its doubtful they would be able to buy a big company like square. As they wouldn’t have cash on hand to do it, taking on more debt while an option isn’t exactly wise as they already have so much debt and many of there moneymakers of the past are in a decline. TV’s and consumer electronics outside of PlayStation is a abysmal in comparison to Samsung and LG the market leaders. The move industry is in a decline, they got a bit of a shot in the arm with spiderman but thats more of an anomaly then a regular occurrence. The music industry is in a decline as touring is so limited and the amount of a cut Sony would get from streaming isn’t anywhere near what it was when people were buying CDs and going to shows like in the past.
So if you look at their capacity to earn money and pay down existing debt the odds of them making a large-scale acquisition work is probably not in the cards. Especially if you look at it from a risk vs reward. If a large scale acquisition would go poorly like say how Microsoft acquired Nokia. Microsoft can write that off and it will go relatively unnoticed because of the income they make. Sony doesn’t have that ability to just throw around and possibly lose umpteen billion dollars when there total net income is only a bit of 8 billion in 2021.
Sony’s debt is quoted in yen so your numbers are off. 1 USD dollar roughly equals 115 yen.
Edit - Sony debt ratios don’t appear to be much of an issue from my perspective. They can buy square imo without much of an issue although it would be a bigger deal for them than Microsoft, obviously.
Now I’m no financial advisor. But, I don’t think when a mega corp has taken on debt it really means anything (with the exception of AT&T). I think it’s beneficial for tax purposes to have that for your financial quarters.
Yes a bit of debt can be a good thing. Microsoft has debt despite having a massive amount of cash. I’m not a hardcore financial analyst either, but Sony’s debt load doesn’t look unreasonable to me.
Sony can afford square but I have no idea if there is any interest from either side.
That equates still equates to over 17 billion dollars meaning if they take the entirety of their net income each year and apply it towards debt it would take them 3 years. So its not until year 3 would they have a positive net income. In comparison, Microsoft could pay off all 50B of their debt and still buy Zenimax all in the same calendar year using only net income for one calendar year.
I also never said that even with the debt they had they would be unable to buy square enix I merely said I doubt its worth the financial risk to do so as they aren’t actually gaining anything. As why would you assume the financial risk of taking all on all of squares cost and debt to basically have the exact same games you already have only you paid more money for them. Final Fantasy was already viewed as a sony title. The majority of units sold are sold on PlayStation in the modern era. even when an xbox version exists.
Sony is already paying for exclusivity for significantly less without having to assume the financial risk of producing and building the game. So why would they take on that financial burden when they are already leasing the whole cow for much less.
Now if sony loses enough Market share where they are having to pay significantly more to tie up exclusivity and the amount of money paid for exclusivity reaches a tipping point where it makes more sense to buy out square than pay annual for exclusivity you would have a point. However, it makes very little sense to specifically buy square enix as is stands now.
The other issue you run into is square enix is publicly traded. So as soon as it’s announced anyone can apply counter offers and the board had to reasonably weigh any offer given as they are publically traded. We recently saw this with codemasters where take two made an initial offer then EA was like well if your for sale here how about this. So the minute it comes out that sony put in an offer you don’t think Microsoft is going to say here is that offer plus 1 billion or whatever amount they want. Even if Sony counters they can’t afford to be in that bidding war.
So financially when you look at it and logically when you look at it. It doesn’t make sense. I don’t see the logic on how you get there beyond hopes and prayers.
They would be better off doing what they are doing now and buying one off studios and then investing in them to grow them and giving creators starter cash to build the games they want to build while nurturing those relationships where down the road you could come in and buy them without having to deal with the Microsofts , amazon’s and ea’s and take twos and apples of the world.
If you’re trying to argue of MS has a stronger balance sheet than Sony, I agree with you. I’ll also agree buying something like SE is a bigger risk for Sony. Microsoft has one of the best balance sheets in the world so any comparison with them is going to look skewed (this doesn’t mean MS is willing to just throw around money). My point is Sony has a healthy balance sheet. If they feel SE is critical to their business and SE is willing to sell, then it can happen pretty easily.
Look at what TT just did with Zynga. That is a much larger proportional acquisition for TT then Sony with SE.
That said, there have been zero credible SE acquisition rumors that I’ve seen.
I know many will disagree but I personally do not see Microsoft purchasing anymore big ass publishers(or at least for the time being). Its A LOT of employees that Microsoft would have to take in and assimilate and that takes time. Just look at the situation with Bethesda. To me, the more I look at it, Bethesda was just the right publisher at the right time. A deal. Bethesda is private, they were struggling financially, and they wanted to be sold off. I may piss even more people off, but I just don’t see Microsoft buying the entirety of WB games, but only the parts that they sell off. I personally don’t see WB selling off their DC license like some people have said but maybe Mortal Kombat. I say that because of this article.
https://www.pocket-lint.com/games/news/156941-warner-bros-interactive-split-att-warnermedia-discovery
“Some of the gaming arm will stay with AT&T and some will go with the new company,” they said.
So I personally see the non-DC studios being sold off. But yea I don’t see Microsoft for example buying an Ubisoft or a Capcom. But thats just me. Now moving on, I think the next wave of acquisitions will be Microsoft buying studios FROM publisher. I have a gut feeling that Microsoft is going to buy much of Western Square Enix, especially Crystal Dynamics. Crystal Dynamics would be a perfect fit for Xbox Games Studios! And I feel Xbox would do a better job than Square Enix. Also hasnt SE been disappointed with the western side of things? I also see Avalanche being scooped up and Netherrealms. Finally, I can see Microsoft focusing on more E rated content.
Question. Isn’t it hard for foreign companies to acquire Japanese companies? Correct me? I feel that’s the one advantage that Sony does have. Especially bidding against a brand that is not popular in Japan.
I wasn’t arguing balance sheets as that’s not an argument.
I was more stating what is the logical reason would Sony have to acquire square enix based on their current financial risk and already existing investment deals with square. As Sony already has exclusivity payments going to square. So what is the logical reason to assume that amount of financial risk acquiring square enix would burden them with when they are already leasing exclusivity for significantly less?
it seems like your arguing Sony pay more money for what they already basically have.
Why would they pivot from the current strategy to pay significantly more money for what they already have in exclusive square enix titles and mindshare of people buying square enix titles on their platform which people already do.
It is not hard. You have to go through additional steps. You have more approvals you have to go through but its not any harder. Its just more paperwork and any entity who is acquiring a company internationally is already paying people who know how to do this so its not any harder.
Yea, not sure why people are doubting Sony’s acquisition power. IIRC they have roughly 19 billion in cash, and no way is Square Enix close to that much.
I believe someone on otherera broke it down, but effectively japan has a level systeme for their companies, and each level has its own specifics for being purchased by a foreign entity. Top level are companies that have ties to Japanese military .etc, which is basically NO! for foreign companies.
Most game companies are level 1, with a few bigger/influencial level 2.
IIRC for level 1, the foreign company just has to submit a post aquisition report (basically say what you will do with this company after you purchase it)
MS will continue to run ABC studios, investing in tech, and creating new jobs and opportunities, and keep high level of funding - good
MS will create ABC studios in other countries, move IP there, and then close the original down in Japan - bad
That’s what I think. I doubt WB will sell off the whole thing. Netherrealms, Traveler Tales, maybe Avalanche software, probably not but hoping for monolith.
It’s pretty much been proven to be entirely bunk with the recent acquisition of Japanese companies in the past three months by Chinese companies. I wouldnt worry about that even being a thing anymore for anything outside of government owned industries.
I believe they’ve added all of their acquired studios since 2018 as subsidiaries, so they’re not being assimilated into Microsoft the same way Rare was all of those years ago. This makes it easier to separate if they want to part ways, but also means the studios can run more independently without all of the baggage that would come with being brought into the MS fold proper.