For Sony, the war of attrition with Microsoft may have just begun.
After microsoft's all-cash acquisition of Activision Blizzard for $68.7 billion, Sony Tokyo shares experienced a plunge on Wednesday, closing down 12.79% throughout the day, wiping out more than $20 billion in single-day market capitalization. The stock price has retreated from a 21-year high and returned to its October 2021 level.
Shares of other game developers, including U.S. EA, Konami japan, Ubisoft france, and Poland's CD Projekt, rose on Wednesday. The market is worried that Microsoft's blockbuster acquisition may open a price war for game manufacturers to bid, and this kind of capital consumption war is not something that Sony can afford.
In terms of game IP, the current market is worried that Microsoft may cancel the authorization of the Blizzard hit shooter "Call of Duty" series to log on to the PS5 console in the future, in order to squeeze Sony's living space.
The improvement of the competitiveness of Microsoft's Xbox Game Pass game subscription business is also the focus of market attention. As a game subscription service, Xbox Game Pass allows members to play games across multiple platforms, directly challenging Sony's traditional console-centric business model.
At a time when the "metaverse" boom is on the rise, cross-platform operability is critical to the success of the virtual world. With the blessing of cloud technology, the traditional software and hardware sales system with game consoles as the core has been weakened, and it has become a trend for users to play and shop across platforms.
In order to enrich The Xbox Game Pass's game library, Microsoft has opened a buy-and-buy model in the past few years, acquiring a number of game developers and studios.
In September 2020, Microsoft acquired Zeni Max Media, the parent company of game company Bethesda, for $7.5 billion in cash, and acquired a large number of studios such as Id Software, Arkane, Tango Gameworks, and Alpha Dog under Bethesda. This acquisition also allows Microsoft to obtain several well-known game IPs such as "The Elder Scrolls", "Fallout", and "Doom".
If the acquisition is successful, Microsoft will have more than 30 game studios, three times the number of studios in 2014.
In several generations of consoles for the PlayStation and Xbox, Sony has consistently been ahead of Microsoft's competitors in console sales and exclusive games. Microsoft has now made it clear that it is determined to close that gap by offering free games through subscription services, so Sony will be under pressure to respond.
But Sony has struggled to match Microsoft in terms of funding for popular game IP. If the industry does shift from a business model based on console hardware, companies need to tell investors that they have plans to grow organically after competitors have just struck a deal of nearly $70 billion.