Sony is facing a new challenge from resource-rich rivals who are banking on the rapid growth of a new generation of online video games as the Japanese conglomerate seeks expansion on a number of fronts, including electric cars.
Microsoft has taken a big step towards positioning itself for the “metaverse” with an announcement on the eve of its purchase of “Call of Duty” producer Activision Blizzard for $69 billion.
Sony shares fell 13% on Wednesday (19) amid concerns that Activision games will be pulled from PlayStation consoles.
“They’re basically trying to build a monster,” said Serkan Toto, founder of consultancy Kantan Games in Tokyo. “I don’t think Microsoft is spending $70 billion to become a software provider for Sony’s platforms.”
Microsoft’s strategy contrasts with that of Sony, which has made incremental deals and won praise for building a network of video game studios that produced hits like “Spider-Man” and “God of War.” Analysts say the company, and others in the industry, may now feel pressure to make more deals in response to Microsoft’s advance.
On Wednesday, shares in video game developers such as Square Enix and Capcom rose amid investor speculation that the announcement of the acquisition of Activision could lead to further consolidation in the sector.
The deal will likely help the aggressive expansion of Microsoft’s Game Pass subscription service, which raises concerns that Sony will be forced to follow suit. Offering games for a flat fee can hurt sales and erode margins.
The Japanese company has a lineup of highly anticipated games, including “Gran Turismo 7” and “Horizon Forbidden West”. Microsoft relied heavily on the “Halo” series, the last version of which was delayed before its December release.
Sony, which plans to launch a next-generation VR headset, is also considering getting into the electric car business to capitalize on its edge in areas such as entertainment and chips.
“Sony may be under pressure to make more acquisitions,” wrote Jefferies analyst Atul Goyal, adding that “if there are no regulatory bottlenecks, Microsoft could pursue another target in the not-too-distant future.”
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