(BFM Bourse) – The proposed acquisition announced by Microsoft on Monday appears to directly threaten Sony’s dominant position in the video game market. The title of the Japanese conglomerate collapsed by 12.78% on the Tokyo Stock Exchange on Wednesday, its worst daily performance for more than 13 years.
The operation is of such magnitude that the two main parties concerned, Microsoft and Activision Blizzard, are not the only ones to suffer the direct consequences on the stock market. The current leaders who thus see their position seriously threatened suffer from it, Sony in the first place.
The action of the Japanese conglomerate has indeed tumbled by nearly 13% in reaction to the announcement the day before of the planned takeover by Microsoft, one of its big rivals (with Tencent in particular) in the video game sector, of publisher Activision Blizzard for a record amount. Sony fell precisely by 12.78% at the close on Wednesday, its worst fall in a session since October 2008, erasing some 20 billion dollars in market capitalization in the process. If it materializes, the proposed takeover of Activision Blizzard by Microsoft, for nearly 70 billion dollars, would be very bad news for the Japanese giant.
PlayStation vs Xbox
Because Activision’s vast catalog of games would allow Microsoft to considerably enrich its Xbox Game Pass monthly subscription service or even to make certain titles exclusive to its Xbox consoles, at the expense of Sony’s PlayStation 5 in particular. “The headwinds are going to get more violent for Sony,” commented Amir Anvardazeh on Wednesday in a note from Asymmetric Advisors. This transaction “removes any doubt as to the intentions (of Microsoft) to take a new step in the battle of the consoles”.
“Sony is going to have a hard time competing with Microsoft” when it comes to “the money it can spend on acquiring popular game franchises,” said Kazunori Ito of Morningstar Research. The fall in the action of the Japanese group “shows that investors fear that Sony cannot stay ahead” if the industry becomes less centered on the consoles themselves, added the analyst quoted by the Bloomberg agency.
If Microsoft itself indicates that the acquisition of Activision would place it in 3rd place in the world in the video game sector in terms of revenue, the Redmond firm could soon steal the status of No. 2 from Sony. Microsoft and Activision’s combined revenue actually hit $4.8 billion in Q3 2021 according to Newzoo data, compared to $4.3 billion for Sony. At the top of the ranking, Tencent still has a margin over its main rivals (8.3 billion).
Microsoft’s announcement, on the other hand, brought to the Tokyo Stock Exchange the values of Japanese video game publishers with a large portfolio of titles: Capcom jumped by 4.56% and Square Enix by 3.72%, Konami earning him 1.72%. Nintendo, both console manufacturer and game publisher, limited its losses, yielding 0.22% against a Nikkei 225 in sharp decline (-2.5%).
(with AFP)
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