Together with experts, we analyze whether Bungie really knows how to develop and operate games services, as well as how often transactions are made in the market, whose goal is to obtain expertise.
Controversial deal
The purchase of Bungie came as a surprise to many. On the one hand, she was proud of her independence after leaving Microsoft and terminating her contract with Activision Blizzard. On the other hand, the studio is a controversial asset for Sony, because it has retained the right to publish games on any platforms.
Against this background, it is not surprising that the deal caused some of the gaming community to be perplexed. Many people are used to considering such M&A stories primarily from the point of view of replenishing the library. What is it about this time, judging by the statement of the parties, as if there is no question.
Therefore, market analysts quickly started talking — not without Sony’s input — about the specific nature of the deal. Today, the media is actively saying that the Japanese gaming giant has decided to buy, because it needs expertise to create successful online products.
Both analysts and journalists, including, are repelled by the unequivocal statement of Jim Ryan, the head of Sony Interactive Entertainment: “We have ambitious plans to create live services. Working with Bungie’s most talented employees will accelerate their implementation.”
The question is how strong Bungie is as a company for the creation and development of such projects, as well as whether Sony has overpaid for it. This is what we decided to talk about with the two pool of experts — with experienced Destiny 2 players and profile experts.
Destiny 2 as a game — interviews with players
The game was originally a premium product. Since 2019, it has been a frituplein. How organically is this model perceived in it?
Igor Belkin, founder of the Guardian community.FM: Destiny 2 cannot be called a frituplein in the full sense of the word. Yes, the client is distributed for free. You can play some basic activities without paying a single ruble. However, the vast majority of content (PVE and PVP endgame, story and seasonal campaigns, locations, weapons, armor, and even character subclasses) requires the purchase of relevant add-ons.
Such a division sometimes causes frustration among free players and they call the loot obtained in the endgame “donation”, which, of course, is absolutely incorrect.
Vika (citizencursed), Destiny veteran: A lot has changed at the time of the transition to frituplay. It’s about both subjective things related to the perception of the game, and about quite objective ones.
For example, a huge number of cheaters and boosters have appeared (players who help get certain weapons, achievements or pass a raid for money).
PVP modes have been particularly affected by this. For a long time it was very difficult to achieve any success, since about half of the players in competitive modes either played with cheats, or others played on their accounts. This was due to the fact that PVP was allowed without normal authentication, even without confirming the phone number.
Bungie has been actively fighting this problem for the last six months, but nothing has been done by the company for a very long time.
Some of my friends, including for these reasons, stopped playing Destiny for a while.
I remember the transition to fritupley just that. The community of the game has always been honest, non-toxic, friendly, and here a zoo was allowed into our cozy house. Elephants smashed porcelain, monkeys stole things, and mice gnawed on provisions.
Now everything has stabilized.
Is it possible to talk about the exclusivity of the chosen monetization model, because the main emphasis in it is not on the sale of experience, currency or timers, as is usually customary in fritupley, but on the sale of access to seasonal content?
Igor: I don’t think the Destiny 2 model can be called absolutely unique. First of all, I repeat, in my opinion Destiny 2 is not a free-to-play game in the conventional sense, since most of the activities are not available to free players.
The Destiny 2 monetization scheme is more like the classic DLC work in premium games. In terms of monetization, Bungie’s game is very similar to, for example, Warzone, which also has seasons and paid cosmetics. But, unlike the same Warzone, in Destiny 2 you will not be able to buy any barrel or armor for real money.
Vika: It’s difficult to talk about exclusivity. I will note that another model (in general, traditional fritupley-monetization) it wouldn’t have worked here.
Firstly, the community of the game is brought up, including the first part. All rewards in the game depend only on the abilities of the player himself. It motivates you to play better. Items cannot be transferred, they must be earned. Against this background, any paid experience boosters or currency without invested efforts would cause loyal players only negative, as they would lead to the depreciation of the forces and time invested with love.
Secondly, consumables and experience matter only at the very beginning of the journey. Destiny has never been a game about leveling levels or the amount of in-game currency. “Have you pumped up to the maximum level and passed the story campaign? Congratulations, now you can start playing for real,” is what we say to beginners who are just getting used to the game. After the initial stages of familiarization, the most interesting begins, and there the player’s skill comes out on top.
Thirdly, Destiny successfully combines elements of a shooter and an MMO. This means that the main game time is spent searching for the perfect combination of armor and weapons, their characteristics and modifiers. If you give players a window to skip this stage, then the whole essence of the MMO component of the game will lose its meaning.
The game is five years old. Judging by the metrics, she is generally doing well. But, subjectively speaking, can we say that she successfully holds the core of her audience or has the main peak of her popularity passed?
Igor: The figures show that yes, it is possible. Some players leave, new ones come in their place. Someone like me and a bunch of my colleagues from our family of clans have been playing Destiny since the release of the first part and are not going to quit it yet.
As with any service game, it has ups and downs, brilliant finds and failed DLC (the first two almost buried Destiny 2), but for a five—year-old game, it performs very, very well. The game constantly refreshes the meta in both PVP and PVE, there is more content, it becomes better and, it seems, in the eighth year of the series, Bungie almost perfectly began to understand which game cycle (gameplay loop) is needed in order to maintain the interest of the target audience.
It’s hard for me to judge the popularity of the game outside the community, I can’t be objective here.
Vika: According to my feelings, the peak of Destiny’s popularity came with the launch of the Forsaken add-on. After that, he slept.
Forsaken seemed to revive the game, fixed many sore spots and gave the players what they were waiting for the most. We were glad that they heard us.
Today, add-ons for the game come out about every year, they really raise the popularity and interest in the game for a while. However, none of them has yet achieved the success of Forsaken. And, as it seems to me, it will never reach.
Seasons come out between additions. The model with seasonal passes still works well, but interesting content in these seasons is not always enough. Some seasons are very successful, and in others Bungie is experimenting with mechanics and activities. Experiments are not always successful.
At the moment of failures for the whole season, the very core loses interest in the game. We do the necessary minimum of tasks every week so as not to lose the relevance of weapons and armor, and then we go to play other games.
I really hope that with Sony’s funding, we will have more variety in seasonal activities so that we don’t have to ride an emotional roller coaster between additions.
How is the game strong today?
Igor: The game has an amazing gameplay, art, mission design and mechanics, a high variety of activities for different categories of players. The game has something to do, both tired men who decided to shoot mobs under a beer in the evening, and a rabid schoolboy on adderall, born with a gamepad in their hands and not getting out of PVP.
The game now has a unique combination of casual content for everyone, PVP modes for young people eager to assert themselves and incredibly cool endgame PVE activities (raids and dungeons).
Another question is that the onboarding of new players is done very badly. After the 2020 update, there is no campaign as such, in principle, there is only a chain of primitive quests on the starting planet. It’s not interesting to start playing it, none of the basic mechanics are really explained. As for the endgame variety mentioned above, you have to wade through dozens of hours of monotonous and boring grind to get to it. Moreover, within its framework it is not at all clear where to go or what to do. Not to mention the fact that the first weeks or even months of newly arrived PVP players will be humiliated by players with a top gear from endgame.
Vika: The strongest side of the game today is endgame: raids, dungeons, complicated versions of ordinary PVE activities. This has always been Destiny’s strong suit. Despite the changing seasons, the interest in endgame among the experienced part of the community has always been high (and still remains at the same level).
However, it is not easy for most players to find a company to complete these activities. The built-in search tools of the group are not developed, players organize themselves on forums and on servers in Discord. Going on a raid alone will not work, and there will be no pleasure. Therefore, the percentage of players who can really appreciate the best part of the game is small.
For fans of achievements and lists, there are huge opportunities here. Interesting achievements, there are quite a lot of them and they differ significantly from each other. There is an achievement for everyone according to their strength and level. In addition, the game has a huge number of weapons for every taste. New weapon and armor modifiers are added every season. Plus, different PVE activities require a different arsenal. Shooting doesn’t get boring.
The game also has a perfectly written universe and ENT on it.
What problems does the product have, if not to go into in particular from the point of view of mechanics. Perhaps the gaming community has some serious questions about how the product is supported?
Igor: All online projects have one common problem: someone from the community always doesn’t like something. There are always players who demand to bafnut one aspect, ponerfit another.
I note that over the past year the game has made a giant leap in quality. Among other things: it became more convenient to play, the narrative team began to work better, anti-cheat and crossplay earned on the PC.
But a number of fundamental problems are still unresolved. The game is still full of cheaters, and the monstrous entry into the game slows down the growth of the game base. The complete lack of support also does not contribute to the development of the game, as well as poor optimization of the PC version. Despite all this, Destiny 2 manages to retain players for so many years.
Vika: I think the main drawbacks are the lack of dedicated servers for PVP modes and the lack of attention to PVP activities. The game has a huge number of fans to kill each other in different ways. At the same time, there are few cards in the pool, new ones are not added, and the old ones are gradually removed from the game. Moreover, the technical component of matches often leaves much to be desired. The network connection is unstable. There are regular departures with subsequent punishment “for the abandoned match”. It’s terribly demoralizing for the players.
In addition to PVP, it is worth mentioning once again not always interesting seasonal activities, a large number of bugs in the game itself (teleporting enemies, holes in textures and other problems), which sometimes interfere with the activity. For example, there was a bug in the raid “S.A.B.E.R of the fallen”. If you jump at the entrance to the room with the boss, the player instantly died and it was impossible to resurrect him.
Developers often know about such problems, but it takes months to fix them. One of the weapons has broken the game itself so many times that it has been fixed for more than two years.
Buying Bungie — interviews with relevant experts
How often are transactions concluded in which the buyer is primarily interested not in the company’s portfolio, but in its expertise, experience, and the ability to help share knowledge?
Grigory Bortnik, editor-in-chief of the InvestGame analytical platform: This is a fairly common practice. An example of recent similar deals can be considered the purchase of Codemasters from Electronic Arts; purchases of game studios from Sony (basically all the company’s acquisitions are studios with which they have already worked on other projects, and they do not give any portfolio changes, only expertise); the same can be said about the acquisition of indie-tinyBuild publisher.
At the moment, due to the increasing consolidation of the market for strategists, the first place is no longer an increase in the portfolio (almost all major IP holders have already been sold out), but the purchase of teams, expertise that will be able to develop both existing IP and new ones.
Alexey Savchenko, CEO of Magnifier One: I will start from afar.
Any investment is a set of factors multiplied by market conditions and the extent to which the acquisition of an asset “falls” into the strategy of the investing party.
Bungie is a company with a very strong IP, growing revenue, 900 employees, and a set of unique expertise. Moreover, she has repeatedly confirmed that she is able to repeat success over and over again. Plus, she is able to play commercially successful live-ops of large titles.
Sony has experience working together with Bungie, it has been tracking Destiny’s activity on its platform. Sony, of course, clearly understands the studio’s growth points, IP (in particular, in cross-media) and assumes that it can scale the studio’s unique expertise on other company projects.
This venture has a certain amount of risks, which are also taken into account in the structure of the transaction. All this combination of factors determines the decision on the realized investment opportunity on the part of Sony.
My point is that decisions about a large purchase are made based primarily on such a factor as expertise, not very often.
Does it often happen that ecosystem synergy is an important factor in a purchase offer?
Quite often.
Sony talks about buying Bungie as a deal that will help the Japanese corporation to establish the production of live services faster. Can it be nothing more than general words, because we so often see such passages in press releases?
Grigory: I agree that many gaming companies often add such an expression to press releases, but for Sony, this deal is, in fact, what it is. At the moment, Sony does not have any strong game projects or franchises that have been supported for a long time (unlike Microsoft, which has gained access to Call of Duty, Overwatch, World of Warcraft, Diablo and a rich expertise in long-term product management).
For Sony, the acquisition of a team that has been able to prove its experience and ability not only to attract an audience on more than one project, but also to launch a new trend in the gaming market in general (after the release of Destiny, many large gaming companies tried to make similar games), makes it possible not only to attract a new audience, but also to keep players for more the deadline.
At the moment, most of the company’s revenue is based on the sale of premium projects. The expansion of the portfolio due to projects that can be operated for a long time looks logical, given the company’s long-term plans for the development of not only the PS5 ecosystem, but also the further development of the PC direction.
Alexey: Sony is solving a strategic task by giving a signal to investors and the market that it intends to independently operate a large number of live-ops products. Having bought Bungie, she immediately answers the question of exactly how she intends to do it.
The second message, which is less noticed, is that Sony is interested in bringing Destiny as a brand to the cinema and television screens.
How fair is Bungie’s estimate of $3.6 billion? Many were surprised by such an assessment of the company. Everyone immediately found a comparison — half of Bethesda. And according to some couch analysts, Bungie can’t be worth that much. What do you think about it?
Grigory: If we are talking about valuation, then it is worth considering the structure of the transaction. Only 2/3 of the total amount ($2.4 billion) will be paid at the time of closing the transaction. The remaining $1.2 billion will be paid in motivational payments over the next few years (2/3 over the next 2 years). And the amount of these payments will depend, among other things, on whether this shareholder will still be an employee of the company.
In fact, Sony pays only $2.4 billion. The remaining part may be less or even be recognized as an operating expense. This will reduce the cost of the acquired asset for the balance sheet.
If you answer your question concretely, then for a non-public company with a high reputation (the creator of two strong IP, who relatively recently attracted $ 100 million from a profile investor), expertise and prospects, such an assessment is generally understandable.
Also, do not forget that Sony is a public company. She makes all her acquisitions taking into account a long-term strategy and starting from internal forecasts. If such a deal was approved internally, then this price normally falls on the current forecast.
Of course, based on the latest deals on the market and the purchase of Bethesda (if we compare honestly, after all, $3.6 billion is 32% of the ZeniMax price, not half), we can say that the company did not overpay so much. Plus, let’s take into account that that deal was announced back in 2020. Then the market situation was very different from the current one. Now it is almost impossible to find an AAA-level studio capable of making and supporting projects that will attract both new and old audiences for a long time.
Alexey: The fairness of the assessment is a matter of the context and structure of the transaction. Without knowledge of these details, it is incorrect to talk about the fairness of the price.
Why are there people who think that the specified amount is too large, that Bungie is worth less?
Valuation of intangible assets greatly blows the head of people who are used to thinking that any transaction is calculated based on 3-5 deductions or 7-15 EBITDA.
But it’s not like that. Transactions are always more difficult to calculate.
Bungie has a high strategic value specifically for Sony, which is measured by both stocks and money. Key employees are taken into account, and revenue from future projects, and the KPIs for which money is paid, and so on, so on.
Also, I would like to remind the good old about the fact that everything costs exactly as much as agreed. Therefore, congratulations and cheers to colleagues and everyone involved in the transaction.