Yesterday, Microsoft announced that it is acquiring Activision Blizzard for $68.7 billion. Less than 24 hours later, this has already caused rival company Sony’s market value to plummet by a whopping $20 billion.
The news comes from a recently filed Bloomberg report, which states that Sony Group Corp. saw its shares fall by 13% yesterday, Wednesday, Jan. 18. This marks the company’s biggest drop since Oct. 2008.
To put this into perspective, Microsoft’s acquisition of Activision Blizzard has knocked $20 billion off of Sony’s market value in a single day. According to Bloomberg, games and network services account for approximately 30% of Sony’s revenue. Microsoft, meanwhile, earns the majority of its money elsewhere, which is part of why this titanic purchase has had such a massive, instantly pronounced effect on its rival. It has also been alleged that only “some” Activision Blizzard games will be available on PS5.
The acquisition is no doubt intended to bolster Microsoft’s Game Pass service for Xbox consoles, which allows subscribers to access a vast library of games in exchange for a monthly fee. After the company’s acquisition of Bethesda and its subsidiaries earlier this year led to iconic titles such as The Elder Scrolls, Fallout, and Doom becoming available via the service, the possibility of behemoth video game series like Call of Duty following a similar trajectory is likely, especially given that the service recently surpassed 25 million global users.
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That’s not to say the acquisition is all good for Microsoft. Activision Blizzard is currently facing widespread allegations of harassment within the company, with both employees and shareholders having called for CEO Bobby Kotick’s resignation in recent months. Activision Blizzard workers have also staged walkouts and strikes in retaliation against layoffs and inaction.
That’s not to mention that just two months ago, Xbox boss Phil Spencer stated that Microsoft would be “evaluating” its relationship with Activision Blizzard going forward on account of the ongoing reports of harassment within the company.
At the time of writing, Microsoft has done little to enlighten people about Kotick’s future or lack thereof at Activision Blizzard. It currently seems likely that Kotick will resign with a pretty penny once the ink has dried, although nothing is set in stone.
While a lot of the minutiae are nebulous at best right now, the main takeaways from this acquisition are that the Xbox ecosystem is rapidly subsuming large parts of the games industry and that Activision Blizzard’s systemic issues are now Microsoft’s to resolve.
It will be interesting to see how Sony reacts to its rival’s moves in the next 12 months. God of War Ragnarok will surely see the company claw back some ground when it launches later this year, while a rumoured Game Pass competitor could slightly even the playing field.
Written by Cian Maher on behalf of GLHF.
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