It needs to scale up to fend off multi-trillion dollar gaming rival Microsoft. Another Japan-based gaming company might be exactly what a PlayStation owner needs.
The video game industry is one of the most attractive markets for growth in technology and media. According to research firm Newzoo, the global gaming market will rise to $223 billion by 2024 from $193 billion last year.
It’s no surprise that there’s been a feeding frenzy for game makers lately. Microsoft (stock ticker:
) latest spree spending $7.5 billion on ZeniMax Media, which closed last year. Then the tech giant followed suit with its massive $69 billion deal
(ATVI) earlier this year. in the same month,
Take-Two Interactive Program
(TTWO) announced the purchase of a mobile game company for $ 11 billion
(ZNGA) and Sony (
SonyIt also said it would buy private game developer Bungie for $3.6 billion.
Sony hasn’t finished shopping. In January, Sony Interactive Entertainment CEO Jim Ryan said he intends to buy more studios.
It’s important to note that gaming intellectual property is the common thread across all industry acquisitions – from ZeniMax’s Fallout and Elder Scrolls franchises to Activision’s Call of Duty games. Brand franchises are critical to increasing revenue and attracting consumers to the console platform.
This is why Square Enix is a perfect fit for Sony. It owns two beloved franchises that have generations of fans after more than three decades of release: Final Fantasy – which has sold more than 160 million units over its lifetime – and Dragon Quest, with more than 80 million units sold.
Sony is known for its award-winning solo experiments – including Last of Us to Spider-Man. Certainly, the popular Final Fantasy games would fit right in. But Square Enix would also be a great complement to Sony’s new strategic goal of creating more live service titles or games with a real-time community component using the Internet.
Final Fantasy XIV is one of the few successful online RPGs. Last year, the game was so popular that Square Enix had to suspend new sales because its servers were overburdened with players. With its greater range and better technical infrastructure, Sony can help solve capacity issues.
Sony and Square Enix did not immediately respond to requests for comment on the possibility of the acquisition.
The merger also wouldn’t break the bank for Sony. Square Enix has a market capitalization of around $5 billion. Any acquisition would cost significantly less than what Microsoft agreed to pay for Activision.
In fact, there may be a sign that Square Enix is preparing to eventually sell it. On Monday, the company announced that it had agreed to sell several studios and intellectual property — including Tomb Raider, Deus Ex and Legacy of Kain — to Sweden.
Embracer Group AB
300 million dollars.
Many experts were surprised by the modest price of the deal. But one benefit of divesting underperforming assets is that it could pave the way for a bigger player, like Sony, to make a cleaner acquisition of the remaining real estate. For example, Tomb Raider will be almost useless to a PlayStation owner because he owns a similar Indiana Jones franchise called Uncharted.
Sony must act quickly. Tech companies around the world are actively looking for gaming companies. There aren’t many high-quality independent game companies like Square Enix that have left.
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