Sony is in talks to purchase the media conglomerate that currently holds the reins to "Elden Ring" developer, FromSoft

[Windows Central]

The deal may be just as much about purchasing anime IP as it is about buying up FromSoft.

Sony is in talks to purchase the media conglomerate that currently holds the reins to "Elden Ring" developer, FromSoft : Read more

 

[fatpunkslim]

Given the poor management of their recent acquisitions, notably with Bungie or the closure of 5 studios this year, it would be surprising if they allowed themselves to be bought out like that, or at least not without major concessions and guarantees. Elden Ring , for example, have been huge successes in terms of multi-platform sales. And when you see the sales flop of recent PS exclusives like Until Dawn, Concord, the latest FF games, leogo horizon, or even Astro Bot, which sold only 1.5 million copies despite all the marketing around it, Kadokawa shareholders will never accept an exclusivity policy, and They would be foolish to let themselves be bought by Sony.

Besides, I’m not sure that’s what Sony wants either; I think they’re taking the same direction as Xbox with a hybrid policy that mixes exclusives and multi-platform. This is what Sony’s management declared not long ago, leaning more towards multi-platform, as they need to adapt to the market’s evolution.

The other question is about the monopoly, not so much in the video game sector, but in the manga and anime sector. However, since this is a takeover between Japanese companies, and their regulatory authorities are very lax .......

 

[GraniteStateColin]

Given the poor management of their recent acquisitions, notably with Bungie or the closure of 5 studios this year, it would be surprising if they allowed themselves to be bought out like that, or at least not without major concessions and guarantees. Elden Ring , for example, have been huge successes in terms of multi-platform sales. And when you see the sales flop of recent PS exclusives like Until Dawn, Concord, the latest FF games, leogo horizon, or even Astro Bot, which sold only 1.5 million copies despite all the marketing around it, Kadokawa shareholders will never accept an exclusivity policy, and They would be foolish to let themselves be bought by Sony.

The Board's obligation is to do what's best for their shareholders (assuming no poison pill that makes an acquisition problematic). If Sony is offering more for the company than the Kadokawa Board can calculate would be achieved through planned growth, then Sony's strategy, whether it involves taking FromSoftware titles exclusive, is largely irrelevant. Which will return greater value is the ONLY factor they should consider.

Now, what's not clear to me in the article: is FromSoftware a wholly owned subsidiary of Kadokawa? By the relatively small total valuation of Kadokawa ($2.7B per the article), that would suggest, just based on the massive success of Elden Ring, that FromSoftware must be a significant portion of that value, but hard to tell for sure from such limited information. E.g., maybe they carry a lot of debt which reduces it. If FromSoftware is a stand-alone company and just partly owned by Kadokawa, then there may be other factors at play. Ultimately, Board members are still legally and ethically obligated to do what's best for their shareholders, but they could have growth plans or other long-term strategies that they genuinely believe are better to pursue than the value they get by selling to Sony now.

Last point: to determine if the value of an acquisition exceeds the value the company's own operations would return, they need to compare the value in the growth of the cash (figure somewhere between a 5% - 10% rate of return on cash, because it would be invested) vs. their own growth expectations and select a reasonable time horizon (this time period can be somewhat subjective, hence the occasional lawsuits by shareholders). If the Board believes they can double the value of the company in 3 years and Sony is only offering 20% over current value, then that would be their reason NOT to sell. If they only foresee 10% growth of their own business and Sony is already offering that same 20% premium over the current stock price, then they must sell or risk shareholder lawsuits (which are disastrous, because even if they prevail, the case itself typically causes shakeups like people leaving the Board and senior management changes).

 

[Ron-F]

Seems to be a great acquisition for Sony, especially to compensate the fiasco of buying Bungie.