Sony Stock Prices Drop Following Microsoft Acquisition of Activision Blizzard - News
by William D'Angelo , posted on 02 February 2022 / 4,011 Views
Microsoft made a huge splash with the announcement it is acquiring Activision Blizzard in a deal worth $68.7 billion. This is the by far the biggest acquisition in video game and Microsoft history.
While nothing is certain yet, a person familiar with Microsoft's thinking says the plan is keep releasing some of Activision Blizzard's games on PlayStation consoles, but will make some Xbox console exclusives.
Since the announcement, Sony's stock price has dropped by around 10 percent. This is the biggest amount since October 2008 and wiped out about $20 billion in Sony's market value.
While it isn't certain the Microsoft acquisition of Activision Blizzard is the reason for the drop or not, experts suggest it is one of the reasons.
Once the deal is complete Activision Blizzard will report to the CEO of Microsoft Gaming Phil Spencer and will bring as many Activision Blizzard titles to Xbox Game Pass and PC Game Pass as possible.
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel dedicated to gaming Let's Plays and tutorials. You can contact the author at wdangelo@vgchartz.com or on Twitter @TrunksWD.
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Think it's safe to say that Sony is not having a good day.
-UNDERSTATEMENT OF THE YEAR NINJA APPROVED-
To some extent this is an overreaction, but to some extent it’s not. Think of the 5 major platform holders in the game space right now
Google
Apple
Microsoft
Sony
Nintendo
Google and Apple own the major mobile storefronts. Microsoft functionally is PC gaming now, and also will be establishing a major presence on mobile. Nintendo has timeless, cross-continental IP and also a massive presence on mobile.
Sony is boxed into console with no obvious way out at the moment. Console is a stagnant market that is basically only relevant in mature markets like North America, Europe, and Japan. They are in by far the worst position to expand into developing markets.
ON the news of the purchase, was said that with this purchase MS becomes the third largest publisher, behind Sony and Tecent.
In terms of revenue.
Yep, which is exactly why I feel regulation will not even bother trying to stop this acquisition. No use blocking something that will not change this. This is a huge deal, but hardly the end for Sony. Sony is in a position where losing a portion of their install base is nothing more than the playing field being evened out more than it was before.
As I have been saying, this is going to be the most interesting console generation we have had in a long time. None of the big 3 are in a spot where they can be counted out.
True, and well for the better or worse Activision as a publisher wasn't one that really got me going. Would say I would be much more affected by they buying Capcom, Square, Sega, etc. Probably even Konami would have more impacted against me than they buying Activision. Ubisoft, EA, Zenimax and T2 at once.
I laugh at the idea of Apple and Google being major players in gaming. Stadia is a corpse walking. Apple is only mobile stuff and doesn't develop anything. Why not just add Amazon too with Luna which no one remembers exists. Their failed game attempts. Console a stagnant market...yeah ok. Why Switch is at 100 million. PS5 is outpacing PS4 another 100 million seller console.
Apple gets a 30% cut of every game sale and every micro transaction in the App Store. Google gets the same from the play store.
Apple made $85 billion from the App Store in 2021. That’s more than SIE made over the same period 3 times over.
If you think apple and google aren’t major players in the games industry, you aren’t paying attention.
Your way at looking this would be similar to say USA government is a big player in gaming because they get 15% of every single game sold in USA no matter the platform.
That 30% cut is the entire foundation of the console business model. The reason Sony even makes exclusives is to get your foot in the door so you buy 3rd party software on the PS store, so they get their 30% cut. Literally the only reason Sony manufacturers a game console is to collect those 30% cuts.
How are Apple and Google not major players in the games industry, when their business model is so similar?
because most apps aren't games
Because they dont have studios, dont develop games, dont foster relationship with devs, etc. They just collect money because of the store. Again, all sales in USA pay taxes to USA government, sure the government can have a big impact in any market, but we wont say they are the biggest player in all the markets just because it collect taxes.
Mobile is simply far larger than any other platform in terms of number of users, revenues and profits.
Don't underestimate it because -you- don't personally like the games, it's the biggest platform right now.
Maybe you were answering to someone else =p
I dont play much on mobile, but I do play some games. And I know it generates a lot of money. My take was that someone getting a cut of the sales dont mean much on saying they are players on gaming industry.
Apple and Google also get a cut for subs on streaming of movie and music, would they be considered big players just because of that? They don`t develop or foster any of those.
Apple and Google are big at baby games for smooth brains.
What a time to be alive.
Aaaaaand stock is already up again almost 4%.
Once again proving that:
a) Idiots sold shares because "Sony is doomed" once again
b) Clever guys bought shares at the right moment.
...aand its at over +5% now. Damn I should have bought some shares.
...aaaand it is close to +6% now...
SonyDOOOOOOM...
Doesn't roll off your tongue like NintenDOOOOOOM.
Always more clever to DOOOOOOOOOOOOM Nintendo!
Stock prices are just gut level reactions. They're not a great predictor of long term prospects. After the Switch debut, Nintendo's stock price dropped by a similar margin, and we know how that turned out. A bit early for the Sony doomed reactions.
Investors, especially in these kinds of companies, tend not to like uncertainty. So, uncertainty about the future of some of the biggest franchises on Playstation will cause a drop. If you think that Microsoft is going to keep releasing things like COD and Overwatch on Sony consoles, might not be a bad time to place a bet on Sony.
Big drop. But to be fair, MS stock dropped as well. In fact, a lot of companies did yesterday.
Microsoft flexing their muscle!
Rewarding Activision CEO and other shareholders while punishing Sony just for not spending 70billion because reasons. Stock market is weird.
I dipped my little toe in some Sony stock today. I might dip in a little more as we see how things shake out here in the next day or two. Sony will see a nice bump if any rumors of regulatory problems, or other complications with the deal come about.
Regardless of any of that, while this deal is definitely bad for Sony, it's far from an immediate death sentence. Sony is in fine shape for the short and medium term.
That is kinda expected, a new of this size will have ripple effects and doubts about the impact so a drop in stock prices is normal.
What a joke,
Stocks going down just becoz of some acquisition.
the stock market second to money loves stability and hate uncertainty
Some shareholders are nervous and sell at the slightest signs of anything negative. Those are the onces that fail to make substantial profit.
No worries, the PlayStation cult will never abandon Sony.
Shareholders are panicking lol.
Sony has 44 billion cash on hand as of 2021 and likely quite a bit more than that now. Also very low debt so they can borrow basically as much as they need in addition. They need to take a big risk and spend a chunk of it.
it seems this figure is outdated, it significantly less now apparently : https://www.macrotrends.net/stocks/charts/SONY/sony/cash-on-hand (~$16.8B)
Sony are contracted with Azure Cloud so unless they plan on upgrading their own Cloud service Gaikai in the background while using Azure, it wouldn't make much sense. That's a lot of money thrown into their own Cloud network for something with little uses for Sony. The reason MS invested so much into Azure wasn't just for gaming. It would take Sony way to long to make that investment back if they were only relying on the Gaming sector.
Actualy I think I doesn't make sense for sony to keep this deal in the long run. It is more of a short term solution. Kinda the same when Intel created apu with Amd gpu https://www.extremetech.com/computing/261646-intel-launches-radeon-powered-cpus-hp-dell-announce-upcoming-systems
Worth noting that Sony lists AWS and not Azure as a focus for cloud engineer applicants. I do seem to recall other job applications involving building and maintaining of servers which would suggest their own servers since the 2012 Gaikai deal are still in service and being improved upon. So they have likely been bulking it up for a decade.
https://www.linkedin.com/jobs/view/cloud-engineer-at-playstation-2843498396/
one of the reasons is Sony making the lense componentry for Azure now they make those components for more than just Azure , but they were looking at moving away from Amazon's cloud services and by entering in to a joint venture they get to have input into the technical side of the service and that joint venture level of integration means they have less worry going forward when it comes to cloud services since they will be using a service that they are more than just another customer, on MS side they get access to Sony's expertise and R&D along with input into design solutions that are tailored for the Azure road map meaning better tailored hardware that help keep them in front of their competitors,
Sony's business models require a lot of investments where they have to eat the cost. They lose money on the consoles but gain it back long term via software and subscriptions. This is something i can see MS trying to get out of eventually once GamePass grows to newer heights. The costs are just too high and unnecessary due to the many options of today's gaming where you just have to rely on Apps to gain access. Sony also needs the cash to support other business models run under Sony so their $17b isn't just for Playstation, it would be shared across the board.
Well in a few years Sony will have less third party support than Nintendo if Microsoft will keep on buying major publishers. Let's go for EA and Ubisoft next year. Nintendo could buy Sega, Temko and Atlus. Leaving Sony with nothing. Let's see if Sony can also become as self sufficient as Nintendo, when it comes to software.
Agreed. It would probably be easier for them to acquire a Japanese publisher like Sega or Capcom than another western publisher like EA, Ubisoft, Take-Two, or WB.
Or harder. I believe Japan has stricter monopoly laws than the US..
The thing is, would the Japanese anti-trust regulatory body care about how much Xbox owns outside of Japan, or would they only care about Japan itself? MS only owns a single Japanese studio afterall, Tango Gamework, and their hardware marketshare in Japan is extremely tiny compared to Sony and Nintendo. I feel like the Japanese government might be more open to it than western governments would be.
One thing that is worth noting, Xbox doesn't truly have a monopoly, not even close. Even after buying Zenimax and Activision, Xbox has only acquired 2 out of like 20 major and mid tier game publishers, there is still Sony, Nintendo, EA, Ubisoft, Take-Two/2K, Embracer Group/KochMedia/THQ Nordic, WB Interactive, Square Enix, Koei Tecmo, Sega, Namco Bandai, Capcom, Konami, Marvelous, Nacon, Focus Home Interactive, Paradox Interactive, 505 Games, Tencent, and more. I kind of doubt that any regulatory bodies would block Microsoft if they attempted to acquire another publisher after Activision-Blizzard, I mean these are the same regulatory bodies that allowed Disney to acquire Fox, bringing the number of major movie studio conglomerates down from 6 to 5. Disney owning 1/5th of the movie industry is a pretty big deal (more than 1/5th in terms of marketshare), and yet the various governments of the world allowed it to happen, so I very much doubt that those same governments would block MS buying say Sega, when there would still be like 19 major and mid tier game publishers left that Microsoft doesn't own. The gaming industry is nowhere near as consolidated as the movie industry is currently, though I do think we will see alot more consolidation over the course of this gen and the next.
Considering that I am not sure how Japan would look at it, maybe in that sense they would allow major acquisitions from them. I didn't think of it like that. Big tech companies are starting to get much more scrutiny over their wealth and power recently so any big move might become more difficult gradually.
I feel one of the reasons is the disconnect in tech stocks between market cap and actual revenue/ profit/ small or no dividends compared to the rest of the market meaning shareprice is driving the whole tech market more than it should and this is especially evident with firms like Tesla who rely on that stock price to drive their business at least MS and the other big companies have healthier fundamentals underpinning their stock price.
Yep, I would buy MS shares, solid company, even Apple, but wouldn`t buy tesla. Those prices are more speculative than anything imho.
Sometimes government will allow as long as there are still 2 players left =p depending on the market.
And I would be pretty sure Disney own more than 20% of the market.
In 2019 Disney's market share was 32.5% alone (excluding 25% box office rev. They got from Sony's Spider-Man: Far From Home) while 37.3% when 20th century is also included. While second place WB's share was 13.4% and 3rd place Universal's share was 13%.
having 1/3 of the market by itself while being almost 3 times larger than the second place is in my opinion very close to a de-facto monopoly considering the sheer difference in power. But sure most courts of law would allow it, but likely they won't be able to buy anything big for quite some time and if they even without that grow to much there may be unfavourable process in the future.
As long as they aren't on top, gives them more freedom to make more acquisitions. This wouldn't be the case if they were the industry leaders.
