By
Godfrey Benjamin
April 26th, 2024
Sony is also likely to ink new acquisitions in the near future to solidify its position.
The shares of Sony Group Corp (TYO: 6758) have recovered from the slump recorded on Wednesday as the shares are now changing hands at 13,135 Japanese Yen each in the Tokyo trading session following an initial scare from the acquisition news of Activision Blizzard (NASDAQ: ATVI). The company’s shares trading on the New York Stock Exchange (NYSE) is still down by 5.01% to $110.04, further dragging the 12% drop recorded in Tokyo on Wednesday.
The massive dumping by investors was based on general fear that the gaming unit of the company’s business will lose some of the games associated with the PlayStation console now that Microsoft Corporation (NASDAQ: MSFT) has acquired Activision Blizzard Inc. Owning a gaming studio is good for a game console manufacturer like Sony and Microsoft, as many make the games from the franchise exclusive to their platforms.
While games like Call of Duty from Activision are currently resident on both the PlayStation and Xbox consoles, the access for Sony to these and other games like World of Warcraft may be revoked, making Microsoft a generally more attractive competitor. Should Microsoft’s announced acquisition of Activision for $69 billion be ratified by regulators, it will go a long way in boosting the company’s Game Pass monthly subscription pass.
“There is no doubt that this deal weakens Sony position in the market,” Piers Harding-Rolls, games research director at Ampere Analysis, said in a note published Wednesday. “Whether or not Activision Blizzard’s content is progressively made exclusive to Xbox platforms and services, inclusion of new releases into Xbox Game Pass for several major games franchises, including Call of Duty, will undermine Sony’s third-party business. Sony has benefitted from the ability to negotiate timed exclusive content for Call of Duty but this is now under threat.”
Microsoft Activision Acquisition: Sony to Go on the Offensive
In the tech world, the acquisition of smaller entities has always been a strategic move to drive growth. While Sony is not new to the acquisition game, it can in no way match the deep pockets that Microsoft has that have made it fit to pull such Activision deals. However, when it comes to the release of blockbuster games, it is all about creativity, one that both companies are expected to go on the offensive with.
Sony is likely to ink new acquisitions in the near future to solidify its position.
“Sony will still continue to push out blockbusters, there can be no doubt about that,” Serkan Toto, CEO of Tokyo, Japan-based consultancy Kantan Games, adding “Sony can of course fight back: they still have their own top in-house studios spread around the world, PlayStation remains a powerful brand in gaming, and acquisitions are in the cards for Sony as well.”
The surge in the shares of Sony in Tokyo is evidence that the market might have overreacted with the acquisition news from Microsoft as Toto said.