Sony Stumbles in Wake of Microsoft’s Activision Blizzard Announcement

Posted on January 19, 2022 by Paul Thurrott in Games, PlayStation, Xbox with 24 Comments

Sony shares fell 13 percent on Wednesday, its biggest drop in over 12 years, thanks to Microsoft’s Activision Blizzard announcement. As a result, Sony is now worth $20 billion less than it was a day ago.

Sony currently dominates the next-generation videogame console market, but it has trailed Microsoft in cloud-based game streaming. And this acquisition will put Microsoft on a more even footing with Sony in videogames by revenue, significantly shifting the dynamics of the overall gaming market. Not helping matters, Microsoft already owns more game studios than Sony, ahead of the proposed Activision Blizzard acquisition.

And Microsoft has another key advantage over Sony: Xbox Game Pass, the set of subscription services that brings hundreds of games to customers across PC, console, and mobile devices. Unlike Sony’s PlayStation Plus service, Xbox Game Pass also includes a cloud-based game streaming option called Xbox Cloud Gaming that lets subscribers access a growing library of multi-generational games on almost any device, including PCs, consoles, smartphones, and TVs. Not coincidentally, Microsoft Gaming CEO Phil Spencer revealed that the firm now has 25 million Game Pass subscribers as part of the Activision Blizzard announcement, and he hinted that Activision’s games would make the service even more valuable.

Sony is expected to adapt PS Plus to better compete with Xbox Game Pass, and it may even use Microsoft’s Azure cloud infrastructure to deliver it to consumers. Before the acquisition announcement, Spencer said that a Sony competitor to Xbox Game Pass and Cloud Gaming was “inevitable.”

“I don’t want it to sound like we have it all figured out, but I think the right answer is to allow your customers to play the games they want, where they want to play them, and give them the choice of how to build their library, and be transparent with them about what your plans are in terms of PC and cross-gen initiatives,” he told IGN. “So when I hear others doing things like Xbox Game Pass or coming to PC, it makes sense to me because I think it’s the right answer.”

Sony’s future may look uncertain for now, but Microsoft’s announcement hasn’t sunk other videogame industry stocks. Indeed, stocks in small- and medium-sized game publishers like Capcom and Square Enix have surged with the hope that they could be future Sony acquisitions.

Join the discussion!

BECOME A THURROTT MEMBER:

Don't have a login but want to join the conversation? Become a Thurrott Premium or Basic User to participate

Register
Comments (24)

24 responses to “Sony Stumbles in Wake of Microsoft’s Activision Blizzard Announcement”

  1. nickysreensaver

    Small typo in the end of the second sentence, $20 billion than it was a day ago.


    Plus no one is talking about hoe the exclusivity deals were with Sony contracts and how Xbox players are often locked out of CoD game features for a year.

    • rm

      I would expect Microsoft to have exclusivity on CoD for a year after this deal is finalized (maybe a shorter period). I actually expect at least a short period of exclusivity for all MS games on Playstation for new games. DLCs on games with crossplay would not have exclusivity time periods or it would make it hard to keep the crossplay working properly with different versions.

      • JacobTheDev

        I'd honestly be surprised if they release games on PlayStation *at all*. They've said that their Bethesda games will likely be Xbox/PC exclusive, why would it be any different for their Activision/Blizzard games?

        • lvthunder

          Why? They release their other software on other platforms. Just like Microsoft doesn't care if you use Office on a Mac why would they care if you play Call of Duty on Playstation. They make money either way. I think it's outdated thinking to think they are doing all this to boost Xbox consoles.

          • jgraebner

            I think you hit the nail on the head there. It is a mistake to think that Microsoft is spending all this money in order to become more competitive with Sony. More likely, they hope to either partner with Sony or make Sony irrelevant.


            Microsoft has always been a software company and they seem to pretty obviously understand that their best shot at success in gaming is on the software/services side. Their goal is not to make XBox consoles (or even Windows PCs) the dominant gaming platform, but instead to do for games what Netflix did for television. No matter where people are playing games, they want them to mainly obtain them through Game Pass. More importantly, these big acquisitions bring enough content in-house to make sure that Game Pass is always stocked with plenty of content, including big franchise titles. Basically, Microsoft learned from Netflix's need to adapt when big content companies like Disney, NBC/Universal, and CBS/Paramount started creating their own competing services.


            Where Sony ultimately fits into Microsoft's plans is an interesting question. I could definitely see Microsoft using big franchises like Call of Duty and World of Warcraft as leverage to convince Sony to allow a Game Pass app on Playstation. I strongly suspect that is what Microsoft sees as a best case scenario. Barring that, I do think that we will see some of those franchises become exclusive to Game Pass (rather than to the XBox console/PC) with the idea that Sony would, basically, become irrelevant without access to Game Pass titles.


          • MoopMeep

            I think they will have exclusives but I don't think they would make cod exclusive to Microsoft platforms.

            I think the value of the company is probably based a lot on the playstation version of some games, like cod. Maybe other IPs aren't as dependant on Playstation/PC so they could make those xbox exclusive.

            • thretosix

              I think you are correct. I also believe if Sony bought Activision/Blizzard they would make COD exclusive.

          • JacobTheDev

            I know, and I'm not a huge fan of exclusives, but they have said Bethesda games will likely be exclusives, so I don't see why Activision/Blizzard would be any different. I'm not *happy* about that (though I own both consoles, so it doesn't affect me much personally), but that's how I think it's going to go. Would love to be wrong, though!

            • Stokkolm

              Bethesda games aren't COD. They're not leaving that much money on the table by making them exclusives. COD will not go Xbox exclusive.

              • nikcomp

                You are wrong. MS will absolutely cut off Sony. COD is really the property that MS wanted. Sony doesn't share their games at the expense of higher sales, do you see them opening Spiderman, Last of us, God of war to MS? I don't like the amount of money spent but a great move on MS to finally force Sony to play ball with their exclusives or start to lose the western gaming market.

                • MoopMeep

                  Sony buys companies that are already making sony exclusive games and they don't spend much money.

                  Microsoft could cut off COD but I think a lot of the value of Activision is based on COD for playstation, so I think they might not want to make that exclusive..... maybe set it up so xbox gets exclusive COD things first with it eventually going to playstation too

  2. Daekar

    As someone who enjoys PC games and would be biased toward Xbox in the console arena, this makes me excited for all the value which will be added to Game Pass.


    At the same time, I'm starting to get the heebeejeebees about the massive consolidation going on in the games space. Now that even a blind squirrel can see the games industry is incredibly profitable, it looks like the huge tech companies are going to swallow up everything until there are only a few players left who control the production of all games. As someone who has enjoyed the fruits of competition and creativity in the market as it used to be, this new future is starting to give me the creeps. Sure, Microsoft has good folks at the helm for the moment, and they probably won't pull anything too slimy right off the bat, but it's only a matter of time. I just don't trust large companies to put my interests as a gamer first. The cesspit of gold-digging shovelware that is the F2P mobile market is proof of that.

  3. xavier abii

    I really wonder how Sony will respond to this. Seems like Microsoft has turned the tide of the console wars finally lol.

  4. derekabraham

    Shouldn't the antitrust watchdogs be investigating this merger? This basically removes choice for playstation and nintendo customers? Or is Microsoft still riding on the once punished, no longer liable status?

  5. markbyrn

    It's almost recovered the lost ground down only 2.63%. It's the long game that counts and Activision could end up being a millstone around Microsoft's neck.

  6. omen_20

    FTC needs to stop these large mergers. Xbox has lost all three generations it's competed in and has decided it's done competing. Now it's just going to use daddy's credit card to buy that trophy.

    • thretosix

      Why would the FTC need to stop the merger? Done competing? Daddy's credit?


      You need to stop being delusional.

    • Stokkolm

      Xbox is not even the play, it's Gamepass that they're interested in bolstering.

      • lvthunder

        Exactly. They aren't spending this kind of money to bolster Xbox consoles.

        • thretosix

          It surely wipes out this Xbox has no games moniker, which in my opinion was never true in the first place.

  7. OldITPro2000

    What publishers/studios can Sony afford? Take Two would be a big win, but I don't know if they can afford it.

    • lvthunder

      Maybe this will make Sony itself the target. If the rumors are true about Netflix wanting into the market if they bought Sony they would get into gaming plus they would get the movie and TV library as well.

  8. MoopMeep

    I don't really care much about Konami but I think it would be cool if they bought them and then had kojima work on a silent hill game.


    I'm thinking "From Software" would be an interesting purchase too.





  9. nbplopes

    MS is amassing a huge amount of “real state” on many subjects. Has someone said, who can’t win … pay to win … who can’t create … buy.