Sony’s movie boss says he expects more games company buyouts
Pictures CEO believes movies consolidation has peaked and games will be the “new growth area”
The boss of Sony’s movie business has said he believes that the video games business will be the next focus for company mergers and acquisitions.
Speaking during the Bank Of America Merrill Lynch Media, Communications & Entertainment Conference this month (transcribed by VGC), Sony Pictures Chairman and CEO Tony Vinciquerra was asked if the movie industry would see any further consolidation.
He replied: “I think the traditional medium of television and film has probably peaked and the new growth area will be the games business, and who’s better positioned than Sony for that business?
“I do think you’ll see some consolidation on that side. You’ll probably see a little more on our side as well. I do think there are probably too many film studios and you might see one or two less over the next five-to-ten years.
“But I think the next area of consolidation will be the games business.”
The games industry’s pandemic boost has already seen a significant rise in mergers and acquisitions.
According to recent research by InvestGame, the value of M&As in the games industry exceeded $22 billion in 2020, including the sales of ZeniMax to Microsoft and Codemasters to EA, which is the highest amount since 2016. It said the key acquirers in 2020 were Tencent, Embracer Group, Stillfront and Zynga.
The report notes that because video games have outperformed many industries hurt by the pandemic, public and private investors have started to target the industry as a perceived safe bet.
In its April end-of-year results call, Sony itself said it would “aggressively” invest in its first-party game studios during its current fiscal year (ending March 2022), in addition to partnering with external game developers on exclusive games.
Sony has so far announced partnerships with the new studio from former Stadia games boss Jade Raymond, investment in a multiplayer game from Bungie veterans, and the acquisitions of PC port house Nixxes and UK-based studio Firesprite.
The PlayStation firm also invested an additional $200 million in Epic Games this year, which buillt on the minority stake it took in the company in July 2020, when Sony made a strategic investment of $250 million in the Fortnite and Unreal Engine firm.
“We intend to increase development personnel and other in-house costs by approximately 20bn yen [$184m] year-on-year, as we further strengthen our in-house software,” Sony CFO Hiroki Totoki said in the April conference call.
“To enhance our software offering, we intend to continue investing in partnering with external studios, in addition to aggressively investing in our in-house studios.”
He added: “As I just mentioned, we aim to strengthen the PlayStation platform through actions such as the recently announced partnership with Haven Entertainment, which was established by Jade Raymond, creator of the famous game Assassin’s Creed.
“In our additional investment of Epic Games, along with the rest of the Sony group we will also work to enhance the social and platform capabilities of games.”
Sony has been working more closely with its movie business in recent years, following the opening of PlayStation Productions, a movie studio tasked with adapting its game franchises to television and movies.