Microsoft’s deal with Activision Blizzard wipes out Sony’s $20Bn market value in a day

Sony Group Corp. shares fell 13% in Tokyo after PlayStation rival Microsoft Corp. announced a $69 billion deal to acquire games publisher Activision Blizzard Inc. The acquisition escalates Microsoft’s spending spree to secure intellectual property assets for its Xbox Game Pass service, wiping $20 billion off Sony’s valuation in a day.

Sony has maintained a consistent lead in sales and exclusive games over Microsoft’s competing offerings across several PlayStation and Xbox generations. However, now the company will be under pressure to respond.

Microsoft earlier has announced that it has more than 25 million Game Pass subscribers and according to Xbox Chief Phil Spencer “will offer as many Activision Blizzard games as it can within Xbox Game Pass and PC Game Pass,” spanning both existing and new titles.

Analysts say that Sony will have a monumental challenge on its hands to stand on its own in this war of attrition. With Call of Duty now most likely to be added exclusively to the Game Pass roster, the headwinds for Sony are only going to get tougher, they added.

Research analyst Kazunori Ito said, “Sony will struggle to match Microsoft in terms of money it can spend to buy popular game IP. Falling shares illustrate investors are worried that Sony may not be able to keep winning if indeed the industry shifts away from the hardware-based model.”