Deal: Sony Buys Video Games Maker Bungie For $3.6B

It was barely two weeks ago when we witnessed the gaming industry’s biggest acquisition; Microsoft agreed to buy Activision Blizzard for $69bn in cash. Now, we’ve seen another big gaming deal from none other than Sony, Microsoft’s gaming arch-rival.

Sony Interactive Entertainment, the owner of the PlayStation brand, has agreed to buy game studio Bungie in a $3.6bn deal. The $3.6bn includes an upfront sum and money earmarked for employee incentives, though Sony didn’t disclose the exact breakdown.

Bungie is best known for the multiplayer shooter games Destiny and Halo. It owns the Destiny IP but sold Halo to Microsoft over two decades ago. Halo, an Xbox-exclusive, helped make the Microsoft-owned console the big brand it is right now.

  • It’s interesting that shortly after Microsoft announced its agreement to buy Activision, a video game publishing giant, its arch-rival Sony went shopping for a game studio and picked none other than Bungie, a company Microsoft previously owned.

 

  • Microsoft bought Bungie in 2000, a year before it released the first Xbox console. Bungie’s Halo franchise became the Xbox’s “killer app,” selling millions of copies and drawing consumers towards the Xbox ecosystem.

 

  • In 2007, Bungie split from Microsoft to become an independent company. It gave up the Halo franchise in the process and went on to release Destiny in 2013. Destiny became a chart-topping game drawing hundreds of millions of dollars in revenue and giving its developer a second acclaimed hit after Halo.

All along, Microsoft remained a minority Bungie shareholder. The game studio also took a $100mn minority investment from Chinese gaming giant NetEase in 2018. Both investors stand to benefit significantly from the sale to Sony.

When Microsoft announced its deal to buy Activision, Sony most likely quivered. Effectively, Microsoft sealed a deal that’ll make it the third-largest largest gaming company by revenue, only surpassed by Sony and China’s Tencent. It meant Microsoft was guzzling some steroids in its rivalry against Sony, and the Japanese gaming giant had to step up. This acquisition is one way of doing that.

Buying Bungie will strengthen Sony’s gaming franchise business as it competes against Microsoft and the vast gaming IP Activision will bring to its table. This competition is most fierce as both companies build up their game subscription services. Already, Microsoft said its Xbox Game Pass service had crossed 25 million subscribers, while Sony’s PlayStation Plus is at 47 million users. Adding exclusive gaming content is the primary way both companies would compete on this front.

 

  • According to a press statement, Bungie would remain an independent subsidiary of Sony Interactive Entertainment post-acquisition. Bungie’s CEO, Pete Parsons, will retain his leadership role.

Correction: We corrected the article to indicate that Microsoft buying Activision would make it the world’s third-largest gaming company by revenue instead of the first, as stated earlier.

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