Sony acquires Bungie for $3.6 billion - staying multiplatform

[aTokenYeti]

PotentHerbs said:

aTokenYeti said:

Bungie was able to negotiate such favorable terms, and Sony agreed to them, because Sony was negotiating from a position of weakness and both parties knew it. That's why the deal doesn't appear to make sense from the outside. Sony has no in house first person shooter talent anymore, they have 0 live service expertise, and their competitor is an industry leader in both categories. They also need to build a portfolio for Spartacus, and subscription services of that nature cannot be sustained on single player games with 5-7 year development cycles.

The deal was being negotiated for months, but Microsoft buying ABK likely caused Sony to cave to Bungie's remaining demands to quickly get a deal done. It's a deal that runs high risk for Sony for 3 reasons:

* Bungie has a multi decade long reputation of working poorly management, going so far as to publicly undermine management when they feel their independence is questioned
* The concessions granted to bungie weaken Sony's hand in future negotiations with firms it's trying to acquire. Anyone Sony was in negotiations with now or in the future will see the deal bungie got and will demand more from Sony, because they know has already caved once
* the special treatment Sony is granting Bungie risks alienating Sony's relationship with its other first party studios, some of who have been with Sony for decades and might be wondering why they aren't getting the special treatment Bungie is getting

If Bungie's expertise proves critical in the success of future Sony live service titles, than this purchase will have been worth it. Otherwise, I am skeptical this deal works out in the long.

The first point is the only real risk Sony has in this acquisition. Everything else you posted is ridiculous and quite frankly doom posting. The deals Sony are currently negotiating, and the ones that are nearly complete, won't break down because of the Bungie deal. Not every studio or publisher have the same kind of leverage as Bungie does. Sony also values Bungie more than other studios because of what they bring to the table. 

Its funny you think Sony overpaid because they were in a position of weakness, rather than the fact Sony paid a premium for Destiny 2, one of the most popular live service games today, with over 180+ Million players and consistently charting in most played weekly for Steam, PSN, XBL, five years after it's release. IIRC, the launch of Destiny was the last time Call of Duty was outsold in the NPD. Sony will recoup the money from this acquisition without having to do much. If Bungie's new IP is the next big multiplayer game, which going by their track record has a good chance of happening, Sony got Bungie at a bargain, and it will ultimately stem the impact of COD leaving the PlayStation platform. 

The deal doesn't make sense because we aren't privy to all the details. For instance, 1.2B of the 3.6B is going to be used for talent retention when the acquisition closes, and none of us would have known if Sony didn't mention it. For all we know, multiplatform could mean PS5, PC & mobile, we don't have enough context about it until it actually happens, let alone make a baseless post about it.

They paid $3.6 billion for a studio with a single IP that brings in an absolute maximum of $200 million per year in revenue. There are studios with half the employee headcount that bring in double that yearly. That tells you all you need to know about the confidence Sony has in the live service games they currently have in development. 

As to my second point, it’s not going to “tank” Sony’s future negotiations, but it is going to raise bidding prices and make Sony have to agree to things they otherwise wouldn’t. If Sony is attempting to acquire a Square Enix, for example, it stands to reason that square would see the terms of the deal Bungie got and would ask for either a higher price out Sony, more production autonomy written into contract, or both. That is not a position Sony wants to be in. 

Compare this deal on the balance to the $200 million they paid to purchase Insomniac. That deal has probably already paid for itself 5-10 fold. 

Last edited by aTokenYeti - on 04 February 2022