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MS bought studios that were either small/struggling/worked with before. Insomniac fits none of these criteria.
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Sony paid $229 million, mainly in cash, to acquire Insomniac Games in November 2019
- Thread starter Kolx
- Start date
For those wondering, M&A valuations are typically either a multiple of some baseline financial metric (ie, X times revenue/Y times EBITDA; Y>X; for classical games studios, I've seen X be around 3-7) or a more complicated formula based on projected future earnings and capital structure. While something higher wouldn't have been shocking, I'm also not too surprised to see this price.
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How do we know they didn't? How do we know they didn't offer $400m? Not always about money. For a long time Insomniac didn't want to be bought.
Yep it's more of an investment in talent
Sony can provide them the IP to develop between Spider-Man and Ratchet and Clank, and Insomniac can develop new IP for PS5 or PSVR
Yeah, Sony one all their IP ironically. Funny how it works out.
essentially Sony have bought a machine with a great culture that produces great content.
It must be really hard to start from scratch and have such a large scale creative production work in such a way that is conducive to building great games.
m
a Public company may cost more (350+M)
iirc Matt said before Public Company sell at twice their current price..
so i don't think Sony or Microsoft will go for them and maybe work on exclusive contracts which will be cheaper
Something tells me Disney tried to go around Sony and just buy Insomniac? And Sony did the smart thing and locked them down.
I think Sony & Microsoft better try to lock down their second party relationships before Google & Amazon start spending we are about to see a gold rush for development teams soon.
I just hope that Console guys and PC guys don't lose some of their favorite teams and be forced to play Stadia all due respect but Cloud gaming is for being out on the run or at break from work. I don't think I want to sit there at home and use it at least for the foreseeable future.
I think Sony & Microsoft better try to lock down their second party relationships before Google & Amazon start spending we are about to see a gold rush for development teams soon.
I just hope that Console guys and PC guys don't lose some of their favorite teams and be forced to play Stadia all due respect but Cloud gaming is for being out on the run or at break from work. I don't think I want to sit there at home and use it at least for the foreseeable future.
What a steal! That's $199 - $209 million more than Microsoft paid for Ninja to play games on their streaming platform.
Dozens of posters have expressed their surprise at the low acquisition price. My point is that Insomniac has not experienced great success outside of its partnership with Sony. Thus, they are more valuable to Sony than other publishers on the market. However because of this fact, Sony doesn't need overpay for their services or their IPs. They aren't really competing with anyone else but themselves.
Without Spidey or Ratchet they would have never offered them anything close to that. And without those games, Insomniac is literally screwing themselves over in any buyout.
People need to realize that Insomniac is a very large studio with two different locations and they simply can't give up those series and enter into a new venture with a new owner. This is why they remained independent to begin with, they still needed Sony in their business operations but wanted options to work with other partners as well. A buyout that would cut them off from their PlayStation relationship was never going to happen, so it was either be bought by Sony or remain independent.
They both got lucky. Considering Spider-Man went on to become the fastest selling PS4 game, Insomniac would have made a huge mistake leaving that behind after the success they just had with Sony. Think of how much money Spider-Man has made, and will make again in the future. They're going to be swimming in money.
Companies don't benchmark selling at double their current public price. Some do, but the vast majority do not. That would imply a very large debt balance and significant control premium. I could very well see pricing Remedy for around what was paid for Insomniac.
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The TitanFall IP is bigger than Ratchet & Clank or any other IP owned by Insomniac.
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On one game that wasn't successful out of many Insomniac worked on. I meant studios like PG or Undead Labs which are associated with MS.
Not likely. Disney shut down most if not all of their gaming divisions. I believe even recently they handed over a gaming project to someone outside Disney. They don't want the headaches of game publishing.
i'm not expert and read only about it but remedy owns IP and engine and both won't be cheap
but again i'm not expert so that's why i Taged Matt
Isn't Sunset Overdrive the only IP they owned anyway? That was the reason they took a step back from Sony in the first place, they were vulnerable due to having nothing to their name .
R&C isn't an Insom IP (Insom created, Sony owned), the only noteworthy IP in their stable (before being brought) was Sunset Overdrive.
They owned Fuse, Song of the Deep and a whole bunch of VR titles.
Falcom has a market capitalization of about $113.3 m, so about half of the Insomniac.
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That's fair; I adjusted my post to be a little less...bombastic.
I also wrote a primer here as to how this stuff works and is valued!
In essence though, you'd look at the enterprise value for a company, which can be shorthand determined by looking at [Market Cap+Debt-Cash]. That's not all there is to it, but that's a quick an easy way of determining it. This is the EV, which is then given a control premium, typically in the range of 20-30% based on comps.
While Remedy no doubt has a solid value, it's done more wholistically (usually) than trying to piece together single assets/IPs. At least, when going for a full on control sale.
I read a report over on the comic/marvel reddit and forums that Sony as a publisher made over 150 million from Spider-Man in it's first 3 days. I'm guessing that by the time they sold 5 million they recouped on the investment.
For context Spiderman is at 13 million sold as of the latest report.
Ah Fuse, forgot about that one.
Maybe we'll get a Sequel on PS5
People realize Sony still need to pay Insomniac's wages and bills, right? It's not like Insomniac will build Spider-man 2 for free. My understanding is that every AAA release costs tens of millions today, and GTA V needed a budget of $265 million.
They have essentially paid $229m for exclusivity and the power to tell Insomniac what to work on, but they have to pay a lot more to actually make any games and see any profit.
That said, it's probably still a worthwhile move, as their exclusives strategy put MS in a really tough spot, so much so that they had to reverse course and acquire all the studios they have been going after.
They have essentially paid $229m for exclusivity and the power to tell Insomniac what to work on, but they have to pay a lot more to actually make any games and see any profit.
That said, it's probably still a worthwhile move, as their exclusives strategy put MS in a really tough spot, so much so that they had to reverse course and acquire all the studios they have been going after.
Because of the discussion here I looked up falcom, they are worth roughly 113m dollars, if we go by Matt saying that publicly traded companies will usually require twice the value to acquire that means that it would cost just about the same as insomniac to acquire them, not as cheap as many were thinking and definitely not worth it for the price.
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Seems like Matt didn't say that, so the price will be lower than insomniac, still more expensive than it's probably worth
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Seems like Matt didn't say that, so the price will be lower than insomniac, still more expensive than it's probably worth
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Good point, but if MS did offer substantial more money, I see no reason why Insomniac would reject the offer.
Or the original version of the first game before EA butchered it.
Do you have access to some specific data or public available info from past transaction?