Not too shabby. I'm gonna guess they will do a few more small companies and then announce the purchase of a publisher by mid 2023.
Sony (as a whole) still has ~$10B left to spend.
Playstation Studios [OT]: News, hype and rumors about PS Studios and Bungie
- Thread starter Gediminas
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Not too shabby. I'm gonna guess they will do a few more small companies and then announce the purchase of a publisher by mid 2023.
Sony (as a whole) still has ~$10B left to spend.
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peter42O
Guest
Sony rised that budget to $30B a few months ago. Enough to -for the part assigned to acquisitions, and inside them the gaming ones- buy a publisher of the size and price of Capcom or Square.
Sony. I think it was a few months ago, when they shown the numbers of the FY that I think it was their CFO mentioned (maybe in the video stream they make to announce the results and make a QA session with investors) that they increased their special budget for acquisitions, investments and Sony stock repurchases to 4 trillion yen, which back then were $30.7B.
That's pretty crazy. Lots of options available with that type of cash. Sony should just grab Square Enix and WB Interactive (With full access to all IPs when it comes to games) and call it a day.
Well, in previous years only around 40% of the spent budget went to SIE and it was split between investments and acquisitions. So maybe they spent like around abit above a third or so of that in gaming acquisitions, so like around a dozen billions or so.
As I remember, when they created the original $18B budget it was for a medium term of like 3 years ending on I think it was 2023. When they revised it had like 7 or 8B remaining and increased it to around 30B I think they didn't specify if their idea was to spend these 30B this fiscal year or if they expanded also the timeframe.
Meaning that if they plan to spend like a dozen billions on gaming in the current fiscal year would be one thing and to spend it across 3 years would be another one. Which could rule out big publishers acquisitions.
But well, we have no idea if they will continue using the same proportion, I assume it will vary depending on the opportunities they have to acquire and close acquisitions in each division, or to invest in each division, or buy back shares every year. Who knows, maybe they only 5% of it for gaming, or the 80%.
The important thing to know is that they have way more cash than before in their special budget ready to be spent on acquisitions and investments in the whole Sony.
The source of the budget increase to around $30B/4 Trillion Yen was the IR talk they had this day, mentioned by their CFO:
Must be one of these May 10 links:
Sony Group Portal - Earnings Announcement
I think it's this one, but have to leave now:
"Added to this amount will be carry-over from the previous mid-range plan, borrowing and asset sales, leaving a total of more than 4 trillion yen available to be allocated."
But I don't understand all they said in the investment parts.
Reading now the slide seems the 4 Trillion (or more) are for Capital Allocation with splits into 2 Trillion for these investments/acquisitions/share repurchases, capital expenditures and dividends but I don't get if it was before or after. Later once I go back I'll try to read it carefully.
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Well, in previous years only around 40% of the spent budget went to SIE and it was split between investments and acquisitions. So maybe they spent like around abit above a third or so of that in gaming acquisitions, so like around a dozen billions or so.
As I remember, when they created the original $18B budget it was for a medium term of like 3 years ending on I think it was 2023. When they revised it had like 7 or 8B remaining and increased it to around 30B I think they didn't specify if their idea was to spend these 30B this fiscal year or if they expanded also the timeframe.
Meaning that if they plan to spend like a dozen billions on gaming in the current fiscal year would be one thing and to spend it across 3 years would be another one. Which could rule out big publishers acquisitions.
But well, we have no idea if they will continue using the same proportion, I assume it will vary depending on the opportunities they have to acquire and close acquisitions in each division, or to invest in each division, or buy back shares every year. Who knows, maybe they only 5% of it for gaming, or the 80%.
The important thing to know is that they have way more cash than before in their special budget ready to be spent on acquisitions and investments in the whole Sony.
The source of the budget increase to around $30B/4 Trillion Yen was the IR talk they had this day, mentioned by their CFO:
Must be one of these May 10 links:
Sony Group Portal - Earnings Announcement
www.sony.com
I think it's this one, but have to leave now:
"Added to this amount will be carry-over from the previous mid-range plan, borrowing and asset sales, leaving a total of more than 4 trillion yen available to be allocated."
But I don't understand all they said in the investment parts.
Reading now the slide seems the 4 Trillion (or more) are for Capital Allocation with splits into 2 Trillion for these investments/acquisitions/share repurchases, capital expenditures and dividends but I don't get if it was before or after. Later once I go back I'll try to read it carefully.
Yeah...this is super confusing. But from what I can ascertain from that pdf, between recent purchases and the announcement back in Feb that they had 10billion left leads me to believe that they probably have ~8-9 billion left to spend.
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I'm reading the PDF slowly now and I think I got it now:
They had planned a mid-range plan capital allocation that covers the period of FY2021, FY2022 and FY2023 where they planned to spend 3.8 trillion yen, that got rised to 4.0 trillion yen.
So that capital allocation includes 3 parts: Capital expenditure (which is the one that got increased 0.2 trillions), dividends (remains the same) and "Strategic investment" (remains the same).
That "Strategic investment" is this special budget of cash that Sony has to spend on acquisitions, investments and stock repurchases (for the whole Sony, not only its gaming division) for FY2021, FY2022 and FY2023 remains at 2.0 trillion yen (this is now around $14.3B, but back when it was announced was the "$18B" budget they had but got smaller in USB due to Dollar becoming stranger.
So that tweet and news of Sony raising the remaining of these originally $18B to $30B was wrong. That budget was to spend from April 1st, 2021 to March 31, 2024 and remains the same.
These are the money spent or decided for that budget from April 1st, 2021 until May 10, 2022:
They add this:
So they executed/got authorized to spend 1trillion 260 billion out of the 2 trillion. Meaning they have 740 billion yens ($5.27B) of the budget to spend from May 11, 2022 until March 31, 2024 after having paid Bungie, Haven, Lasengle, Crunchyroll and the stocks they plan to repurchase this fiscal year.
From these $5.27B we have to remove the investments they did after May 10 like the recent From Software one meaning that they should have slightly under $5B to spend until March 2024 in acquisitions, investments and stock repurchases.
Sony will primarly use this cash budget to pay them, but if needed and desired they could get more cash or debt to pay more, or to pay a part of the price with Sony stocks, etc. Plus they normally buy the 100% of companies, but to buy 51% would be enough to own and control a company. Or well, at the end of a fiscal year they could review this budget to increase the strategic investment budget instead of as they did this year the capital expenditure, which I don't know what exactly is.
Edit: This is what Capital Expenditures means: more money for acquisitions.
So not sure but maybe I'm wrong and as I initially said they really increased that $14.3B (originally $18B) budget for the 3 years ending in March 2024 to around $30B. Meaning that to the remaining $5.27B we should add 1.7 trillion yen ($12.1B) so they have $17.37B left to spend in acquisitions, investments and stock repurchases from May 11 2022 to March 2024 (not counting the stock repurchases already approved for this year).
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With 17.37B being the guestimate, what was the list of potential candidates likely valuations again?I'm reading the PDF slowly now and I think I got it now:
They had planned a mid-range plan capital allocation that covers the period of FY2021, FY2022 and FY2023 where they planned to spend 3.8 trillion yen, that got rised to 4.0 trillion yen.
So that capital allocation includes 3 parts: Capital expenditure (which is the one that got increased 0.2 trillions), dividends (remains the same) and "Strategic investment" (remains the same).
That "Strategic investment" is this special budget of cash that Sony has to spend on acquisitions, investments and stock repurchases (for the whole Sony, not only its gaming division) for FY2021, FY2022 and FY2023 remains at 2.0 trillion yen (this is now around $14.3B, but back when it was announced was the "$18B" budget they had but got smaller in USB due to Dollar becoming stranger.
So that tweet and news of Sony raising the remaining of these originally $18B to $30B was wrong. That budget was to spend from April 1st, 2021 to March 31, 2024 and remains the same.
These are the money spent or decided for that budget from April 1st, 2021 until May 10, 2022:
They add this:
So they executed/got authorized to spend 1trillion 260 billion out of the 2 trillion. Meaning they have 740 billion yens ($5.27B) of the budget to spend from May 11, 2022 until March 31, 2024 after having paid Bungie, Haven, Lasengle, Crunchyroll and the stocks they plan to repurchase this fiscal year.
From these $5.27B we have to remove the investments they did after May 10 like the recent From Software one meaning that they should have slightly under $5B to spend until March 2024 in acquisitions, investments and stock repurchases.
Sony will primarly use this cash budget to pay them, but if needed and desired they could get more cash or debt to pay more, or to pay a part of the price with Sony stocks, etc. Plus they normally buy the 100% of companies, but to buy 51% would be enough to own and control a company. Or well, at the end of a fiscal year they could review this budget to increase the strategic investment budget instead of as they did this year the capital expenditure, which I don't know what exactly is.
Edit: This is what Capital Expenditures means: more money for acquisitions.
So not sure but maybe I'm wrong and as I initially said they really increased that $14.3B (originally $18B) budget for the 3 years ending in March 2024 to around $30B. Meaning that to the remaining $5.27B we should add 1.7 trillion yen ($12.1B) so they have $17.37B left to spend in acquisitions, investments and stock repurchases from May 11 2022 to March 2024 (not counting the stock repurchases already approved for this year).
Id go Capcom/WB personally, but I would guess Sony are persuing SE, and at least liscensing/possibly (co-)developing Konami's ip.
Thanks for the update. I think it makes sense now...lolI'm reading the PDF slowly now and I think I got it now:
They had planned a mid-range plan capital allocation that covers the period of FY2021, FY2022 and FY2023 where they planned to spend 3.8 trillion yen, that got rised to 4.0 trillion yen.
So that capital allocation includes 3 parts: Capital expenditure (which is the one that got increased 0.2 trillions), dividends (remains the same) and "Strategic investment" (remains the same).
That "Strategic investment" is this special budget of cash that Sony has to spend on acquisitions, investments and stock repurchases (for the whole Sony, not only its gaming division) for FY2021, FY2022 and FY2023 remains at 2.0 trillion yen (this is now around $14.3B, but back when it was announced was the "$18B" budget they had but got smaller in USB due to Dollar becoming stranger.
So that tweet and news of Sony raising the remaining of these originally $18B to $30B was wrong. That budget was to spend from April 1st, 2021 to March 31, 2024 and remains the same.
These are the money spent or decided for that budget from April 1st, 2021 until May 10, 2022:
They add this:
So they executed/got authorized to spend 1trillion 260 billion out of the 2 trillion. Meaning they have 740 billion yens ($5.27B) of the budget to spend from May 11, 2022 until March 31, 2024 after having paid Bungie, Haven, Lasengle, Crunchyroll and the stocks they plan to repurchase this fiscal year.
From these $5.27B we have to remove the investments they did after May 10 like the recent From Software one meaning that they should have slightly under $5B to spend until March 2024 in acquisitions, investments and stock repurchases.
Sony will primarly use this cash budget to pay them, but if needed and desired they could get more cash or debt to pay more, or to pay a part of the price with Sony stocks, etc. Plus they normally buy the 100% of companies, but to buy 51% would be enough to own and control a company. Or well, at the end of a fiscal year they could review this budget to increase the strategic investment budget instead of as they did this year the capital expenditure, which I don't know what exactly is.
Edit: This is what Capital Expenditures means: more money for acquisitions.
So not sure but maybe I'm wrong and as I initially said they really increased that $14.3B (originally $18B) budget for the 3 years ending in March 2024 to around $30B. Meaning that to the remaining $5.27B we should add 1.7 trillion yen ($12.1B) so they have $17.37B left to spend in acquisitions, investments and stock repurchases from May 11 2022 to March 2024 (not counting the stock repurchases already approved for this year).
But I'm still not sure. I'm not an English native speaker so there are some concepts like "Capital Expenditures" that I don't know well. Plus maybe Sony already spent part of these "Capital Ependitures" assigned for this 3 years period elsewhere, in addition to the money spent from the budget.
It would be 17.37B to spend by the whole Sony (not only their game division) until March 2024 and not only in acquisitions, but also in investments and Sony stock repurchases.
Recent big gaming companies acquired have been bought paying a premium of 40-60%. Meaning that to get a rough estimate you should add maybe a 50% to their market cap to get an idea of their potential valuation. But it changes case by case because things like assets as IPs or amount of workers, debt or their revenue or profitability affect their valuation.
But making a gross estimate assuming a 50% premium to get a rough estimation:
Nintendo 7.36 trillion Yen + 50% = $52,49B
EA $34.85B + 50% = $52.28B
Take 2 $19.77B + 50% = $29.66B
Bandai Namco 2.22 trillion Yen + 50% = $23.75B
Capcom 970.08 billion Yen + 50% = $10.35B
Scopely $5.4 billion + 50% = $8.1B
Square Enix 737.64 billion + 50% = $7.89B
Ubisoft 5.58 billion € + 50% = $5.55B
Sega 486.80 billion Yen + 50% = $3,47B
Kadokawa 447.33 billion + 50% = $3.19B
CD Projekt 8.26B PLN + 50% = $1,7B
Devolver 376.99 million GBP + 50% = $651M
I highlighted the most likely ones if SIE gets enough money and if they are interested to sell.
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peter42O
Guest
Sony invested on them and sold them some unused IPs to make mobile games of casual stuff they had in other division like Wheel of Fortune and things like that.
Scopely is in top 28 mobile gaming by revenue, now after recent acquisitions they should be top 25 and by acquiring them Sony would climb on the ranking (was top 10 last year). They are specialized on adapting very successfully to mobile top IPs like Marvel, Star Trek, Looney Tunes, WWE, Walking Dead, Wheel of Fortune or Yahtzee.
Sony wants to acquire or partner with people to adapt their IPs to mobile gaming.
Above Scopely there's Bandai Namco, Square, Konami or CyberAgent (parent company of CyGames who also does plenty of non gaming stuff) who would be also be a good acquisition but already are busy with their own IPs and aren't that used to work with external IPs in mobile, and these companies have ties non gaming stuff that could cut the operation, or could too expensive for the current Sony budget.
The other ones above Scopely are companies like Tencent, Disney, Zynga, King etc which obviously are outside reach, and then the other ones are basically super casual stuff with no interest on working on console/PC-like IPs or genres.
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peter42O
Guest
Thanks. Appreciate your replies and info. Scopely being a mobile studio would explain why I never heard of them before as I don't follow mobile gaming whatsoever. lol
For 30 billion they should go big and grab a massive pub with must have ip like cod (console sellers), and the only thing that pushes console (playstation console) is gta in terms of 3rd party. So get T2 or go home sie.