The video game industry became a little smaller last month after Microsoft’s $68.7 billion purchase of Activision Blizzard and Sony’s $3.6 billion acquisition of Bungie. With the risk of Sony or Microsoft taking even more developers off the table, would Nintendo consider buying certain studios within their realistic price range? When thinking about it as an arms race between the major platform holders, the answer is a clear-cut no. Nintendo president Shuntaro Furukawa just recently stated that Nintendo doesn’t see the value in acquiring studios that do not have the internal Nintendo “DNA.” However, he also mentioned that the company isn’t opposed to acquisitions if necessary. Historically, we’ve seen Nintendo buy studios that it has close relations with and companies that were in danger of being bought by someone else, such as with Retro Studios or Next Level Games. With similar circumstances in mind, what companies could Nintendo feasibly consider as far as acquisitions?
“Genesis does what Nintendon’t” was Sega’s infamous slogan that summed up the bitter rivalry between the two companies in earlier generations. Yet, that animosity has long since faded, and Sega has been a regular developer and publisher of games on Nintendo platforms ever since. In terms of franchises, Sega’s IP would be a natural fit for Nintendo’s catalog thanks to storied series like Sonic the Hedgehog, Super Monkey Ball, and Nights into Dreams. Sonic has even had various sports game crossovers with Mario for generations at this point. Bearing in mind that Nintendo’s reported war chest of cash on hand is around $16.378 billion as of 2022, the current $4.09 billion asking price of Sega Sammy Holdings doesn’t seem entirely impossible.
It may seem like an expensive deal relative to the money Nintendo has available, but it could prove worth it for Nintendo’s first-party stable. Importantly, speculation about Microsoft buying Sega has been floating around for a while, founded or not. Could Nintendo sit still if there were a risk of Sega being taken off the market? Atlus games such as Shin Megami Tensei, various Persona spin-offs, and Sonic platformers would potentially never appear on Nintendo systems in the future.
If Nintendo did decide to acquire Sega, it would instantly gain all of the aforementioned IP, as well as franchises like Virtua Fighter, The House of the Dead, Puyo Puyo, Valkyria Chronicles, and more. Studios like Atlus, Creative Assembly, and Ryu Ga Gotoku could prove invaluable to first-party development, and could you imagine a Sonic platformer in the hands of Nintendo’s own Mario development teams?
Companies like Square Enix ($5.87 billion) or Capcom ($5.12 billion) are lofty propositions due to the monetary cost. A more realistic option would be a prominent developer that Nintendo has already found success with and who stands to gain a lot from the deal. PlatinumGames would undoubtedly breathe a sigh of relief at the financial safety net an acquisition by Nintendo would provide. The studio has developed multiple acclaimed Nintendo exclusives already such as MadWorld, Bayonetta 2, The Wonderful 101, Astral Chain, and the upcoming Bayonetta 3.
Yet, for all the praise that PlatinumGames has earned over the years, it has also created licensed games that weren’t as well received and were probably developed in order to keep financially afloat. It’s been speculated that PlatinumGames has had monetary woes, at least prior to the Tencent investment, and it’s a studio that had grown frustrated at not having the funding or creative freedom to create the games it wanted to make. In a recent interview, CEO Atsushi Inaba suggested that they would consider an acquisition so long as it does not compromise their creative freedom. Nintendo has already proven that it can provide PlatinumGames with both the funding and creative freedom to create games like Bayonetta 2, so Platinum would be in safe hands if the house of Mario were to acquire the studio.
Unfortunately, as PlatinumGames is a private company, we cannot say with certainty how much it would cost Nintendo to acquire, but we would very roughly estimate it to be around $300 million. This number comes from a comparison with another developer, People Can Fly, which has a market cap of $0.41 billion with 357 staff members and an annual revenue of $46.9 million. PlatinumGames currently has 294 staff members and an estimated annual revenue of $5-$25 million.
Independent games thrive on Nintendo Switch, and some of the notable recent titles have been helmed by Dotemu, under the publishing wing of Focus Entertainment. Focus Entertainment (previously known as Focus Home Interactive) is a relatively smaller French publisher that would hypothetically cost Nintendo around $300 million to acquire.
When looking at its subsidiaries, there is a lot of potential in this deal. Streum On Studio created Necromunda: Hired Gun, Deck13 is the studio behind Lords of the Fallen and The Surge, and Douze Dixiemes developed Shady Part of Me. However, Dotemu would be an especially valuable developer in the deal. In recent years the studio has proven itself to be a master of bringing back classic franchises with titles like Streets of Rage 4, Wonder Boy: The Dragon’s Trap, Windjammers 2, as well as publishing upcoming titles like Metal Slug Tactics and Teenage Mutant Ninja Turtles: Shredder’s Revenge. Nintendo is already a company that loves to bring back its legacy titles in a variety of ways, and Dotemu would be a natural fit for adding new life to classic games.
Continuing on the trend of independent developers, WayForward is another notable indie developer that has a long history with Nintendo. WayForward has been developing games for more than 30 years and has helmed franchises like Shantae, River City Girls, and the upcoming Nintendo Switch exclusive Advance Wars 1+2: Re-Boot Camp. The beautifully animated, creative, and family-friendly games that WayForward creates have been a perfect fit on various Nintendo platforms over the years, so an acquisition by Nintendo doesn’t seem too ludicrous.
However, like PlatinumGames, WayForward is not a publicly traded company, so we need to do a bit of sleuthing to estimate its potential valuation. By looking at another prominent indie publisher with Team17, we see a company with a market cap of $1.35 billion with around 236 staff members and an annual revenue of $82.97 million in 2020. WayForward currently has 151 workers and an annual revenue of $30.5 million. Based on that comparison, we would guess that WayForward could be very roughly worth between $500 and $800 million. Compared to the grander scale of other potential acquisitions, this one is well within Nintendo’s price range. It isn’t hard to imagine that Nintendo would make a deal like this happen if there were a risk of WayForward being bought up by a rival platform holder like Microsoft or Sony.
Do you think Nintendo should consider buying any of these studios?