion dollar amount is just the remaining about of the original 18 billion dollar projected budget, they've already spent 8 billion of it. I mean, they don't HAVE to spend that much, and conversely they can choose to spend more if they want to, it's just a guide for investors. It's like if you have all your money in your bank account and investments, and then you write on a piece of paper saying, "over the next 3 years I'm gonna set a budget of $500.00 for pizza". It's not like you're then taking steps to segregate $500.00 from your bank account specifically for pizza, you're just gonna buy pizza with the target goal of spending $500.00 when the 3 years is up. You can use money from your bank account, barter, trade favors, find money on the street... whatever, so long as you aim to have $500 worth of pizza when 3 years is over. That's the way I read this situation.

In fact there are less than $10B remaining, you have to subtract from there whatever they spent on acquiring Haven and the announcement of some hundreds of millions spent on repurchasing Sony stocks during this past fiscal year. They also may have invested on something else outside gaming during this quarter. Probably there are around $8B left to spend this FY. But well, in theory they can review that budget for investments, acquisitions and repurchasing stocks at the end of the fiscal year. They may have reviewed it.

 

[Varteras]

Yeah, the 26 billion dollars is still there, it's just tied in with Sony Financial. Someone explained it a long while ago, but I don't know if that money can be touched for M&A because Sony has to have that cash on hand to run their financial services.

The 10 billion dollar amount is just the remaining about of the original 18 billion dollar projected budget, they've already spent 8 billion of it. I mean, they don't HAVE to spend that much, and conversely they can choose to spend more if they want to, it's just a guide for investors. It's like if you have all your money in your bank account and investments, and then you write on a piece of paper saying, "over the next 3 years I'm gonna set a budget of $500.00 for pizza". It's not like you're then taking steps to segregate $500.00 from your bank account specifically for pizza, you're just gonna buy pizza with the target goal of spending $500.00 when the 3 years is up. You can use money from your bank account, barter, trade favors, find money on the street... whatever, so long as you aim to have $500 worth of pizza when 3 years is over. That's the way I read this situation.

Yeah I can see that. And that would track with how Sony's cash flow is going for them. They already reported another $3 billion went back into their cash reserves from September 30, 2021 to December 30, 2021. Their cash reserves actually dropped by $3 billion between June 30, 2021 and September 30, 2021 which I'm going to guess is when they started finalizing a lot of purchases. The fact that they've spent $7.4 billion but their cash reserves were already back up to where they were before their spending spree bodes well for their ability to continue spending. Though I am now very curious as to how that $26 billion is being utilized. I would assume it's to shore up their Financial Service but I want to know how exactly that affects the rest of the company

 

[vivftp]

Yeah I can see that. And that would track with how Sony's cash flow is going for them. They already reported another $3 billion went back into their cash reserves from September 30, 2021 to December 30, 2021. Their cash reserves actually dropped by $3 billion between June 30, 2021 and September 30, 2021 which I'm going to guess is when they started finalizing a lot of purchases. The fact that they've spent $7.4 billion but their cash reserves were already back up to where they were before their spending spree bodes well for their ability to continue spending. Though I am now very curious as to how that $26 billion is being utilized. I would assume it's to shore up their Financial Service but I want to know how exactly that affects the rest of the company

I think the $26 billion has to be kept legally for things like insurance payouts and because Sony's a bank in Japan. They have to keep that money in reserve at all times for the financial services division.

 

[Varteras]

I think the $26 billion has to be kept legally for things like insurance payouts and because Sony's a bank in Japan. They have to keep that money in reserve at all times for the financial services division.

Which is odd because I'm not seeing any other point in time since 2009 that their cash reserves dipped by double digits. Nevermind $26 billion. That's an awful lot of money to suddenly need for their Financial Division

 

[Y0ssarian]

 

[Varteras]

Uhhh which publication is this because Google ain't showing me anything about this

 

[vivftp]

Which is odd because I'm not seeing any other point in time since 2009 that their cash reserves dipped by double digits. Nevermind $26 billion. That's an awful lot of money to suddenly need for their Financial Division

As pointed out in my first post above, the change is simply due to Sony switching the way they are doing their accounting. They moved from one method where the financial division assets were included in cash on hand to a method where they weren't. Nothing at all changed other than the way they report things. No money moved or did anything. Under the new accounting method it just didn't consider those assets in the cash on hand pool.