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Michael Pachter: Sony Paid Too Much For Bungie!

In January, Sony, Microsoft and Take-Two spent a total of $85.4 billion to acquire Bungie, Activision Blizzard and Zynga, respectively, which is a considerable amount of money moving around the industry, and already last year’s record-breaking year has been broken by this trio, with the end of 2022 nowhere near in sight! According to the veteran analyst, Microsoft and Take-Two, on the other hand, have coughed up the right amount of dough for the companies they plan to acquire…On that note, Michael Pachter, Wedbush Securities’ gaming industry analyst, told Yahoo Finance Live what he thinks of these three acquisitions.

 

“I think Microsoft has a vision and a strategy. They made a bold statement with their acquisition of Activision, which fits their strategy. Take-Two surprised us and explained it very well when they did it. But we didn’t know that they wanted to be significant in mobile, and they do. And so they bought one of the two big public mobile companies, the other being Playtika. And they paid up for it.

Sony, I think, just did a “me too!” statement and said, we’re not going to be left behind. So we’ll buy Bungie. Both the Activision and Zynga deals were done below the stock’s recent highs. So Activision had traded over 100, and the deal was at 95. Back in October, it was over 100. I believe Zynga had sold over 11, and the deal was done at 9.86. So you know, they didn’t overpay, either of the acquirers. Bungie went for $4 million per developer. And most deals are between $250,000 and a million. I’ve seen deals as close, you know, as high as $2 million per developer. This is crazy talk.

And just to compare and contrast, Electronic Arts bought Respawn about three or four years ago for $700 million with 400 developers. And those guys generate $700 million a year in revenue. Bungie does about $200 million in revenue. So I think Sony vastly overpaid. I think this was a statement that we’re not going to let Microsoft get ahead of us, so we’ll just buy something out of desperation. It’s not a deal that makes a whole lot of sense to me. The others do,” Pachter said.

And we can understand his approach, but we’ll have to wait and see how much Bungie can help Sony in its cross-entertainment thought, which we discussed a couple of days ago. We haven’t seen Embracer Group, Tencent, and NetEase make moves this year yet, though. When will they begin this year‘s expansion?

Source: WCCFTech

 

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