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  • Post published:20/01/2022
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Sony shares fell 13 percent on Wednesday, its biggest drop in over 12 years, thanks to Microsoft’s Activision Blizzard announcement. As a result, Sony is now worth $20 billion less than it was a day ago.

Sony currently dominates the next-generation videogame console market, but it has trailed Microsoft in cloud-based game streaming. And this acquisition will put Microsoft on a more even footing with Sony in videogames by revenue, significantly shifting the dynamics of the overall gaming market. Not helping matters, Microsoft already owns more game studios than Sony, ahead of the proposed Activision Blizzard acquisition.

And Microsoft has another key advantage over Sony: Xbox Game Pass, the set of subscription services that brings hundreds of games to customers across PC, console, and mobile devices. Unlike Sony’s PlayStation Plus service, Xbox Game Pass also includes a cloud-based game streaming option called Xbox Cloud Gaming that lets subscribers access a growing library of multi-generational games on almost any device, including PCs, consoles, smartphones, and TVs. Not coincidentally, Microsoft Gaming CEO Phil Spencer revealed that the firm now has 25 million Game Pass subscribers as part of the Activision Blizzard announcement, and he hinted that Activision’s games would make the service even more valuable.

Sony is expected to adapt PS Plus to better compete with Xbox Game Pass, and it may even use Microsoft’s Azure cloud infrastructure to deliver it to consumers. Before the acquisition announcement, Spencer said that a Sony competitor to Xbox Game Pass and Cloud Gaming was “inevitable.”

“I don’t want it to sound like we have it all figured out, but I think the right answer is to allow your customers to play the games they want, where they want to play them, and give them the choice of how to build their library, and be transparent with them about what your plans are in terms of PC and cross-gen initiatives,” he told IGN. “So when I hear others doing things like Xbox Game Pass or coming to PC, it makes sense to me because I think it’s the right answer.”

Sony’s future may look uncertain for now, but Microsoft’s announcement hasn’t sunk other videogame industry stocks. Indeed, stocks in small- and medium-sized game publishers like Capcom and Square Enix have surged with the hope that they could be future Sony acquisitions.

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