This is the focus of this thread though. It's literally in the title. You as an executive of Sony, countering Microsoft's latest strategy. Which is acquiring as many developers, publishers and IPs as possible to brute force content output. Making Gamepass seem more compelling than ever with sheer volume and exclusives.
You see right here is wording playing into a narrative. "Brute force" acquisition. "Defensive" acquisition. "Organic growth", etc. Microsoft isn't "brute forcing" content output, otherwise we'd already be seeing a deluge of new games from the Zenimax studios but...they're taking their sweet time. Because that new content they're making is being curated and polished, not simply shoved out the door.
It's logical Nintendo often gets left out of most discussions. That's because Nintendo has no direct competitor. Their target audience is way different compared to Sony and Microsoft. Nintendo has done it themselves. They carved out a niche of which works perfectly well for them.
This isn't as true as people have convinced themselves it is. There's a decent bit of overlap between the three, and there is clearly more overlap between Sony and Nintendo than Nintendo and Microsoft. People leave Nintendo out of the discussion so that it's more convenient a discussion for them to have.
Also by your own words here you seem to suggest Sony lacks an identity, a niche, that works for them which doesn't revolve around Microsoft. Whether you believe that's true or not is besides the point (I personally don't believe it which is a big reason why I don't get involved deeply into speculative acquisitions especially when they're reactionary).
The overlap between Sony and Nintendo are marginal. Nintendo targets a way younger age group even though some of their games still speak to adults.
It's not the age demographics you should pay attention to so much as the genre demographics. And isolating a platform holder's focused target to only the 1P content is flawed especially considering you're mainly doing this with Nintendo but not Sony. All platform holders leverage 3P content to their advantage in terms of the audiences they target based on genre demographics, and there is a lot more overlap between Sony and Nintendo once that's taken into consideration than you give credit.
Sony titles speak to some Japanese gamers mostly because of their 3rd party titles. Look at the best selling 1st party titles of Sony and then look at the best selling 1st party titles of Nintendo. They can't be further from each other. Now look at the best selling 1st party titles of Sony and that of Microsoft's. Much more similar right?
Again you're simply isolating the push for 3P content exclusivity being a factor in this particular part of your argument, even though your larger speculation on acquisitions hinges on acquiring 3P content. If your logic here carried through the entire premise of the thread, wouldn't the discussion focus more on new internal 1P studio upstarts from within Sony itself rather than acquiring 3P developers and publishers?
Just goes to show how paramount 3P content, particularly exclusive content or content positioned as exclusive in that regard, is to the platform holders. They leverage that specific 3P content to bolster the image and allure of their platform within the market. And yes, Nintendo ALSO does this, so acting as though Nintendo isn't as affected by acquisitions as Microsoft on the grounds their 1P aims at some different demographics than Sony's, while simultaneously not considering how major a role exclusive 3P content factors into Nintendo's platform allure (and we can see this when looking back at prior Nintendo consoles/handhelds, too) makes no sense.
Similarly, acting as though the reason to
Remember, the 1st party exclusives are where the big 3 make the most money with. The way you use a Switch compared to the PlayStation and Xbox is also vastly different..
Uh, this isn't really true. In a way for Nintendo it might be to some extent, but their 30% cut from 3P sales do add up. For Sony and Microsoft, the VAST majority of their money comes from 3P sales. Even in their best year, Sony's 1P output only accounted for roughly 18% of PlayStation's total revenue for the prior FY (the one that ended March 2021).
The other 82%? 3P sales.
In the world of entertainment, content is king. If Sony or Microsoft were to wanna compete with Nintendo directly they would first need a console that plays similarly to that of Nintendo's. So you would need to make an extra console. Not only that but then you'd need to make titles that are comparable to that of Nintendo's. Both Sony and Microsoft made the right decision to not compete with Nintendo as they'd spread themselves way too thin then. They are having a tough enough time competing with each other. Now imagine doing that times 2. It would be nuts. It would be chaos and they would both lose their brand identity, even if they were to have enough studios to make Nintendo-like games.
Sony did exactly what you're suggesting with the PS2 and PSP; the PS2 was up against Dreamcast, Xbox, and Gamecube while the PSP was up against GBA and later the Nintendo DS. They managed to make that work, and it would've continued to if the PS3 didn't screw up in the beginning as badly as it did, but you can't really blame that on the PSP.
A few other things here I don't quite agree with; Nintendo's big strength is that they make money on their hardware from Day 1. Sony have stated they're paying close attention to the Switch OLED's performance, and they also aggressively pushed to make the PS5 (at least the Disc version) profitable in a matter of months. Additionally, considering the role Japan still serves for Sony (and knowing Nintendo dominates in that market), there's more incentive still for them to make some type of new portable for regions like it (IMO I think they're planning for one, roughly on par with PS4's specs, probably a couple years from now).
Basically I guess what I'm saying is it isn't as difficult as you think to design something to compete with Nintendo and do so without ruining their brand image. This goes for both Microsoft and Sony but especially the latter considering they've
done exactly this in the past.
You get me wrong, and you'd know if you read exactly what I said. The ones I want Sony to acquire if I were to be a Sony executive are the ones that are way smaller, with way less bloat and are the ones that are upstarts. I'd want them to acquire key individuals together with the people they work the best with. Aside from Capcom I don't want Sony to acquire any publisher. How's that going tit for tat? The acquisitions I calculated cost 7.7B, nowhere close to the 77B that Microsoft put on the table.
Going "tit for tat" isn't necessarily just about the money, it's about the strategy as a whole and the reasonings/motivating factors behind such a strategy. Again the premise of the thread at least IMO is driven by a reaction to MS's acquisitions, so on some base level it's going tit-for-tat. And in terms of ideological consistency, some of your speculation here is contrary to other points you've mentioned in earlier parts of your reply.
Again, if (to you), the 1P content is strong enough and Sony's biggest source of revenue, why would they need to acquire any outside devs or pubs to begin with, given whatever they provide generates less than Sony's own current 1P output? If you want to throw away that thought (which would be a good idea, since it isn't backed up by actual financial data provided by Sony themselves), then you have to realize if the driving idea behind these speculative acquisitions isn't reactionary, people can just think it's because Sony lack a brand identity or niche, and therefore have to do so buy acquiring 3P devs and publishers. You didn't say this outright, but it can be inferred in your statements about Nintendo and what those statements imply to a company like Sony.
If you're wanting to dismiss that idea (which IMO would also be a good idea to do), then similarly it gives room for people to reject the implications that MS's acquisitions are out of a need to find a brand identity or niche, or at least ALL of their acquisitions are for that purpose. I'm not saying this is something you've ever said or implied, but it's just something I'm putting out there to other people who think such a way when it comes to these acquisition discussions.
I gave the companies pretty generous valuations, in reality the total valuation of the actual acquisitions themselves are therefore pretty damn close to the 7.7B I mentioned. It will probably go towards 9B max. Which Sony can definitely afford. The risk wouldn't be too big. If they lose all of that it would set them back a little bit more than half a year, and that's only if they lose it all. Which let's be real, the hype alone would not make that happen. And even if it did, the positive buzz would also add valuation to Sony. It would add to Sony's public perception and image. Even if that can't always be put into numbers, that stuff is invaluable.
Your numbers are too low because they aren't considering the reality of other companies looking to purchase those same entities, which would drive up the purchasing cost. If Capcom's $6.9 billion in market cap, they are likely going to sell for at least 1.5x that amount if not more, considering what other companies would look to acquire them for. That alone drives up the asking price, meaning more for Sony to pay if they won the bid.
That's why I said the risk is a notable one. Sony wouldn't be pushing for these acquisition bids in a bubble.
The selling price of the devs I mentioned will again probably be max 9B. Remember that I gave them super generous valuations. And even though they aren't mired in any way shape or form, they are upstarts with limited cumulative sales. Whereas Activision-Blizzard has proven over a decade long without fail that they are one of the best in the game sales wise.
The devs yes, maybe. But you also threw Capcom in there, and I'm speaking cumulatively here.
As said previously, companies aren't static assets. People work there. People have preferences, dreams and aspirations. If people dont agree with the huge companies you mentioned who are able to make bigger bids, they will eventually leave. What will you have bought by then by overbidding? A shell of a company that basically is nothing more than just a name and showing how big your dick is. Game Science, the studio behind Black Myth: Wukong left Tencent to work on their own stuff. You can say all you want about Sony, but very few publishers give their devs almost free reign to what they develop. That and Sony being seen as this prolific publisher, offering the highest quality that people have ever experienced would want to make devs and companies join them. Many devs want to improve. Within Sony they can. It's no secret many studios share their tech and ideas with each other within Sony.
None of this is exclusive to Sony, though, and of the major companies ones like Tencent are the outlier in terms of driving potential employees to leave. What you're saying CAN happen, but in the case of various game-related acquisitions over the years it's been fairly rare of a happening.
There are instances where some companies would prefer to be acquired by certain other companies but I can assure you it's not out of some idealistic notion of "improving" under the wings of a certain platform holder. Which, quite frankly, is a bit insulting to the talents of the company that would be acquired, as if they aren't good enough as-is without being acquired and in such a case...why would they be the target of an acquisition in the first place?
Unless by "improving" you mean money for funding, because that is almost always the #1 driving factor in these kind of deals. The company being acquired should generally already have the talent, they just may need the resources and money, and in case of the former, perhaps specific resources that can be gathered by leveraging networking of the parent company looking to buy.
Isn't Sony acquiring the devs I mentioned and making them make great quality games not them doubling down what they are already doing? In contrary you just mentioned the idea of Sony putting their 1st party games on PC day 1 with a PC launcher. How is that even doubling down on what they are doing? They've never done that before. Plus this would not only make them compete with Microsoft, this will also make them compete with Epic Games.
This is me looking at it from a business perspective. Sony's strategy, regardless of any acquisitions, clearly involves opening up to and expanding further within the PC platform, to generate even more revenue and profit for the PlayStation division. If they're going to expand further in that space regardless, and want to mitigate any potential losses in console sales by doing so, they are going to want to create a launcher where they can 100% own the storefront and monetize that storefront even without a person making purchases on the store.
Which means offering PS+/PS Now style perks to subscriptions and an ad-supported version for those who don't subscribe. By doing that they are able to justify Day 1 releases, leverage the PS brand in the PC space to provide an alternative storefront from Steam, GOG, Epic etc., use the strength of their 1P content to drive engagement with their storefront/launcher on PC, leverage a linking of their PS side and PC side to allow devs to publish their games on both (as well as physically distribute their games in retail stores) while only paying a single licensing fee for both storefront types (instead of two separate ones like many do when publishing on PS and then porting to Steam, where they pay Sony a 30% cut for PS sales and Valve a 30% cut for Steam sales), and pair this with driving their PS console revisions into territory where slight profits (if not more) can be made on consoles sold, massively mitigating financial risks across the board and enabling a much wider audience for their 1P content sales.
And realistically, if anything, THAT would be the driving impetus for them making most further 3P developer acquisitions, let alone a major 3P publisher one. Without it their reasons of justification dramatically reduce.
I imagine Sony would want to keep Epic Games as their ally and not their enemy. Making them your enemy might make you lose out on their Unreal Engine 5, which everyone is so impressed by. That would definitely hurt Sony in some areas. Sony just made an effort to strengthen their relationship with Epic Games, it makes no sense to create that relationship and then instantly destroying that. You would've been basically investing into that without reaping any rewards from that. That's just not a good business move.
This makes no sense; Sony making their own storefront/launcher that competes with Epic doesn't mean they suddenly lose access to UE5! Otherwise MS wouldn't have access to it at all considering all of their games go to Steam and not EGS. Sony's "effort" to strengthen their relationship with Epic was buying a 2.5% stake into the company, which is minuscule in almost any respect.
Additionally, them doing their own launcher/storefront has no bearing on their licensing of UE5 for software and film/television production/development. Those things are being done by two different departments within Epic Games, and there are plenty of business relationships out there where two companies are cooperating closely in one space/area while being competitive in another. I mean, we see that already between Sony, Microsoft and Nintendo!
Oh yeah, staying complacent and not doing anything when your competitor just acquired one of the biggest publishers ever and hoping for the best gives you control. Like how's that even logical lol. If Microsoft can buy Activision-Blizzard, they can buy any other publisher. Sony's stock dropped 20B in a day time. Not acquiring anything would put them on the spot where they will have less and less choice of the ones they wanna buy, it would only mean it's harder for them to hire any new talent. Not to mention they risk of getting their stock value drop more and more while the competition is getting stronger and stronger. Sony now just lost 20B with nothing gained. Better to spend that 20B and get something in return wouldn't you say?
And this is just more to show that the driving impetus in this discussion is a reactionary one but realistically, Sony don't need to be reactionary here. No one does. Sony don't need to acquire a dev or publisher to get new talent per se, though it is a pathway towards getting such talent.
So what if their stock dropped $20 billion? Why do you think Microsoft put out the COD statement so soon? Part of that was to stop Sony's stock from dropping any further, which should already somewhat indicate MS's intent here isn't what some other people might want to think it is. If Sony sticks to their strengths and deliver quality products that perform very well on the market, they'll make back that lost market cap value swiftly if it hasn't happened already.
You're also only looking at this from a Microsoft and Sony POV; there ARE other companies out here with major purchasing power, including other 3P publishers like Take-Two, EA, etc. Who's to say none of them end up buying some of these other 3P developers, or enter mergers with them? And that's not even to say anything about Tencent or Embracer Group.
I don't know why you gave that example, that was a different time with different circumstances. It's really not comparable by any means.
The example was given because it just goes to show that what's happening now isn't very different fundamentally from what's happened in the past. The Sega example is to show what happens when you're too reactionary to the market around you instead of playing to your strengths; the people who are constantly saying "Oh now Sony GOTTA acquire (insert company here)!" , they don't realize it but with the degree and emphasis of it the give, they're asking for Sony to be very reactionary.
And that could hurt them. Perhaps significantly. If it comes down to who has the money to spend, Sony can't necessarily play in that space for very long.
Your last paragraph just described what I said earlier. The acquisitions I mentioned are all devs who have a good relationship with Sony and aside from Capcom, they are all quite new. Some of them havent even put out a game yet. Also what I mentioned just means they are doing exactly what they are doing now, they would just be more aggressive about it and speed up the process they were going towards anyways. I never said they should change their approach, unlike you did. For example putting their 1st party titles on PC with a PC launcher. They've never ever done what you suggested. If they followed your approach THEN they'd be changing their ways of how they tackle things now.
The PC launcher example is just me noting a logical next step for a part of their strategy they are already moving towards, so I don't see what's so outlandish about it. For a company like Sony, if they want to do Day 1 in their own service, they'd want to find a way to make that on a per-game basis, most likely. If they want to do Day 1 on PC, they'd want to do that in a way where they control the storefront 100%.
For the latter, whether that's fully on their own or perhaps in a significant partnership with Epic Game Store, the concept itself would be one they'd pursue for Day 1 on PC.