Sunday, December 10

A 10% drop in the stock market and a well-tied future: Sony’s options in full expansion of Microsoft

It has been practically immediate. Less than a day after the announcement that Microsoft was investing 60 billion euros to buy Activision, Sony went public. It is logical: the immediate question, after conjecturing about what possible business plans Microsoft may have (Is it going to help you get exclusivities or to reinforce Game Pass, is it going to launch into the mobile market or does it want to enter the MMROPG sector?), is: how is Sony going to react?

Sony’s strength, since the time of the first Playstation, is in exclusive games. That is the strength of the brand, and the most remembered games of each generation for their consoles are not the third-parties multi platform, but those produced by Sony itself or its proprietary studios, fully squeezing the technical possibilities of its hardware and catapulting the sales of each generation of Playstation: ‘God of War’, ‘Ratchet & Clank’, ‘Spider-man’, ‘The Last of Us’ or ‘Uncharted’ are just some of them.

But nevertheless, this clear differentiation of strategies between Sony and Microsoft has not prevented a certain mistrust from being generated about the future of the Japanese company: Sony’s stock price fell by approximately 10% in the first hour since the news was known. For its part, Nintendo has only experienced a slight decrease in its shares of 0.22%, something logical considering that hardly any Activision games came to the company’s consoles.


Sony: now what?

Vlad Savov, a journalist specializing in technology at Bloomberg, shared his impressions on his Twitter account about the impact of this stock market crash on possible next steps for Sony. On the one hand, he stated that games only account for 30% of Sony’s business, especially considering that in its cinema branch, for example, it has licenses as juicy as Spider-Man. And on the other, there is the possibility that Microsoft’s plan will fall before the laws antitrust, something that will still take months to materialize in one way or another.

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Evolution of the price of Sony shares in recent months, where the extraordinary rise they experienced in the last months of 2021 can be seen.

But on the other hand, Savov points out some aspects that explain this fall in the stock market. On the one hand, the logical fluctuations: Sony had been with share price records, so a fall was more or less predictable. To this adds that Sony does not have the muscle to start a takeover war with Microsoft: It is a competition in which he is not interested in getting involved, especially having such a clear exclusive strategy with Playstation.

What possible perspectives open, then, before Sony? On one side, It would not hurt to reinforce your own Game Pass, which in your case is -with slight variations- Playstation Plus. Game Pass is growing by leaps and bounds (in a year it has gone from 18 to 25 million subscribers), but it is still far from the 100 million users of Playstation Plus, which come largely from the fact that the service is mandatory to play online. That clear advantage in the number of subscribers could be used by Sony to unite its two services under the same umbrella (Playstation Plus and PS Now, its streaming game platform, similar to Game Pass but technically far behind).

This is how Activision Blizzard makes money: its three big franchises generate 76% of its income

On the other hand, it would be convenient for Sony not to accommodate itself in its catalog of exclusives. It is true that 2022 promises to be a very juicy year for Playstation 5, with titles like ‘Forspoken’, ‘God of War Ragnarök’, ‘Gran Turismo 7’, ‘Horizon Forbidden West’ or ‘GhostWire: Tokyo’, among others (if the crisis of the components does not continue to wreak havoc). But with the purchases of Bethesda and Activision, you have before you with Microsoft a colossus of rival games like you’ve never seen before, and that will surely be used to boost Game Pass (temporary exclusives or not, titles on the platform from day one…). Each of Sony’s exclusive bets enrich its catalog, but they are slow games to produce and have a limited impact: Sony needs us not to stop talking about Playstation 5 for months, as it happens now in the interludes between games.

No doubt, andIt is a relevant moment for Sony, and its next decisions can mark the immediate future of the company. In the same way that Nintendo gave up competing with its two great rivals years ago and focused on differentiating hardware and hosting tailored games, Microsoft seems increasingly distant from the war of big names and bomb-exclusives. It only remains to be seen if Sony continues down this path (for which, essentially, it would not have to change anything) or has some ace up its sleeve to fight back.