Sony's Future in Jeopardy After Microsoft's Game-Changing Activision Blizzard Acquisition, Analyst Warns

Highlights

Sony is under pressure to respond to Microsoft's acquisition of Activision Blizzard, which some argue gives Xbox too much power in the gaming space.

The Microsoft-Activision Blizzard deal, valued at $68.7 billion, is the gaming industry's biggest ever and holds significant implications for the tech sector. To counter Microsoft's game-making setup, Sony is anticipated to pursue its own acquisitions and has already expressed interest in new purchases throughout 2023.

Sony is facing pressure to address the recent acquisition of Activision Blizzard by Microsoft, according to an industry analyst. This concern arises from the belief that the deal may grant Xbox an excessive level of dominance within the gaming industry. Following extensive regulatory reviews, Microsoft completed the $68.7 billion transaction on October 13, making it the largest deal in the history of the gaming sector and the wider tech industry.

Now that Activision Blizzard has become part of Microsoft's portfolio of game studios, Sony is under increasing pressure to respond, says Piers Harding-Rolls, Head of Games Research at Ampere Analysis. According to Harding-Rolls, this recent development is likely to compel the PlayStation manufacturer to pursue its own acquisitions, including high-profile deals that would enable Sony to effectively compete with Microsoft's continuously expanding game development efforts.

Harding-Rolls is not the only one making these predictions, as Sony has also shown interest in new acquisitions in 2023. In fact, there were reports that Sony was considering making its financial services unit a public company in order to fund future merger and acquisition activities. It is unclear if this move is necessary for Sony to continue its growth, but what we do know is that Sony's gaming acquisitions have slowed down in the past year. After completing five deals in 2022, Sony only acquired one game developer, Firewalk Studios, in 2023.

As for Microsoft, Harding-Rolls believes that the tech giant will not make significant changes to Activision Blizzard's structure in the near future. Although Bobby Kotick will step down as CEO in 2024, it is unlikely that this leadership change will immediately impact the rest of the company. As of now, Harding-Rolls predicts that Microsoft will allow Activision Blizzard to continue operating as a separate entity, similar to how it handled ZeniMax Media after acquiring it in 2021. This strategy would give Microsoft three independent game publishing arms: Activision Blizzard, ZeniMax, and Xbox Game Studios.

PlayStation is beginning to feel the impact of Microsoft's ZeniMax acquisition. However, it may take some time for Microsoft to experience tangible benefits from this deal. This is primarily because of a previous agreement in July, where Microsoft committed to keeping Call of Duty, Activision Blizzard's main franchise, available on PlayStation for the foreseeable future.