They're still paying off bungie.
They expanded: the past mid terms plans were for growth for future, the current mid term plan is utilizing those investments.
- - - - [My thoughts]
When do I think they will make acquisitions?
- Bungie paid off (will likely take 5 quarters) there's about 350 million USD left & they said that it's going to reduce by 20-30% each quarter.
- they said them selves they will bolster aggressive M&A in entertainment after spinning off finance business. (Which is oct, 2025)
- Cash returns from projects that are currently midway, they're going to release like 10+ movies and several games by the end of 2025.
No, the Bungie acquisition was already completed and paid with cash from a budget they had for acquisitions.
What they are paying now, for Bungie and the rest of their recent acquisitions are "acquisition related costs": retention bonuses, hiring more people for them to grow them to the desired point, maybe to enlarge or modify their offices to fit this people, integration courses/meetings/trips/etc.
Totoki said these "acquisition related costs" will start to ease out in the current FY24.
They've bought a ton of studios already & they already doubled or tripled those studios' headcount.
Hiroki and Yoshida said: we want to utilize those investments that we have made in the past mid year plans.
Yes, in the last 6 years they acquired many studios and also grew them not only these but also the rest of the teams, having now way more people working, meaning more development costs.
AAA games take 5-9 years to be made, so all these new teams and people won't be generating revenue or profit just when acquired: they need time to see their first game released. In many cases will be during the current mid-term plan (3 years period).
In almost all these cases, they made investments on these teams and obviously the results of such investments take some time to start to show the results.
As an example, Bungie, Firewalk, Housemarque or Haven will release their first new game being Sony studios in these 3 years period. Bungie keeps generating a great yearly revenue of maybe around a couple hundred million dollars per year, but the revenue they generate will skyrocket with the Marathon release.
Meaning, until now most of the growth investments they did in the last 3 (or 6) years are causing to have more development costs than before but still aren't showing more revenue than before because still didn't have time to release their first game. Starting this 3 years mid-term plan they'll start releasing their first games, so will start generating way more revenue/profit.
After all this massive growth (SIE became maybe 4x or 5x as big in headcount as they were before 2019) they did cut some fat, something also useful to compensate the profitability lost with the unexpected extra high hardware component prices.
Pretty likely all this process of new teams integration and consolidation, to complete paying their acquisition related costs and see their first games being released will be completed somewhere around or soon after they sell 80% of their banks division around October 2025. At the same time, until then Sony will continue porting old games to PC and releasing more GaaS and related DLC that will generate a ton of money (Helldivers 2, Concord, Marathon...). They also have like 10 adaptations in the works, so they'll release some in this period. This period will also see MS porting more and more games to PS, further killing the Xbox revenue share so increasing the PS one. All these things will generate extra revenue and profits for SIE.
So the optimal point to start making (big) gaming acquisitions would be starting late 2025/ early 2026 or so.
