The news of Microsoft's 68.7 billion acquisition of Activision Blizzard broke out, which won the headlines in the technology circle. At the same time, the two companies closed up one after another. It also drives the game companies to pull up for a short time, of course, this does not include Sony. It plunged 7% on the day and fell 4% before the session.$Microsoft(MSFT)$$Sony(SONY)$
This logic is not complicated. If our opponent grows, can we keep up?
The three major console manufacturers in the game circle, Sony, Nintendo and Microsoft, ranked third, promoted the "arsenal" and won the first-line game giant Activision Blizzard. Blizzard owns well-known IPs such as Call of Duty, Watch Pioneer, StarCraft and Warcraft. In particular, Call of Duty is also the first game on PlayStation's annual list.$Activision Blizzard(ATVI)$
In the short term, whether Activision Blizzard's games can continue to be played on Sony's console. In the long run, whether it will break the existing competition pattern and bring about new changes. In a word, the benefits are more on the opponent's side and the risks are more on his own side.
It is based on the consideration and answer of these two risks that will bring up our view of Sony's killing and falling this time.
From exclusive games of host manufacturers to meta-universe
Perhaps it is hard for domestic gamers to imagine that in foreign countries, especially in North America, the game console is the only game option for most families. For the convenience of understanding, we regard it as a cultural phenomenon for the time being. For domestic players, perhaps more for the hostExclusive gameAnd buy PS4, Switch. As a strategy of console game manufacturers, exclusive game is also a pattern formed by the competitive situation in the game circle. In Sony's case, there are probably the following game studios controlled by acquisition in the world:
As Sony's own son, the works produced by these studios are naturally decided by Sony. It can be regarded as monopolizing the details of the game ecology. Just like the exclusive IP known to domestic film and television audiences, this metaphor is appropriate for host manufacturers. Microsoft originally followed this strategy, but now it is not. Now Microsoft has rarely released Xbox exclusive games. About this change, you can say that Microsoft is more structured. After all, Microsoft's main business is not games, which can make it have this pattern. Perhaps Youaiteng in China will have such a pattern one day.
Microsoft no longer pursues exclusive games, at least reducing the short-term risk that Activision Blizzard's games will be permanently removed from PS4. One of them. After that, the real reason for Microsoft to acquire Activision Blizzard is to lay out the meta-universe.
In recent years, Microsoft's acquisition in the game field is much faster than Sony's, and there is no way to make more money. As a technology leader in the US stock market after Apple, Microsoft wants a ticket for the future. Frankly speaking, it is hard to imagine that Microsoft will really regard Sony as a strategic competitor, and the two are not in the same heavyweight. In this regard, Microsoft's actions in the game industry are not aimed at the host manufacturers. Meta-universe is the hottest concept at present, and the first application field should be the game industry. If one day the host manufacturer declines, it is the evolution of the game industry. Sony or Nokia, to put it bluntly, is a pawn in history. Microsoft, which just took Nokia, definitely doesn't want to be it again.
At this point, if you really pay attention to Sony, you will pay more attention to Sony's current business.
Three Reasons to Invest in Sony
It is not easy to understand Sony. Its business is so complicated that it needs to be studied hard. Even so, when it comes to the reasons for buying Sony, we have combed three points for reference only:
Sony's growing direct-to-consumer businesses (games and music) are two important reasons to consider buying. The third point is valuation.
Sony has continued to soar to new highs this year thanks to high demand for PlayStation 5 (PS5) consoles and thanks to growing demand for streaming music services. According to current analysts' estimates, the total revenue in fiscal year 2021 (ending March 31, 2022) should increase by 2pc.
Games are Sony's biggest business, driving the company's growth. According to forward-looking guidance, the gaming division is expected to account for 29% of total revenue and 31% of operating profit in fiscal year 2021. While the supply of consoles is far short of demand due to a shortage of chips, there are good reasons to believe that the game business may perform much better than investors expected.
Music is Sony's most profitable market segment, with an operating profit margin of nearly 2% in FY 20200%. Sony continues to meet the growing demand for streaming music services. In the most recent quarter, the music division's revenue rose 44% year-on-year, while operating profit rose 55%. Sony has been a top music distributor since 2012.
Sony's direct-to-consumer service connects with about 160 million people around the world. Management wants to expand it to 1 billion people. Considering that the console game market is expected to grow at a compound annual growth rate of 7% every year by 2025, and the global paid streaming media subscriptions are expected to more than double to 1 billion by 2030, anything is possible. Given these opportunities, the company's P/E ratio of 13 times earnings looks low.
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