Can Sony survive Tencent?
The consolidation in the current games market is musical chairs for high rollers. Sony’s overall position of its games division, which is arguably at its most vulnerable as the console business resets this year, is making bids left and right to secure its long-term future. But the immense success of newcomers like Tencent, which , remember, was a measly $3bn firm a decade ago and generated $54bn in 2019, means that incumbent platform holders need to get busy.
When the Sony’s CEO, Kenichiro Yoshida, took over in 2018 he immediately refocused the firm’s attention to innovation as it had in the past. To accelerate that process, and given the current landscape of major tech firms spending to break into gaming, Sony is clearly investing on internal innovation and through external acquisitions. Along these same lines it recently spent $400MM on streaming platform Bilibili. It also paid $250MM for a 1.4% stake in Epic Games (valued at $18bn or roughly double that of category leader Valve). That’s a lot less than when Tencent paid $330MM for a 40% stake in 2013.
Seemingly, Sony was just pushed out by Tencent in a bid for Leyou, a Hong Kong-based game developer and parent owner of, among other, Digital Extremes which is known for its ridiculously popular Warframe (which, btw, features a guitar-like instrument, the shawzin, if you needed a sense of what they’re all about). Tencent now has the exclusive as it readies to finalize a bid.
With a position that is much less secure than it was in the past around services, devices, and technology that will drive future growth and the number of capital-rich newcomers, Sony may yet be facing its real challenge in gaming for the first time in years.
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