Analyst Thinks Sony "Vastly Overpaid" for Bungie in Desperation

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Wedbush Securities analyst Michael Pachter thinks Sony “vastly overpaid” for Bungie in an attempt to prevent Microsoft from getting ahead in the competition. Speaking to Yahoo Finance, Pachter used Electronic Arts’ acquisition of Respawn Entertainment to illustrate his point, stating that EA paid $700 million for a studio that generates $700 million per annum in revenue. In contrast,Sony paid $3.6 billionfor a developer with an annual earning of about $200 million.

From a financial perspective they got fleeced. Sony's defense is that they want Bungie to teach their other studios how to make a live service game. 3 Billion for coding lessons? Yikes

Rumor has it that Microsoft made several attempts to reacquire Bungie over the years but felt that the company’s asking price was too high. Bungie has denied these reports but they crop up every now and then, backed by known insiders. While we’ll probably never know what the companies talked about behind the scenes, Sony has been very clear about why it acquired Bungie.

Sony wants to use Bungie’s 30 years of experience and technical expertise to build a live service portfolio of its own. Destiny and Bungie’s future IP are only a small part of the reason Sony found value in pursuing the acquisition. Nevertheless, Pachter thinks the deal doesn’t make sense. “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,” Pachter continued. “It’s not really a deal that makes a whole lot of sense to me. The others do.”

"Wedbush Securities analyst Michael Pachter ...."

😄

🤣

Compared to the amount Activision will have to payout in sexual harassment claims over the coming years, it might be a wash.

Michael Pachter.

Ahhh there it is! lol

They definitely paid a premium... makes MS's purchase of Bethesda seem like a bargain.

Poor cows and and sony, getting fleeced so hard 🤣

I think the critique makes sense if that's what they paid for Destiny 2. But that's not what they bought - we'll have to see what the bigger investment yields, but let's be honest: it will be a while before the return passes the investment and we aren't exactly going to be first in line to get the inside scoop on all the ways the money is spent and earned

It does seem kind of high.

If there's anything to know about Michael Pachter, he's always wrong.

Bungie as a name has a quality associated with it. That along with PlayStation getting online help from them and I don’t think they overpaid.

Would cheaper have been better, yes, but it took 3 billion. They own the name/developer forever now though.

Desperation no, calculated move yes.

Based on the current info, yes!

Regardless of what you folks say about Michael Pachter, sometimes he's right and wrong about things but that's beside the point. He does bring up a good point about Bungie's price. $3.6 Billion is way too damn high on just Bungie alone who is just one company. Activision being in the Billion range makes sense because they pretty much have everything from shooters to owning Blizzard in the process so seeing MS buying the whole company for $68.7 Billion is understandable. Bungie doesn't look like their worth a Billion, Sony could have wiggle into paying in the high Million range and no one wouldn't question them at all.

*Rumor has it that Microsoft made several attempts to reacquire Bungie over the years but felt that the company’s asking price was too high*

Yeah, MS saw this as a wise move cause Bungie doesn't look like its worth a Billion IMO.

I agree in principle (it's a ton of money for a company without getting their most relevant IP) - but it's Michael Pachter, so I'm certain his analysis must be incorrect.

Also, Bungie has *some* value to Sony. Sony has zero top-tier FPS or multiplayer franchises, so Bungie is a good pick to cover their weaknesses.

I used to watch Michael Pachter on Gametrailers🤣Had no idea he was still in the business

@Planeforger: exactly - bungie fills a pretty glaring hole that has emerged in Sony's repertoire in recent years. I think that's worth more than people think (but I dunno if it's 3.6bn)

That's still too much. If their price was somewhere near Billion range and still have a Million higher price, I wouldn't question about Sony's purchase at all.

You don't have to be an analyst to know they overpaid

lol ya

Poor you. On these boards everyday posting for the same 17 people to see. What a waste of time. Won't stop people from buying what they want. Seems that's Playstation over Xbox. Deal with it.

They should make the Haze game Sony always wanted. That will recoup the costs.

wow that was a long time ago.. I forgot about Haze

@Sagemode87: the cow defender to the rescue once again.

I'm not a big fan of patcher. He's been wrong alot as we all know, yet we always bring him up again and again here. Either way, his statement about bungie not being worth $2.4 billion isn't wrong either.

I find people's opinion of Pachter a bit hilarious. Like most analysts, we only hear about them when they're wrong.

He has been with Wedbush securities for 20yrs, you don't get that kind of security as an analyst if you are constantly wrong. Being right (or close) is literally his job. Of course he gets it wrong sometimes but he is correct far more than incorrect.

I feel like I've been forced to defend him in this thread which is kind of funny. People literally invest millions and billions on his predictions, clearly they feel like they are getting a return on that investment

We all were surprised at the price, doesn't mean that Bungie won't provide a huge amount of knowledge for Sony.

@blaznwiipspman1:

For comparison, the team behind Splitgate is valued at $1.5B. lmao

Bungie has a lot of potential and sure, they may never make that money back for many years but, they're PlayStation's key to live services.

PlayStation expects to more than double their first party revenue by FY25 and that will largely be done because they can leverage Bungie's expertise. Bungie could directly and, indirectly bring in a ton of money per year when it's all said and done.

Of course they did. They basically just bought Destiny for $3.6 billion. I'm sure they'll probably break even in 20 years though.

I'll say that I myself enjoy Haze for what it was trying to do during the golden age of PS3. Haze got screwed over by serious project mismanagement. It was partially Ubisoft's fault and partially Free Radical's fault and plus, they spent far too much time trying to make the game work on PS3 because Ubisoft signed an exclusivity deal behind their backs.

Of course they overpaid but they were desperate to counter MS's acquisition momentum. Plus them doing this may potentially save them any future embarrassment should MS need to fight a possible FTC antitrust probe and Sony gets deposed publicly about the the full scope of their exclusivity practices, which I am sure Microsoft has been preparing to welcome. In a way Sony is showing they aren't unable to compete on similar ground so hopefully for them the FTC doesn't doesn't see need to dig further.

Lol Michael Pachter. Cmon yall. Stop.

Compared to Zenimax deal? Yes.
Compared to Activision deal? No.

Alot of these acquistions lately haven't made sense. Really the only one that was a "good deal" IMO was probably the Zenimax takeout at $7.5 Billion. Take Two just paid $13 Billion for Zynga (!!??). Almost double the Zenimax deal. I know mobile games are $$$, but geez. Zenimax had a ton of IP. Obviously MS's takeout of Activision is a big one, but $70 Billion? Effectively for Call of Duty and Blizzard? Valuation for Activision seems crazy even recognizing the cash cow Call of Duty is. Microsoft's own activity makes the Zenimax deal look like the bargain out of all this.

Sony probably overpaid relative to the IP they acquired, but it's a relatively tiny acquisition to shore up something they needed in their portfolio after MS's activity. Seems like a rational move, given their lack of shooters for the last few years. Now they have a developer with IP and instant expertise. Of course they will be relying on their next game being a pretty big hit, if it's a flop that will start looking like a bad deal.

I would be the first one to point and laugh at Patcher if he was wrong but... he's not

3.6 Billion for Destiny? And I'm a HUGE Destiny fan btw. I really dont see how bungie is worth that much tbh. Sony would have been better in using that money and buying Capcom or SE... they wouldnt be that much expensive than that being that Ubisoft has a market value of around 7 billion.

edit: Capcom has a market value of 3.2 Billion... it would be a way better aquisition than Bungie

SONY is planning on releasing at least 10 live service games before March of 2026. I'd say they paid what they thought would net them a large dev team with the exact experience they needed to grow and flesh out the services for those games. Who better to help than a team that has had success with not one but two games of that type?

Sure it's a lot of money, but it's hard to overlook experience especially in the one area where you need it the most. They paid for that expertise and the extra revenue that studio will bring in each month with an already established franchise. When you think of it like that, it's not such a stretch and makes a lot more sense even if they overpaid. Either way it's not my money and I think the move made a lot of sense.

Sony should've waited for Black Friday, everything is on sale then.

So apparently they paid 2.4 billion for Bungie but 1.2 billion was set aside to make sure employees don't leave.

The cow damage control 🤣

Sony paid massively over the odds, something I mentioned when comparing MS Bethesda/zenimax studios and franchises for 6.9 billion compared to bungie and dying light for nearly 4 billion,even the most Sony loving sad act fanboy can't damage control their way out of this SImple-fact

@vatususreturns: if Capcom wanted to sell for 3.2b they would have been bought long ago

Absolutely does. The amount of IPs MS bought and studios they got with Zenimax, it was well worth it.

I think we all knew Sony over paid for Bungie, hence everyone's reaction when they did.

For 3.6 billion they got Destiny and a moody developer. It's just such a shockingly shit deal.

Konami financially would have been the best deal imo. Making Pro Evo exclusive alone is pretty big. And since it's unlicensed with FIFA it could be done.

3.6 Billion for Destiny and a moody developer that wants to maintain their independence is not a good deal. If Sony can't make Bungie first party exclusive after paying 3.6 billion... THIS is a problem. I'd be like, if I'm paying 3.6 billion, you can STFU about your independence.

Sony buying Bungie was likely a infrastructure and porting knowledge and tech buy, not about making exclusive games or Destiny exclusive for that matter which is why Sony isn't talking about removing Destiny from Xbox consoles, its too profitable for them. 3.6 Billion however is just too much and Sony could've wiggle them to lowering that price if they could. But hey, I'm just a PC gamer, so what do I know🤷‍♂️

I don't know. Sony are not stupid, they know exactly why they paid that amount. We can only speculate why they paid $3,600,000,000 but at the end of the day only they know what it's for. It might very well turn out to be a great deal.

Okay, but 3.6 billion is too much for that, if that was the deal. Why not buy part ownership of them, with part of the deal of getting their expertise in exchange for helping them financially with development.

My point is, 3.6 billion is too much to not even get exclusivity in the deal too.

They just paid a lot for not much control imo.

:P

@HalcyonScarlet: except bungie's games would make less money as an exclusive... so exclusivity would actually make it a worse deal.

Not too happy about the live service focus Sony has announced. Hopefully it does not stop them from making good single player titles.

I think that "independence" is mostly PR bs. Sony bought Bungie. Its theirs. They can do with it as they please. If they wanted to make Destiny exclusive, they could. It just doesnt make sense from a business perspective to do so, same as with Minecraft when MS bought it. Splitting the fanbase on a well-established live service game would make no sense and would just p*ss people of. Sony wants to recoup the investment and making the game exclusive wouldnt help with that

@HalcyonScarlet: You should probably call them and let them know you think they paid to much, your expertise easily outweighs the 6 months negotiating they went through.