Sony's Market Value Drops $20 Billion After Microsoft's Activision Deal
After Microsoft announced their acquisition of Activision Blizzard, Sony’s shares and market value drops dramatically in just one day.
Microsoft rocked the games industry on Tuesday, Jan. 18th, when it announced its intent to acquire Activision Blizzard. Following the news, Sony’s market shares have fallen nearly 13% in Japan over the course of 24 hours.
The Microsoft Activision Blizzard deal is a colossal $70 billion, the highest any company has paid in a video game studio acquisition. Microsoft now welcomes Call of Duty, World of Warcraft, and Crash Bandicoot, along with many others, to the Xbox family. Boasting a total of 24 game studios under its umbrella according to Eurogamer, Microsoft has solidified itself as one of today’s top 3 biggest game companies.
The unprecedented acquisition has also placed significant additional pressure on Sony, intensifying the long ongoing battle for industry dominance.
SONY’S MARKET VALUE FALLS SHARPLY
Both Microsoft and Sony have been embroiled in a decades-long competition in the video game market. Namely, they’ve competed via a console war between Xbox and PlayStation as well as rival games subscription services.
With Microsoft obtaining Activision Blizzard, Xbox could potentially have a broader list of exclusives. With games like Call of Duty or Diablo on the line, Sony could face even tighter competition as they’d be forced to remove those games from their own console.
While a more limited game library could potentially hurt Sony, they still maintain a much larger subscriber base than Microsoft does. According to Wall Street Journal, Sony reported that their PS Plus service had a total of 47.2 million subscribers, as of Sept. 30, 2021. On the other hand, Microsoft announced that Game Pass had 25 million subscribers, slightly more than half of Sony’s total. So far, Microsoft Gaming CEO Phil Spencer has only stated the following on platform exclusivity:
Additionally, Sony’s PlayStation 5 has been steadily competing with the Xbox Series X|S since its launch. Notably, the PS5 outsold the Xbox nearly 10x in Japan in 2021, and stores and manufacturers continue to struggle to meet PS5 demand. It goes to show that, though Sony’s market value has dropped, they remain a strong presence in the industry.
WHAT’S NEXT FOR SONY?
The Activision Blizzard acquisition could certainly spur Sony to begin making bigger purchases themselves. As of now, they’ve acquired Firesprite Studios, Spider-Man studio Insomniac Games, and Uncharted remaster developers Bluepoint Games. Compared to Microsoft’s $68.7 billion deal, these have all been smaller, but still successful purchases. Whether Sony will now move toward staggeringly large acquisitions themselves is yet to be seen.
For now, PlayStation players will have to wait for definitive changes until the Microsoft Activision Blizzard deal closes in 2023.