When Sony revealed its surprise $US3.6 (around A$5) billion deal to buy Bungie, it was clear the PS5 manufacturer was paying a premium for the original creators of Halo and now Destiny 2. Now the company has revealed roughly a third of that price tag is actually just to pay Bungie developers so they don’t immediately leave the studio.
“Approximately one-third of the US$US3.6 (around A$5) billion acquisition consideration consists primarily of deferred payments to employee shareholders, conditional upon their continued employment, and other retention incentives,” Sony announced in yesterday’s earnings presentation as first reported by Tweaktown. The approximately $US1.2 (A$1.7) billion will be paid out over several years, with an estimated two-thirds to be paid within the first two years following the acquisition’s official closing date. Sony is paying for the people as much as for Destiny 2.
To put that number in perspective, Sony paid $US229 (A$321) million for Spider-Man maker Insomniac Games as recently as 2019. While Bungie has more than double the number of employees, at 900 people $US1.2 (A$1.7) billion still comes out to over $US1 (A$1.4) million per developer, though obviously some folks at Bungie will get much more while others will get much less.
The massive payouts come as consolidation in the gaming industry kicks into overdrive, and capital from other parts of the economy floods the market. This has led to unprecedented competition between companies for game development talent, and it’s clear from the way Sony has talked about the Bungie deal that what it’s most interested in is the studio’s expertise when it comes to making live service games. It can’t capitalise on that if senior developers all cash in their chips at once.
But that strategy has also rubbed some staff at Bungie the wrong way. As The Washington Post reported earlier this week, some developers view Sony’s generous payout as “golden handcuffs.” “I don’t really understand the time frames or ramifications just yet,” one employee said. “[It] seems designed to retain folks for at least a couple of years.”
Sony and Bungie did not respond to a request for comment.
According to The Washington Post, employees will receive 50% of their total equity payouts when the deal closes and the rest in subsequent years. After that point, it’s unclear how many developers will stay at the company. Those who spoke with The Washington Post were generally optimistic about Bungie’s future under Sony, though a few remain cautious given some of the burnout-inducing working conditions at other first-party PlayStation studios like Naughty Dog and Sony Santa Monica. During its recent investor presentation Sony also announced the ambitious goals of releasing 10 live service games in the next four years and doubling first-party game revenue by 2025.
Bungie has notably been trying to put crunch culture and other workplace issues behind it in recent years, though as a report by IGN revealed last year, the studio hasn’t always made good on those pledges.