Tokyo: Gaming leader Sony Group is facing a new challenge from cash-rich rivals betting on a new-generation online video game boom as the Japanese conglomerate expands on multiple fronts, including electric cars.
Microsoft Corp., a laggard in the generational console battle with Sony, took a major step in positioning itself for the “metaverse” — a proposed immersive experience where people play, shop, and socialize online — ” Call of Duty” with a $69 billion deal. Developer Activision Blizzard.
Read also: Xbox Game Pass, Metaverse, Mobile Gaming: Microsoft-Activision $70 Billion Deal Has Big Potential
Sony shares fell 13% on Wednesday amid worries Activision titles would be pulled from the PlayStation system.
“They’re basically trying to create a monster. I don’t think Microsoft is spending $70 billion to be a software provider for the Sony platform,” said Serkan Toto, founder of Canton Games consultancy in Tokyo.
The Full Frontal approach contrasts with that of Sony, which has struck incremental deals and garnered praise for building a network of in-house gaming studios that produced hits such as “Spider-Man” and “God of War”. . Analysts say that — and other giants — may now feel pressure to make more deals in response.
The deal for Microsoft’s activation is made possible by a vast array of other businesses, including software and cloud services, whose market capitalization is more than 14 times that of the Japanese conglomerate.
Analysts say that many observers view Activision as a tarnished business and its flagship franchise loses momentum after allegations of sexual harassment and misconduct by managers.
“The developer is basically a quasi-critical asset,” said Miyo Kato, an analyst at Lightstream Research on the SmartKarma platform. makes me suspicious.”
pressure to conform
The deal will help Microsoft aggressively expand its Game Pass subscription service, raising concerns that Sony will be forced to follow suit. Offering games for a flat fee can eat into sales and reduce margins.
“Most analysts are blinking during these developments, encouraging higher ratings for Sony’s strong movies and music business,” wrote Amir Anwarzadeh, market strategist at Asymmetric Advisors, in a note.
Tech giants including Apple and Amazon have also made strides in gaming in recent years, but struggled to deliver a hit.
In contrast, Sony has a pipeline of highly anticipated titles, including “Gran Turismo 7” and “Horizon Forbidden West.” Microsoft is heavily relying on the “Halo” series, the latest installment of which was delayed before its December release.
The development of cloud technology has loosened ties for the console amid hopes that consumers will spend more time playing and shopping in virtual reality and attracting investment from firms such as Facebook parent Meta.
The change has been compared to the epoch-making shift of electric and autonomous vehicles.
Sony, which plans to launch next-generation virtual reality headsets, is also looking to enter the electric car business to leverage its lead in areas including entertainment and chips.
Shares of gaming firms including Square Enix and Capcom on Wednesday stoked speculation that the Activision deal could lead to more consolidation.
Sony, a Japanese industry champion, is seen as a potential buyer at a time when many local companies are losing out to foreign rivals in many areas.
“Sony may come under pressure to do more M&A,” Jefferies analyst Atul Goel wrote in a note, adding that if there are no regulatory hurdles, Microsoft may go after another target in the not too distant future.
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