Shares of rival Sony fell the most in two years after Microsoft announced that it would buy video game company Activision Blizzard for $68.7 billion.
Sony’s shares on the Tokyo stock market lost close to 10 percent on a daily basis.
This was recorded as the hardest loss of value the company has experienced on a daily basis since March 2020.
Microsoft wants to make its Xbox game console more attractive by purchasing Activision Blizzard, the manufacturer of worldwide popular games such as Call of Duty and World of Warcraft.
One of the biggest aims of this step is to consolidate Xbox’s position against its biggest rival Sony’s PlayStation.
With this move, Microsoft also wants to improve its dominance in the field of intellectual property by adding games to the Xbox Game Pass application, thus it intends to expand the game catalog it will offer to its customers.
On the gaming front, Sony gets 70 percent of its revenue from console sales rather than games.
If the deal is approved, Microsoft will become the world’s third-largest gaming company by revenue.
Is the gaming industry moving away from hardware?
According to Morningstar Research analyst Kazunori Ito, who spoke to Bloomberg, the drop in Sony’s stocks shows that investors fear Sony will be challenged if the gaming market moves away from the hardware-based model.
Shares of Activision Blizzard rose 37 percent after the announcement of the acquisition.
Activision Blizzard was going through tough times due to the accusations it faced on issues such as working conditions, gender discrimination and harassment.
Microsoft’s shares, on the other hand, fell 2 percent after the acquisition was first announced due to scandals at Activision Blizzard.
Activision Blizzard postponed the release of its two highly anticipated games in November, and its shares fell sharply when the fourth-quarter sales figure fell short of expectations.