cormack12
Gold Member
Source: https://marsipangames.com/inspecting-and-dissecting-sonys-acquisition-strategy/
.....much more at link
Seems speculative to me, but worth a discussion cos I'm fed up of the era shit now.
In a world where multiple industries are quickly moving toward consolidation, Sony is one of the most curious companies involved. Between gaming, movies, anime, technology, and even music – they’re one of the most diverse companies on the matter.
With the rise of consolidation that has taken over the entertainment history, so has the amount of misinformation and bad takes on acquisitions. As I both own stock within Sony and have a good point of view on their plans, budgets, and stuff like that – I feel very comfortable in talking about the subject, and in the process hopefully learn a few people about their supposed strategies and plans.
The biggest part for Sony during the 2010s has perhaps been that they paid off almost all of their loans, and have worked on increasing their cash on hand to end up in a much better and secure position. The company we have in front of us today is a very different one than what they were 10 years ago.
A great tool to see how companies Cash on Hand has changed throughout the years is MacroTrends. Using the tool, and looking back at earlier years we can put into context how they’ve changed during the last 10 years. In 2010, their cash on hand was around $18B, in 2015 when they’d begun making a lot of changes and paying off debt, we were looking at a low point of $13B. However, now in 2021, they’ve all of the sudden reached one of the highest points the company has ever had- over $44B cash on hand, with almost 0 debt.
Historically, Sony has made a lot of acquisitions – it’s often forgotten that most PlayStation studios are one way or another acquired once upon a time. But most acquisitions are pretty “organic” – essentially, Sony needs to do it to grow in a certain area or even from a need of securing its partners to advance them even further. Very rarely has Sony been very aggressive with their acquisitions.
Where we currently see the biggest change is actually in how their acquisitions are made. Historically, the different Sony segments have more or less went to the leaders/the board of Sony, and said that “We want to acquire X, because of these reasons”. If the board accepts this, they essentially give them a set amount sum of money to use. (Authors Note: This is obviously very simplified, but in general how it historically has looked.)
But this has changed very recently. Again, using the excellent Macrotrends website, we can see that Sony deposited around $24B this summer. Some people seem to believe that this is because a large acquisition is in motion, this isn’t true. This is essentially Sony taking from their “Cash on Hand” to essentially create their first M&A Focused budget.
So what would the budget split be? Well, if I would make guesses on how the budget could be split between the segments. My guess would be that SIE has around $13B-£18B in the budget, while the rest is pretty evenly split between Sony Music & Sony Pictures, with a bigger cut going to Sony Music. (Remember that Funimation falls under the Music branch). This is based on their strategy as well as how they’re prioritizing the different segments within the company.
While I could speculate (And have pretty good guesses) on what the exact acquisitions Sony will make between today, and 2023, I think it’s pretty pointless all things considered to speculate about the exact companies that they will/could acquire going forward. But there are certain growth vectors for each segment that I find more interesting to talk about. Let’s go over what I think will happen M&A-wise for Sony.
.....much more at link
Seems speculative to me, but worth a discussion cos I'm fed up of the era shit now.
In a world where multiple industries are quickly moving toward consolidation, Sony is one of the most curious companies involved. Between gaming, movies, anime, technology, and even music – they’re one of the most diverse companies on the matter.
With the rise of consolidation that has taken over the entertainment history, so has the amount of misinformation and bad takes on acquisitions. As I both own stock within Sony and have a good point of view on their plans, budgets, and stuff like that – I feel very comfortable in talking about the subject, and in the process hopefully learn a few people about their supposed strategies and plans.
The biggest part for Sony during the 2010s has perhaps been that they paid off almost all of their loans, and have worked on increasing their cash on hand to end up in a much better and secure position. The company we have in front of us today is a very different one than what they were 10 years ago.
A great tool to see how companies Cash on Hand has changed throughout the years is MacroTrends. Using the tool, and looking back at earlier years we can put into context how they’ve changed during the last 10 years. In 2010, their cash on hand was around $18B, in 2015 when they’d begun making a lot of changes and paying off debt, we were looking at a low point of $13B. However, now in 2021, they’ve all of the sudden reached one of the highest points the company has ever had- over $44B cash on hand, with almost 0 debt.
- Sony Interactive Entertainment
- The final – and biggest part of Sony, is PlayStation. The latest decade Sony has strengthened its position as the most important piece of Sony, and with some necassary and well placed management changes – like appointing Shuhei Yoshida to head of Indies, Hermen Hulst as head of PS Studios, and Jim Ryan as head of PlayStation has been hugely benefitial for the segment. Aside from that they have finally found their stride on exclusive content, as in a place where they’ve fixed their problems and gotten a hold on their entire segment, which allows for them to focus on expansions instead of problem solving – something their competitors needs to figure out for themselves. Even if Sony hasn’t outright stated it yet, Mergers & Acquisitions will be one of the keypoints in this area. The truth is, while there are growth vectors for PlayStation, they are in such a great position already that they really only want to focus on expanding the amount of content for the platform – and locking down content exclusivley for the platform. In a weird way, this is the opposite strategy of Sony Pictures, in which SPE makes acquisitions that help them license out properties, while SIE instead focuses on locking away content from competitors. For now the acquisitions have been securing important teams and partners to Sony, but this might not be the case starting the next Fiscal Year, in which it’s believed that Sony – and more specifically SIE, will be very aggressive acquisitions wise. More on this late
Historically, Sony has made a lot of acquisitions – it’s often forgotten that most PlayStation studios are one way or another acquired once upon a time. But most acquisitions are pretty “organic” – essentially, Sony needs to do it to grow in a certain area or even from a need of securing its partners to advance them even further. Very rarely has Sony been very aggressive with their acquisitions.
Where we currently see the biggest change is actually in how their acquisitions are made. Historically, the different Sony segments have more or less went to the leaders/the board of Sony, and said that “We want to acquire X, because of these reasons”. If the board accepts this, they essentially give them a set amount sum of money to use. (Authors Note: This is obviously very simplified, but in general how it historically has looked.)
But this has changed very recently. Again, using the excellent Macrotrends website, we can see that Sony deposited around $24B this summer. Some people seem to believe that this is because a large acquisition is in motion, this isn’t true. This is essentially Sony taking from their “Cash on Hand” to essentially create their first M&A Focused budget.
So what would the budget split be? Well, if I would make guesses on how the budget could be split between the segments. My guess would be that SIE has around $13B-£18B in the budget, while the rest is pretty evenly split between Sony Music & Sony Pictures, with a bigger cut going to Sony Music. (Remember that Funimation falls under the Music branch). This is based on their strategy as well as how they’re prioritizing the different segments within the company.
While I could speculate (And have pretty good guesses) on what the exact acquisitions Sony will make between today, and 2023, I think it’s pretty pointless all things considered to speculate about the exact companies that they will/could acquire going forward. But there are certain growth vectors for each segment that I find more interesting to talk about. Let’s go over what I think will happen M&A-wise for Sony.
- Sony Interactive Entertainment
- Sony has ironed out most problems with their internal studios, and PlayStation 5 is going very strong forward as of now. The current focus is growth. Their internal studios both have (insanenly big) goals for growth, with most studios growing to multiple teams within each studio. Focus here is effenciency, and goal is for (almost) every developer being able to develop on a similar pace as Insomniac has been doing, which means 2-4 games in development at each developer.
At the same time, they want to secure content and teams they deem as necessary for future growth and potential. Currently they’re in a phase of acquiring and locking down partners, as Firesprite, Housemarque, and Bluepoint. This will surely continue until around March 2022 (End of FY21), in which I suspect the strategy will shift toward more “aggressive” acquisitions to secure content.
Areas I believe Sony see potential of growth within are VR, in which I suspect they’ll lock down 1-3 developers that are focused in the space. Multiplayer is also a growth area, and Sony sees the genre as a fickle one as it’s hard to tell if a game will be a success or not, this has been solved by signing partnerships with studios like Haven Studios, Deviation Games, and FireWalk. If the game is deemed a success, we’re guaranteed to see acquisitions in this area. Aside from that I’m also expecting some kind of acquisition in countries / areas in which Sony is lacking in. I believe there could be multiple companies of interest in the East, mainly Japan and China, but also in parts of Europe as Poland, or maybe even Canada – one of the biggest development scenes in which Sony is currently lacking in. We also cannot forget about teams that could help out with support, as well as mobile which will get a push from Sony going forward. There’s also the matter of Sony co-owning EVO and potentially wanting to lockdown a fighting game developer going forward.
- Sony has ironed out most problems with their internal studios, and PlayStation 5 is going very strong forward as of now. The current focus is growth. Their internal studios both have (insanenly big) goals for growth, with most studios growing to multiple teams within each studio. Focus here is effenciency, and goal is for (almost) every developer being able to develop on a similar pace as Insomniac has been doing, which means 2-4 games in development at each developer.
Please, don't ever become involved in running a business.
? PC players? Lol
