Sony Takes The M&A Spotlight
Sony adds to M&A mania with another high-level gaming content transaction
What a wild start to 2022. Within the first month of the year, we have surpassed multiple all-time records in games M&A. Of the big 3 acquisitions alone, the market has absorbed $85.0bn in transaction value. It started with Take-Two’s acquisition of Zynga ($12.7bn), followed by Microsoft’s acquisition of Activision-Blizzard, and finally Sony’s acquisition of Bungie ($3.6bn). The great Consolidation of Gaming continues.
A brief recap of Bungie’s history — founded in 1991, the Bellevue-based company was acquired by Microsoft in 2000 when they were developing the original Halo (fun fact: they even had a minority investment from Take-Two in the summer of 1999). After a 7 year run and a Halo trilogy later, Bungie spun out from Microsoft in 2007 (they retained a minority stake) to become independent once again. In 2010, the studio signed a 10-year deal with Activision to develop what we now know as the highly successful Destiny franchise. In 2018, the company also received a $100.0M minority investment from the Chinese giant NetEase.
A friend and colleague of mine shared some great feedback after reading some of these posts, stating that titles could be slightly more descriptive. In a previous article, I talked about PlayStation’s distinguished approach to acquisitions, especially in the wake of Microsoft x ATVI. He suggested that instead of “PlayStation in 2nd Place?” the post could have been better represented by the title “Sony acquires smaller but better.”
Bringing Bungie under the SIE umbrella epitomizes this stance perfectly.
$3.6bn is by no means small, but for the legacy and development capability that Bungie brings, it’s an incredibly smart acquisition to add to Sony’s roster. Full details surrounding the deal structure aren’t publicly available yet, but it’s a cheap acquisition relative to the performance of its existing IP, not to mention the potential for new content (especially with Sony’s backing). In Sony’s press release, they take great care to highlight that Bungie will remain an independent studio under SIE. My hunch is that they’ve got a very strong development agreement whereby Sony will open its deep pockets for whatever Bungie wants to do next.
This acquisition might also be seen as a knee-jerk reaction to Microsoft’s moves. However, as noted previously, Sony really prides itself on forming deep relationships prior to investing. Hermen Hulst (Head of PlayStation Studios) tweeted that it was a discussion a year in the making. I think the ATVI acquisition definitely prompted Sony to close the deal quickly for their own announcement, but it would be mistaken to think it wasn’t a calculated move from the beginning.