Sony’s Jim Ryan in Las Vegas earlier this month.
Photo:
patrick t. fallon/Agence France-Presse/Getty Images
Sony Group Corp.’s
SONY -7.17%
shares fell nearly 13% in Tokyo on Wednesday on concerns about tough new competition for its videogame business from the newly announced combination of
Microsoft Corp.
MSFT -2.43%
and
Activision Blizzard Inc.
ATVI 25.88%
The $75 billion deal, which still needs regulatory approval, would unite Microsoft’s Xbox platform with the publisher of top games including Call of Duty and World of Warcraft.
Microsoft said the deal would bolster its Game Pass subscription business. Its offerings compete with Sony, which sells the PlayStation console and the subscription-based service PlayStation Plus.
The Activision acquisition should remove any doubt that the U.S. software giant intends to escalate the fight for videogame dominance, with the risk that popular games could be exclusively hosted by Game Pass, Asymmetric Advisors strategist Amir Anvarzadeh said in a note.
“The headwinds for Sony [are] only going to get tougher,” Mr. Anvarzadeh said.
The deal could allow Microsoft to reserve games for itself, potentially forcing consumers to choose them over competitors’ alternatives. Some games from Activision’s Call of Duty franchise, for example, have been on consoles from Microsoft, Sony and
Nintendo Co.
—something that might no longer be the case.
That possibility is likely to prompt a close look from antitrust regulators in the U.S. and abroad, who could ask whether Microsoft’s ownership of Activision would create unfair competition against its main game hardware rivals.
Microsoft said the transaction would make it the world’s third-largest gaming company by revenue, behind China’s
Tencent Holdings
Ltd. and Sony.
Write to Kosaku Narioka at [email protected]
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