It’s a major blow for Sony as the companies’ stocks have plummeted 13% or $20 Billion after the acquisition of Activision Blizzard by Microsoft.
Tuesday was a big day for gaming as Microsoft made the shocking announcement that it was acquiring Activision Blizzard for a whopping $70 billion. This news has rocked the gaming industry and as a result Microsoft’s major competitor Sony has a huge drop in shares falling nearly 13% in the course of 24 hrs.
In the video game market, Microsoft and Sony have had a decades-long rivalry. Specifically, they’ve competed through a console war between Xbox and PlayStation, as well as competing gaming subscription services.
According to an industry insider:
“Sony will have a monumental challenge on its hands to stand on its own in this war of attrition. With Call of Duty now most likely to be added exclusively to the Game Pass roster, the headwinds for Sony are only going to get tougher.”
In contrast to Sony’s huge setback, other gaming companies such as Capcom, Konami, and Square Enix saw their shares jump by more than 5% on Tokyo’s stock exchanges, indicating that companies with strong video game IPs were expected to become more valuable in an era of mega-mergers.
Sony’s traditional console business model, which relies on high-profile exclusive titles and hardware sales, is being challenged by the attempt to attract paying members with an overwhelming library of games. Around 30% of Sony’s revenue comes from games and network services.
While having a smaller game portfolio could damage Sony, the company still has a considerably larger subscriber base than Microsoft. As of the 30th of September, last year, Sony’s PS Plus subscription service had a total of 47.2 million users while Microsoft had 25 million subscribers on their Game Pass subscription service which is more than half less than Sony.
What will this major news mean for Sony in the future and Microsoft for that matter? We will be keeping a close eye on this major story and report back as it breaks.