Semantic Nonsense: Forecasting an allegedly realistic lineup for Sony mergers

Welcome back to Damage Control, where today we’ll be continuing our discussion of Sony Group Corporation. Sony is a multifaceted company, with fingers in television, movies, music, video games and consumer electronics.

While they’re making a big splash this week by scooping up Bungie, they’ve been busy gobbling up other businesses for a while. Remember what happened to Crunchyroll just last year? That was but one of 11 such acquisitions it made in 2021, including EVO and several large buys in the U.K. market.

As Geoff mentioned yesterday, Sony themselves says we should expect more action, so I’m going to speculate on something other than mini console lineups for a change and take a stab at who else may be giving Sony the business.

Konami

I hear a lot of people throwing around Capcom and SquareEnix as suggestions for getting acquired, but they’re both, frankly, doing too well to be bought. But the list of ’90s kids’ favorite video game companies isn’t all bad options. There’s one in particular who has remade their business in the strategy of continuously doubling-down on pachinko as their primary revenue stream. But 8% of pachinko parlors went out of business last year. The disruption has already led to cuts at Sega Sammy (pachinko being the Sammy half, which also used to be the much bigger half of the revenue), culminating in Sega completely dumping its arcade business last week. I suppose you could add Sega to the list when we’re done here.

Sony, for its part, has already busied itself with scooping up Konami’s discards. When Hideo Kojima left Konami for greener pastures, he found a partner in Sony for Death Standing.

Konami, like Bungie might not provide the same volume to Sony that Activision Blizzard brings Microsoft, but they do bring a valuable catalog of IPs exploitable not just for the Playstation, but Sony’s media empire as well.

And breathing new life into Silent Hills will get back at least a quarter of the purchase price in free marketing.

Netflix

And we’re already off video games. But here’s that media empire thing again and — I might note — home of Konami’s Castlevania series.

Sony hasn’t gotten around to much in the streaming world. They’ve clearly prefered to make money from licensing rather than from subscriptions. I’m sure it’s been nice and easy to manage rather than building something, but the market and their competition among the Big 5½ are leaving them behind.

With Comcast (NBC/Universal), Disney and ViacomCBS all jumping into the streaming wars with studio-specific services, Sony has suddenly found itself being the only one going without. And the future of streaming is a studio-system-like set of walled gardens with the new streaming services all either buying back the rights to their content or just waiting for existing contracts to time out, never to be renewed. And with the few remaining mid-tier players like MGM/United Arts being circled by vultures like Apple and Amazon, it won’t be long before Sony finds itself the only provider of licensed content at all.

This, of course, would leave it as the sole remaining content on Netflix that the streamer didn’t produce itself, making Netflix de facto Sony’s streaming service even if Sony doesn’t buy it.

That being said, in a few years, Sony might want to get on the studio-system-streaming-service bus, but still not want to expend the effort of building something, or giving Crunchyroll a massive mission creep. Not to mention the massive leverage they could exert over Netflix in an offer by waiting until after everyone else has abandoned the former king of the streaming world.

ARM

Oftentimes, the path to success is not by doing, but by owning.

We know ARM is buyable because NVIDIA would be owning it right now if antitrust hadn’t reared its beautiful head.

Sony’s share of the smartphone pie has steadily decreased from 9% right before the iPhone launched to less than 1% today. And while I have no expectation of any acquisition making them a household name for smartphones, with this buy Sony can get a piece of the action from damn near every smartphone sold, in addition to a host of other products licensing ARM technologies.

All Sony needs to do here is keep the lights on, let the existing company continue to iterate the tech, and let the money keep rolling in.