With Microsoft recent's takeover of Bethesda, and their CEO going on record saying they're going to buy more, there has been a lot of speculation about Microsoft's next move. In this post I'd like to have a quick look at the numbers, and speculate about what Microsoft's next acquisition could be. I'll be focusing on Japanese publishers, partially because of the Sega rumours floating around, but also because I think acquiring a Japanese publisher would make a lot of sense for Microsoft.
To begin, some numbers:
| Company | Enterprise Value |
|---|---|
| Bandai Namco | $13,745,492,500 |
| Square Enix | $6,640,000,000 |
| Capcom | $5,410,000,000 |
| Koei Tecmo | $5,891,103,337 |
| Konami | $4,690,000,000 |
| Sega Sammy Holdings | $2,471,000,000 |
| Kodakawa | $1,685,010,925 |
| Falcom | $85,049,898 |
| Nippon Ichi | $30,720,364 |
This list is a selection of publicly traded Japanese publishers with their current enterprise value. At the time of writing, Microsoft has $136,527,000,000 cash on hand. In other words, if they really wanted to they could in fact afford to buy this entire list. However, in practice this obviously won't happen due to it not making financial sense. Furthermore, the enterprise value alone doesn't tell the whole story. When taking over a company, the acquirer will almost always pay a premium on top of the enterprise value, because the board of directors and shareholders of the target company must agree to the takeover. Thus, in reality Microsoft would be paying at least 20% more than the numbers in the table show, probably more.
Next, let’s go over the companies in this list and see which one would make the most sense.
Bandai Namco:
+Owns many different IP’s: Ace combat, Dark Souls, Tekken, Tales of, etc.
-Highest EV on the list,
-The majority of their titles already appear on xbox.
-Significant parts of their income come from non-video game sources such as toys and amusement parks
conclusion: probably not a buy.
Square Enix:
+Has the most popular JRPG IP’s on the planet.
+Has a very cozy relationship with Sony, meaning that buying them would let Microsoft snatch away some key time exclusives
+Square owns Eidos Interactive, the developer responsible for Deus Ex and Tomb Raider
+Has a succesful MMO, another genre microsoft is currently lacking in.
-Second highest EV on the list
-Said relationship with Sony might make a takeover more difficult.
-Also involved in arcades via ownership of Taito.
Conclusion: Would make an excellent yet expensive acquisition, assuming they can make the deal happen.
Capcom:
+Monster Hunster exclusivity might be capable of single handedly carrying the Xbox brand to relevancy in japan
-Most of their games already make it to Xbox/windows anyway.
-high EV.
Conclusion: Would be an excellent addition to microsoft’s lineup, but not sure if Capcom would be the most sensible option here.
Koei Tecmo:
+Snatching Nioh away from Sony exclusivity would be a win.
-High EV.
-Complex business structure with lots of non-video game divisions.
-Few popular IP’s
Conclusion: Not a sensible acquisition.
Konami:
+Metal Gear!
-Probably makes more money from Yu gi oh cards and pachinko than video games these days.
Conclusion: No.
Sega Sammy Holdings:
+Absolutely staggering range of IP’s
+Owns Atlus, snagging Persona away from Sony would be a huge win.
+Has a large amount of dev studios, including some that specialize in PC games such as Amplitude and Relic.
+Has a history of working with Microsoft
+Out of the major Japanese third parties, their EV is the most affordable.
-Sega Sammy holdings also has quite a few non-video game businesses.
Conclusion: It doesn’t surprise me that there are so many rumours about Sega. They look like they’re by far the best buy on this list. If I was put in charge of Microsoft tomorrow, I would absolutely go for it.
Kadokawa:
+Owns FromSoftware!
-That is also the only reason I even bothered to include them, the majority of their business isn’t actually video games
Conclusion: Calling them to see if they’re not interested in selling From would be an excellent move, but buying the entire company is a big no.
Falcom:
+Specializes in JRPGs, an area Microsoft is sorely lacking in.
+Most of their output is Sony-exclusive, taking that away would be a win.
+EV isn’t even 100 million.
-Niche. Would Ys and trails fans be willing to make the jump to Microsoft’s ecosystem?
Conclusion: Maybe? It does strike me as worth trying, but perhaps for a company as huge as Microsoft niche developers like Falcom aren’t worth the effort.
Nippon Ichi:
+Cheapest on the list
-Their biggest IP is as far as I know Disgaea, which doesn’t seem to be a very big seller.
-A lot of their value seems to come from their publishing activities, which isn’t very useful to microsoft. Conclusion: Probably not worth, even with their low EV.
So, what do you think? Did I miss anything? Should Microsoft try to buy a Japanese company, or should they put their billions to use acquiring even more Western talent? While the rumours did turn out to be false, I wouldn’t be surprised if a Sega acquisition was in the cards. It just seems the most sensible of the lot.
Submitted by Tasty_Bicycle | #Specialdealer Special Offer Online Shopping Store 2016
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