Hahaha. True and I agree. Sony as a whole isn’t worth more than Microsoft as a whole which I believe we all can agree on? But my argument is that, how is Sony not being at Microsoft’s level their fault or problem? Because to me, that sounds like and is a Sony problem.
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We are in agreement 
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It makes it more fascinating if we remember than before 2014, Microsoft was also on decline and a lot of people thought that Microsoft would never return to its glory days. But they decided to invest into cloud and software services and now are reaping the benefits. While Sony was doing what? Throwing jabs at Xbox One over disk sharing?
Because Microsoft invested into all of it in advance. While Sony was doing what? How did Sony lose their consumer electronics crown to Samsung, LG and other companies for example? How they went from PSP to Vita and now Nintendo completely obliterated them in Japan via handhelds…
I do wonder why Sony does not have its own semiconductor production like Samsung does 
Dat 2020 jump. I do wonder why those drops in 2015, 2018 happenend. But we cannot draw parallels with Sony as Sony is 4 companies unlike Microsoft.
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Sony have a habit of resting on their laurels, and being late to the party (or early but with poor commitment).
For example, MP3 Walkmans could have been ahead of the pack but weren’t because they bet huge on CDs and Mini Discs.
Same could be said for their Vaio laptops, the Bravia TV brand, and even their mobile phones.
I hope PlayStation doesn’t go the same way, but the rescue mission with the PS4 after the battering in the 360 era has slowly been unwound, not by their hubris but by two huge competitors - Nintendo in Japan and Xbox elsewhere.
It’s not they’re being bought out by someone, but their being squeezed out by competition making moves.
Thats my take.
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Agreed. Sony had opportunities to be the “lead” in certain aspects and they just didn’t.
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Maybe if they spent their time and money in Cloud services instead of things like VR they could compete but they didn’t and that was their choice, that’s not MS problem
and the idea that MS will simply be too big and push PlayStation out of the industry is just laughable, they may no longer be the top dog in the coming years but PS is a worldwide brand that people have loved for 25+ years with franchises you’ll only be able to get in that ecosystem
That Xbox will suddenly force them out because of Cloud and CoD is ridiculous
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Such strange benevolence with Sony is what keeps its status quo on gaming industry. As Mort says it relies on strong cult, favorable press, and benevolence of gov institutes, mainly in europe. If we see how things evolved for MS since “Xone” fiasco we have an idea how lazy in innovation Sony has been.
Backwards compatibility - > played down by sony - > implemented in ps5
Games on pc - > played down by sony - > being implemented
Gamepass - > played down by sony - > shitting the bed because of the service now
Cloud - > ignored by sony - > shitting the bed because of MS infraestructure
Does Sony deserves all this benevolence. Why Xbox consumer need to pay for Sony laziness or lack of investment?
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It all boils down to luck or a vision. For example if Microsoft pivoted to touch controls with their windows on mobile faster, they could eat some Apple’s lunch for example. But at that time they were too much into B2B and missed that market altogether. Something similar happened with Internet search for example.
I wonder if it was the same situation as now where they bet on more profitable popular platform rather than on future. But you can understand them also as CD market was huge.
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I think Sonys management is either too proud and stupid to change or they are financially bound. They bled billions on PS3 for blu-ray against HD DVD and within 5 years…Netflix had won. And so too we have seen dozens of streaming services rise to carve out their piece. …but not from Sony.
Its why I doubt Nicks comments “Sony will eventually do day 1 releases”…historically they have never competed with services and lost control of entire markets before even attempting it…and they had huge advantages in music and film/tv. They had James bond and Spider-man. A decade later they are third party to Disney and Bond is owned by Amazon.
They are either ignorant of the model, too proud to embrace it or too poor to run it.
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Sony did introduce PSN to catch up with Xbox Live though. And PS+ service.
I think the argument here is that Sony had an uncontested opening where they literally held all the cards to make their cloud gaming presence solidified. They didn’t do anything with that, so if the CMA argument is that there is no room for competition in cloud gaming due to moves from MS, the counterpoint is that MS building out their cloud gaming presence from the ground up was the competition and it was happening when Sony had bought all the major players in that space already. Clearly it was not MS’s cloud presence that kept Sony from offering a compelling cloud service. That is demonstrable.
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Sony definitely fumbled due to their arrogance in pricing and having the “Sony brand will sell itself” attitude. They owned households in the 90s/2000s the way Apple now does. They had a headstart on most big tech, they could’ve practically been one by now had there been better foresight.
According to the Xbox documentary, Microsoft were actually worried about Sony owning the living room, more than their other competitors.
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the whole Sony vs Microsoft thing and how each company chose to spend it’s time being in the dominant position speaks a lot to the philosophies of the two companies.
Sony’s “playbook” if you will dates all the way back to the PS1 era, when a not super strong 1st party lead to the company throwing insane amounts of money into 3rd party and 2nd party, partnerships and deals. While 1st party strengthened in the PS2 era, they still largely depended on 2nd/3rd party marketing and exclusivity deals.
Sony fumbled the PS3 so hard, and the major lesson they learned from that generation was that, while 3rd party deals are a major source of success (as evident by Microsoft during the 360 gen going nuts with marketing deals) when you don’t have those, you have to build your own compelling lineup of content to sell your box. This is something that would come to help Sony ultimately beat out the 360 during the 7th gen, and was also the source of why, when Microsoft lost absolutely everything during the Xbox one, never managed to recover, due to a fundamental lack of 1st party content to make a compelling case to consumers to buy the Xbox One. That context and that situation is ultimately what lead to the birth of gamepass and what we now see as insane amounts of money being dumped into 1st party.
While Sony managed to depend on itself and it’s internal 1st party to ultimately edge out microsoft in the 7th gen (barely), they leveraged their now excellent 1st party lineup, and what they also applied during the PS1/PS2 days to absolutely dominate the last generation, and as a result this generation is an extension of that strategy. Hell, the amount of 3rd party deals and exclusivity deals with Sony now are so extensive, it’s the closest Sony has gotten to matching the PS1/PS2 days.
Sony’s fears are fundamentally rooted in the notion of the playbook of some 25 years no longer being effective, and with the backing of Microsoft, what Xbox has decided to do is instead of play the game the same way it’s been played for nearly 3 decades, change how the entire game is played, in a way that suits Microsoft’s strengths. Sony could have spent the past several years planning for such a scenario knowing that, such a day like this would come (if not from Microsoft potentially someone else). Mark Cerny and other Sony execs would often share in interviews, how during the PS2 era they were terrified of what a Microsoft in the gaming space could look like, given how much money the company could potentially put behind marketing, 3rd party partnerships, and acquisitions. However, due to how Microsoft was structured at the time and treated the xbox division as just a lesser part of it’s business, that never came to fruition, which gave Sony peace and mind when competing with Microsoft for the past 3 generations. Sony’s domination during the PS4 generation lead to such hubristic goals as “ending the Xbox brand’s presence in the gaming market” for the PS5, never thinking or realizing that their biggest fears from when Microsoft entered the gaming space 3 generations prior, might come back to haunt them.
Everything about how Sony is behaving right now, reeks of a division that is terrified of what’s to come.
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They know Microsoft messed up 10 years ago and Microsoft is financially all in now… Xbox will never again mess up when it comes to making sure there is as much content available to not only entice new gamers to Xbox but to hold what they have.
Responding to a couple of specific questions and a post I was tagged in above.
Acquisitions are typically funded in one of three ways (or some combination of the three):
- Cash on hand
- Debt
- Stock swap
The last time I checked, Sony had negative working capital (which is not the same as having no cash but it does mean the firm doesn’t have much extra liquid reserves), so it is unlikely to do any large purchase with cash only.
Sony has a BBB+ credit rating (which is on the low end of “good”), so I’m sure it could borrow if it wants. How much exactly would depend on a comprehensive risk analysis of the firm and the target. I suspect that if the target is highly profitable they could borrow quite a bit without taking a hit to their credit rating. However, interest rates have gone up dramatically recently, so it is not an ideal time to borrow (unless you think rates are going to continue going up). Right now, Sony’s borrowing rate is probably in the ballpark of 6.25%. A year ago it would have been close to 2.50%. So, if Sony leadership has any inclination to borrow to fund an acquisition they are probably kicking themselves that they haven’t already done it.
A stock swap occurs when the acquiring firm issues new shares then uses those newly issued shares as currency to purchase the shares of the target firm. The exact ratio used in the swap must be negotiated between the firms. It is not just a 1 to 1 swap. Negotiating the exchange ratio is basically the same as negotiating the price of the acquisition.
Stock swaps are a great option when the acquirer is low on cash, or when its stock price is high, or when the target is very profitable, or when the target firm’s owners want to defer paying taxes on the sale (because stock swaps are not taxable events in most jurisdictions). Ideally the target is profitable enough that the acquirer’s earnings per share will not be diluted by the purchase - even though new shares were created to fund the purchase.
Given the above, the big drawback to Sony using a stock swap to fund an acquisition is that Sony’s stock price is down almost 50% year-to-date. So, any purchase made with a stock swap would be about twice as expensive (all else equal) as it would have been 10 months ago. Of course, many of its potential targets are way down as well so that may end up being a wash (or even a net positive) after factoring in the target’s lower valuation.
To sum up, Sony has some options for making larger acquisitions, but none of them are as straightforward as simply writing a big check like Microsoft can. Unfortunately, I can’t really put a cap on the maximum acquisition Sony could comfortably do without devoting more time to a real analysis - and even then I could be wrong. There are lots of really creative investment bankers out there who make a very nice living putting together deals. So you never know what could possibly be pulled off. But I do think anything bigger than Square or Capcom would be very interesting.
One last note: @AllianceOfficer was correct. Mergers are legally and structurally different from acquisitions. Mergers result in an entirely new firm being created and the two “partners” being absorbed by the new entity, In a merger there is typically some blending of the top level executives and the board - so leadership in the new firm is essentially shared. In an acquisition the acquiring firm buys the target firm. The target’s board is typically dissolved and the top level executives (if they are retained) will now report up the chain of command to the executives at the acquiring firm.
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Imagine being punished for investing tons of money into something that might or might not work, then having it work and being told that’s unfair because this other company didn’t do the same and now it will be expensive for them to catch up. The sad thing is we’re not talking about some small company that finds it unfair, it’s a billion dollar company that chose not to go down that path and have other ways to get to the same path without building it by buying access to it.
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What amuses me is that a company like Sony can better compete with Game Pass if they offer first party day one games. They choose not to though and that is on them.
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Exactly and the CMA is basically blaming Microsoft for that. lol!!!
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It’s blinding how much Sony wants to keep everything status quo and not change anything. They are so scared of change and while I understand why and it can be expected because of how good they have it.
I don’t blame them from acting this way but I sure as shit don’t agree with how they are going about it. Instead of going with the flow and changing it up to follow where the industry is going, they choose to instead put their head in the sand and scream it’s unfair.
Adapt or go the way of Blockbuster, I would like to say it really does feel like Sony has no future plans and are living in the moment so there is no vision of what Playstation should be in 5-10 years time.
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