Sony to buy videogame maker Bungie for $3.6 billion

Bungie is best known as the original creator of the popular first-person shooter franchises Halo and Destiny. Today Halo is owned by Sony’s rival Microsoft Corporation and the series is available through Microsoft’s Xbox system and not Sony’s PlayStation. With Bungie’s deal, Sony will gain control of Destiny, which is already on both PlayStation and Xbox.

Microsoft said in mid-January after Sony’s announcement that it was buying videogame company Activision Blizzard Inc. in a cash deal worth about $75 billion.

Recent deal activity gives large console makers additional ways to compete against each other by obtaining content that can be offered exclusively to their customers at launch through subscription services or other means.

Microsoft stands to acquire one of the most popular shooter franchises, Activision’s Call of Duty, following the merger of those companies. The Call of Duty title has been the best or second best-selling game in the US every year since 2010, according to market-research firm NPD Group.

The planned acquisitions of Sony and Microsoft, which are pending regulatory approval, will give console makers additional ways to compete against each other by adding more content to their portfolios that they can exclusively offer to customers.

“Sony and Microsoft are in a multi-year arms race for talent and developers,” said Jefferies analyst Andrew Urkwitz. “Being at a turning point in the console cycle and being on the cusp of big subscription services, first-party titles have never been more important.”

Sony said that after the deal closes, Bungie will be an independent subsidiary of Sony Interactive Entertainment and will continue to be run by its board headed by Chief Executive Pete Parsons and Bungie’s current management team.

Kenichiro Yoshida, Chairman and Chief Executive of Sony Group, said, “Bungie has created and continues to grow some of the world’s most beloved videogame franchises, and by aligning its values ​​with people’s desire to share gameplay experiences, they Bringing together millions of people around the world.” ,

Mr. Parsons said in a separate release that the deal will help Bungie grow while maintaining the studio’s creative independence.

“Today, Bungie begins our journey to become a global multi-media entertainment company,” he said.

In 2000, Microsoft acquired Bungie to develop games for its upcoming Xbox console. The studio found success in the early 2000s before splitting from Microsoft in 2007. Microsoft’s Xbox Game Studios has since continued to produce new Halo games, and the company owns the intellectual property behind the franchise.

In 2010 Bellevue, Wash.-based Bungie signed an exclusive 10-year publishing deal with Activision for its Destiny franchise. The tie-up ended a year ago in early 2019, with Activision stating that the shooter series did not meet its financial expectations.

Sony said Monday that the Bungie team will focus on the long-term development of “Destiny 2” and work on expanding the Destiny universe and building new properties.

Analysts at Cowen estimate that Bungie generates annual revenue from Destiny in the middle of $100 million. While Destiny’s “trajectory has been bumpy at times, it is still one of the most popular franchises in gaming,” the firm says in a note to investors.

In addition to Sony’s deal for Bungie and Microsoft’s deal for Activision, Take-Two Interactive Software Inc. said in January that it had agreed to acquire mobile game maker Zynga Inc. for $11 billion. According to data from Pitchbook, activity within the sports industry following merger and acquisition deals nearly tripled to $26.2 billion in 2021, from $8.9 billion in 2020.

Global consumer spending on game software rose 1.4% last year to about $180.3 billion, according to industry tracker Newzoo BV. The analytics firm said that in 2020, such spending rose by about 23% over the previous year, as the social-distancing restrictions of the pandemic pushed people to turn to online entertainment.