Gaming, Streaming, Online Gambling, Industry Consolidation is Heating Up by James R. Wigen, Sr. Portfolio Manager, Independent Financial Management

-Sony Interactive Entertainment’s deal for video game maker Bungie follows Take-Two’s $12.7 billion agreement to buy Zynga and Microsoft’s $69 billion Activision Blizzard acquisition.

-Bungie is behind the multiplayer shooter games Destiny and Halo, the latter of which it developed until 2010.

-Technology companies are increasingly interested in gaming as they look to expand audiences and prepare for future iterations of virtual- and augmented-reality devices.

Sony Interactive Entertainment has agreed to acquire privately held video game developer Bungie for $3.6 billion, adding to a flurry of industry consolidation this month.

Bungie is the company behind the multiplayer shooter games Destiny and Halo, the latter of which it developed until 2010. Bungie was acquired by Microsoft in 2000 and split from that company in 2007.

While smaller than both Take-Two Interactive’s $12.7 billion deal for Zynga and Microsoft’s $69 billion Activision Blizzard acquisition, Sony agreed to buy the company that, with Halo, helped launch Microsoft’s first Xbox in 2001.

All three video game deals were announced in January.

Technology companies are increasingly interested in gaming as they look to expand audiences and prepare for future iterations of virtual- and augmented-reality devices.

Sony shares were up about 4.5% for the day as of 4:30 p.m. ET.

Bungie will continue to operate independently within Sony, according to a statement.

The video game developer’s most recent hit is Destiny 2, which will continue to be offered on multiple platforms. The Halo franchise has been developed by Microsoft’s 343 Industries since 2011. Its latest game, Halo Infinite, launched on Xbox and Windows in 2021.

“Bungie has created and continues to evolve some of the world’s most beloved video game franchises and, by aligning its values with people’s desire to share gameplay experiences, they bring together millions of people around the world,” said Kenichiro Yoshida, Sony Group Corp.’s chairman, president and CEO, in a statement. 

Sony Interactive Entertainment, which develops PlayStation and is based in San Mateo, Calif., is a subsidiary of Sony Group Corp.

Information provided by Alex Sherman@SHERMAN4949.

My view – All of this consolidation comes after the WarnerMedia rollout to Discovery+, and WynnBet app being put up for sale.  

These three sectors have one thing in common, large customer acquisition costs.  Whether it’s marketing or content creation, it becomes very expensive to find new customers and keep them engaged.  With people changing how and what type of content they want at their fingertips, many companies are having to head back to the boardroom to figure out how they can grow their business in this changing environment. 

The answer, streaming shoppable video technology, allows people to get rid of commercials and easily learn about and purchase products they see while consuming content, whether through a tv show, movie, playing games or watching sports.  With commercials quickly becoming something people can opt out of, it will be critical for advertising dollars to be implemented into the content people are watching. 

Companies will need to reach out to content creators and offer to pay them to integrate their products into the tv show or movie which is being created.  This will provide content creators upfront money to help reduce the cost of creating the content, and will benefit consumers who can directly purchase goods which they see on their screens, whether on a phone, ipad, computer or television.  It is developing very fast, will be coming very soon, and only a few survivors will be left controlling it all.

My Top Survivors:

Amazon (AMZN)

Discovery+ (through WarnerMedia) (DISCA) 

Disney+ / ESPN+ (DIS)

DraftKings (DKNG)

Endeavor Group Holdings  (EDR)

Fanduel (parent Flutter Entertainment) (PDYPY)

Fanatics (private)

FuboTV (FUBO)

Meta (old Facebook) (FB)

Microsoft (MSFT)

Netflix (NFLX)

Paramount+ (parent ViacomCBS) (VIAC)

Peacock+  (through NBCUniversal – parent Comcast) (CMCSA)

Sony Group Corporation (SONY)

Tiktok (parent ByteDance) (private)

YouTube (parent Google / Alphabet) (GOOG)

 

It will take a little time to all come together, however, once it does it will be very tough to compete against these survivors.

 

James CPM® designation was supplied by Global Academy of Finance and Management or GAFM®

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All opinions expressed by James R. Wigen on this website are solely his opinions and do not reflect the opinions of IFP Advisors, LLC, dba Independent Financial Partners, (IFP).  Investment Advice offered through IFP Advisors, LLC, dba Independent Financial Partners (IFP), a Registered Investment Adviser. IFP and Independent Financial Management, LLC (IFM), are separate entities.

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