FEB. 2, 2015 • With a projected ¥230 billion ($2 billion) loss looming for the fiscal year ending March 31, Sony Corporation has sold its Sony Online Entertainment (SOE) business to Columbus Nova. Financial terms were not disclosed. In December 2010, Columbus Nova set up Harmonix-SBE Holdings to acquire Harmonix Music Systems from Viacom Inc. in December 2010. In that deal, Harmonix-SBE Holdings paid $50 and assumed $100 million in Harmonix liabilities. Viacom later booked an additional $50 million in related losses. It is not known whether Columbus Nova has set up another holding company to operate SOE. One of the company’s divisions, Columbus Nova Technology Partners does operate a host of tech firms, but no video game businesses. SOE was immediately rebranded Daybreak Game Company LLC. Columbus Nova acquired all existing and future SOE content, including the upcoming EverQuest Next. Daybreak will be operated as an independent game development studio.
Impact: Many people expressed surprise that Sony unloaded Sony Online Entertainment. The bigger surprise may be that it didn’t happen sooner. The reality is that SOE was a bit of an odd duck for Sony. The company actually started as a division of Sony Pictures in the 1990s and was only brought into the Sony Computer Entertainment game division in 2008. However, SOE was noted mainly for its PC games that did not translate very well to the PlayStation audience. Overall, Sony has been under tremendous pressure to cut costs, especially on the content development side. SOE was noted for very big budget, high risk products and there was concern that the division could be shut down. The fact that Sony was able to find a buyer is clearly a positive.
It is hard to pinpoint what Columbus Nova’s interest in the games industry might be. Online games are fairly capital intensive so this is a major long-term investment. The firm definitely thought it was important to keep Harmonix separate from its other technology holdings. On the SOE acquisition announcement Columbus Nova’s senior managing partner Jason Epstein was the person quoted. Epstein is also a managing director at the Technology Partners division, and four years ago it was reported that he negotiated the Harmonix deal. This may be a case where one person is driving these game company acquisitions. It would not be the first time an investment firm catered to the personal interest of a major partner. What this means for the newly renamed Daybreak is hard to say. Harmonix has seen several rounds of layoffs in recent years despite success with its Dance Central franchise. We imagine Daybreak will see similar restructuring if Columbus Nova deems it necessary. All of which brings us back to online games as a capital-intensive business. EverQuest Next is a far different property from Dance Central. It requires substantial funds to develop and operate the MMOs that SOE is known for. As much as the EverQuest franchise is a prime jewel to hold, how much support there will be for launching new IPs remains to be seen.