Sony's future and possible studio/publisher acquisitions

[Puff]

Sony is looking to sell up to 80% of its Financial Group it made a wholly-owned subsidiary in 2020.

Sony Weighs Financial Arm IPO to Fuel Big Investment Push

“Sony’s image sensor and entertainment businesses will need much bigger investment in the future. Meanwhile, you need a strong base for financial services,” Chief Operating Officer Hiroki Totoki said at the briefing. “That’s why we decided to consider using a virtual spinoff — which allows us to keep Sony’s name on the financial service arm while it gains the ability to raise cash independently.”

I suggested in the past that Sony might sell off its Finance Group just two weeks ago and that they might utilize the funds from the sell off to help it invest further in its core business elements.

"Sony Group has a market cap of 115 billion dollars. That's quite small compared to some of their competitors. Their competitors are Microsoft (2.27T), Apple (2.67T), Google (1.34T), Amazon (1.06T), Nvidia (696B), Tencent (410B), and even Netflix (141B). And Sony is largely split between Video Games, Movies, Music, Electronics, and even Finances (I can see them selling off their financial subsidiary to fund expansion elsewhere). And that isn't to say that any of their much larger competitors are all in on video games (they aren't)" - Mibu no Ookami, May 3rd, 2023

Their stock has increased from 115 to 119 billion with a significant gain from today's news that they'll be selling their financial group and investing that money elsewhere. I expect they'll get a decent bump after the showcase next week as well.

Here is where the speculation fits in as to where they'll spend that money. I still think T2 is by far the best buy that Sony could get. It checks so many boxes and I think they have fairly good reason to think they could get it past regulators now that the EU ruled in favor or the Activision buy and the CMA dismissed the console concerns.

Ultimately, a deal for T2 is going to cost upwards of 30 billion dollars, which I think will be a mixture of cash, financing, and stock consideration. Aside from T2 though, it's clear that they're interested in FromSoftware/Kadokawa.

I think Jim Ryan and Sony Group senior leadership has recognized some key points here

• The absolute bullet that they MAY have sidestepped with Microsoft attempting (and likely failing) to buy Activision Blizzard King
• That they're extremely vulnerable to the large money in the industry
• That if this deal is blocked that T2 could be a likely alternative for Microsoft.
  • I think T2 and EA are the obvious next choices for Microsoft and that of the two the one that would hurt Sony more would be T2 and that T2 is cheaper to buy than EA.
• Sony also recognizes that Microsoft is embattled at the moment with the ABK deal so can't jump into T2 right now, so the timing is really key here.

Sony to Sell Sony Financial Group + Speculation

Sony is looking to sell up to 80% of its Financial Group it made a wholly-owned subsidiary in 2020. Sony Weighs Financial Arm IPO to Fuel Big Investment Push “Sony’s image sensor and entertainment businesses will need much bigger investment in the future. Meanwhile, you need a strong base for...

www.neogaf.com

Hmm very interesting, what do you think about it?

 

[Dabaus]

Sony isn’t going to buy take 2. Period. That’s an insane proposition for them. I think if anything they settle for square enix, kadokawa, and shares in capcom and perhaps take 2. Take 2s ceo is out there begging for the Microsoft deal to go through too. Unless he wants that to go through so maybe someone could buy them no problem? Maybe.

Microsoft just got blocked for trying to buy activision so Sony goes for the second biggest publisher besides ea? Makes no sense.

 

[Bryank75]

Sony to Sell Sony Financial Group + Speculation

Sony is looking to sell up to 80% of its Financial Group it made a wholly-owned subsidiary in 2020. Sony Weighs Financial Arm IPO to Fuel Big Investment Push “Sony’s image sensor and entertainment businesses will need much bigger investment in the future. Meanwhile, you need a strong base for...

www.neogaf.com

Hmm very interesting, what do you think about it?

The financial arm is far too unpredictable and the limitations the extra regulation puts on Sony is a huge negative that makes the company slower to react to the faster moving businesses they are in.

I think TakeTwo would definitely be on the cards, they are a key western developer and Sony would be looking to expand their footprint and revenue..... to match what Microsoft are doing. Dominating by ownership.

By denying Microsoft ownership of GTA, RDR, NBA2K and many other big IP's, they essentially kill Gamepass's ambitions of being a one stop shop for gaming needs.

Then add something like Kadokawa.... making them fully or timed (significantly timed) exclusive....

It really puts Sony in a power position for the future. IMO.

 

[AshHunter216]

The financial arm is far too unpredictable and the limitations the extra regulation puts on Sony is a huge negative that makes the company slower to react to the faster moving businesses they are in.

I think TakeTwo would definitely be on the cards, they are a key western developer and Sony would be looking to expand their footprint and revenue..... to match what Microsoft are doing. Dominating by ownership.

By denying Microsoft ownership of GTA, RDR, NBA2K and many other big IP's, they essentially kill Gamepass's ambitions of being a one stop shop for gaming needs.

Then add something like Kadokawa.... making them fully or timed (significantly timed) exclusive....

It really puts Sony in a power position for the future. IMO.

I think Microsoft's efforts to stack the European Commission with their own former staff would create a situation in which Sony would be denied acquisitions of that size. I also think that if the ABK deal fizzles out due to the CMA's actions, Sony no longer need to take drastic actions like that. I do think the ABK situation has shown that they need to diversify the genres of games that their first party produces and expand the level of expertise in their development stable so that they are less reliant on third party devs with their own interests and fickle allegiances.

 

[Dabaus]

Varteras From neogaf made a great point id like to share:​

"I don't think Sony is looking to make a singular, massive acquisition by selling off its financial arm. Rather, I see them funneling that into a multitude of other smaller acquisitions and investments. I can see them either merging with Kadokawa or buying up their controlling stake in FromSoft while entering other legally binding agreements with them. Sony's strategy meeting seemed to indicate that they plan on expanding third-party exclusivity. They may accomplish this through purchasing partial ownership of major third-parties like Capcom or Konami. Essentially creating a web where they do not own these companies, thus dodging regulators, but still getting significant benefits from them and making it far more difficult for these companies to be pulled away from them.

It's been clear that Sony's entertainment arm, especially SIE, is their greatest growth vector and the future of the company. Removing their financial arm, as I understand it, would not only give them a huge cash injection, but also free them from the burden that operating as a bank brings. That being the requirement to maintain a certain amount of reserves to cover their liabilities. This could free them of tens of billions of dollars being wrapped up just to meet that criteria. Allowing them much more fluid usage of their cash."

This is the strategy i see Sony going with. I could see them investing in Square, further entrench themselves with from/kadokawa, buy minor stakes in like capcom and CDPR.

 

[Bryank75]

Varteras From neogaf made a great point id like to share:​

"I don't think Sony is looking to make a singular, massive acquisition by selling off its financial arm. Rather, I see them funneling that into a multitude of other smaller acquisitions and investments. I can see them either merging with Kadokawa or buying up their controlling stake in FromSoft while entering other legally binding agreements with them. Sony's strategy meeting seemed to indicate that they plan on expanding third-party exclusivity. They may accomplish this through purchasing partial ownership of major third-parties like Capcom or Konami. Essentially creating a web where they do not own these companies, thus dodging regulators, but still getting significant benefits from them and making it far more difficult for these companies to be pulled away from them.

It's been clear that Sony's entertainment arm, especially SIE, is their greatest growth vector and the future of the company. Removing their financial arm, as I understand it, would not only give them a huge cash injection, but also free them from the burden that operating as a bank brings. That being the requirement to maintain a certain amount of reserves to cover their liabilities. This could free them of tens of billions of dollars being wrapped up just to meet that criteria. Allowing them much more fluid usage of their cash."

This is the strategy i see Sony going with. I could see them investing in Square, further entrench themselves with from/kadokawa, buy minor stakes in like capcom and CDPR.

Kadokawa / From is essential, especially against PC in the future. They need full control over it.

I think CDPR could be justified as a full purchase too but as we've discussed many times, their PC storefront is an issue.... but would be a nice exclusive store to splinter PC users and not allow a unified store for PC in steam.

I agree with the others... but the investments need to be large, they need a chunk and probably a member on the board of directors.

 

[Arminius]

I agree, and I can see Sony doing this.

 

[VillaiN]

T2 s overvalued. 5B revenue, 700M profit and trades at 20B? Joke. Paying any premium d be stupid unless bidding war.

But i think it might be good for sony as defensive move. Its more about getting people in eco sytem than profits. Unless they cut the fat from t2. Maybe some show or movie in gta universe.

Keep GTA multi. At least for 10 years like usual. Nba, wwe multiplats.

Everything else on case by case. Rdr bioshock, borderlands...might be exclusive. I

 

[Bryank75]

T2 s overvalued. 5B revenue, 700M profit and trades at 20B? Joke. Paying any premium d be stupid unless bidding war.

But i think it might be good for sony as defensive move. Its more about getting people in eco sytem than profits. Unless they cut the fat from t2. Maybe some show or movie in gta universe.

Keep GTA multi. At least for 10 years like usual. Nba, wwe multiplats.

Everything else on case by case. Rdr bioshock, borderlands...might be exclusive. I

If MSFT somehow got ABK through, I think it's a move they need to try.

 

[AshHunter216]

If MSFT somehow got ABK through, I think it's a move they need to try.

Even if Sony were to decide to spend that much cash, I don't think regulators would let them buy it, especially not the EU, who just hired a MS lawyer to a leadership position.

 

[Bryank75]

Even if Sony were to decide to spend that much cash, I don't think regulators would let them buy it, especially not the EU, who just hired a MS lawyer to a leadership position.

Well if they let MSFT through, I think they would either have to let Sony through or it would display incredible hypocrisy...

Of course they could just buy a chunk of TakeTwo as discussed above as a defensive measure and sign some incredibly longterm deals too!

GTA and RDR agreements for 50 years for example.

I guess Sony need to start doing this with everyone, sign massive longterm deals that act as poison pills for MSFT's acquisition ambitions.

 

[avenovah]

Something in the air.

 

[Dabaus]

Something in the air.

This is news from last Thursday. Don’t know what redditleaks is talking about it now.


Also guys, the ftc said activsion, ea, take 2, and epic are too big too buy. Sony isn’t going to defy the ftc especially after they sued blocked the activision deal.

 

[Eternal_Wings]

Square Enix is coming, I can feel it.

 

[AshHunter216]

Something in the air.

Maybe Sony feels like even if the ABK deal fizzles out, they're still at risk of losing some of their third party partners to acquisitions and want to make strategic investments.

 

[Bryank75]

This is news from last Thursday. Don’t know what redditleaks is talking about it now.


Also guys, the ftc said activsion, ea, take 2, and epic are too big too buy. Sony isn’t going to defy the ftc especially after they sued blocked the activision deal.

I think Sony could try to get away with TakeTwo.... they are the smallest of the big publishers. They might as well try...

I do wonder what the real strategy is though!

I wonder if they will buy something significant in gaming or just more no-name studios. (No offense to them)

Or will they be looking at music and film investments more?

 

[Arminius]

I would hope Sony tries to buy stocks in multiple publishers and have at least one person on their executive board of directors.

 

[Eternal_Wings]

Hiroki Totoki: “Consolidation in entertainment has been happening and Sony doesn’t want to be left behind,” he added.

 

[Puff]

Imagine if the Witcher 4, Witcher Remake & Cyberpunk Sequel is exclusive to Playstation

 

[Bryank75]

Imagine if the Witcher 4, Witcher Remake & Cyberpunk Sequel is exclusive to Playstation

First thing that would happen is you'd see a lot of people on Twitter saying 'Witcher was overrated anyway' and the likes....