These past two weeks remains to be very energetic within the video game industry as platform holders Microsoft & Sony both make billion dollar purchases of notable talent within the market. This started off with the Xbox company revealing its plans to outright acquire Activision Blizzard for roughly $70 billion. From individuals viewing the arrangement, some believed that Sony would “respond” to this move from Microsoft.
This week it was revealed that the PlayStation company has spent $3.7 billion for Destiny team Bungie. But, it was not an answer to the acquisition from Microsoft. “These conversations have been a number of months in gestation, and certainly pre-date the activity that we have seen this year,” Sony Interactive Entertainment President & CEO Jim Ryan explained. Sony even followed up on its minor stake into Discord this week with a new update as well.
However, it was reported recently that Sony might have overspent for the Bungie deal according to Wedbush Securities Managing Director of Equity Research analyst Michael Pachter speaking to Yahoo Finance. From Sony’s recent financial report, it is revealed that more than $1 billion of its acquisition is being utilized to keep Bungie employees from leaving following the announcement.
“Bungie is a private company, the majority of whose shares are owned by its employees, so the payment of the consideration is structured to incentivize the shareholders and other creative talent to continue working at Bungie after the acquisition closes,” Sony explains in the slide for its reasoning to spend the $1.2 billion for Bungie staff.
Adding, “Approximately one-third of the 3.6 billion U.S. dollar consideration for the acquisition consists primarily of deferred payments to employee shareholders, conditional upon their continued employment, and other retention incentives. These amounts will be paid over the course of several years after the acquisition closes and will be recorded as expenses for accounting purposes.”
In the same interview with Jim Ryan elaborating on the timing of the acquisition, he also touched on the future for PlayStation. From that he disclosed that acquisitions are still in its playbook moving forward. You can read the full report by heading here.
Are you surprised by the arrangement Sony made for Bungie?