Thursday, June 30, 2022

How Can Sony Compete With Xbox’s Activision Blizzard Buyout?

Microsoft’s seismic deal to put Activision Blizzard King under its sole control is rocking the entire industry like an earthquake, and Sony would be right to be concerned. It even caused Sony’s stock price to plummet, although it has since recovered somewhat.

For those invested in the so-called console wars, the duel between competing console platforms can be similar to Sith vs Jedi, Liverpool vs Man United, Nike vs Adidas, only more online and less dignified. These wars have always been overheated since Sega fought Nintendo for hearts and minds. But I kind of get it – a lot of emotion can be invested in these platforms, even if the skirmishes can amount to silly insults being hurled across the web.


Related: Microsoft’s acquisition of Activision Blizzard is jarring, but the crown in the deal could be king

Especially in Europe, Sony has a loyal fan base. In its native Japan, on the other hand, Sony enjoys a devotion that leaves Microsoft far afield. In this generation, however, that could change. At Christmas, the Xbox series was the second most popular console in terms of UK sales, ahead of the PS5 (the all-conquering Nintendo Switch took first place). And even in Sony-Nintendo-dominated Japan, things appear to be changing as Xbox outsells previous Xbox consoles. The news of Microsoft’s takeover of Megaton even shook Japanese commentators, sparking astonishment and even fear for their beloved PlayStation.

A screenshot showing gameplay in Jak and Daxter

“Sony is now under tremendous pressure to respond. Sony doesn’t have as much money as Microsoft, so its options are more limited,” says George Jijiashvili, senior games analyst at Omdia. Those options might be limited, but with this huge shift in the gaming landscape, Sony might be forced to make some important decisions.

Sometimes a light switch is flipped and things are lightened. Even the possibility of Call of Duty becoming an Xbox exclusive is rightly a concern for PlayStation fans. The shooter series has such a serious following that many would flock to Game Pass and Xbox should the exclusivity materialize. As Microsoft plans to keep some properties across platforms, Call of Duty will likely stay on PlayStation, but other games won’t go that route. Characters long associated with PlayStation – Crash Bandicoot and Spyro the Dragon – suddenly have a greener pallor, a Microsoft hue. PlayStation-only mascots now look skinny. Ratchet, Kratos and who else? Ellie maybe, although TLOU isn’t really a mascot show. Are we suggesting that Aloy and Jin fall into this category after just a single game each?

Sad Kratos Urn

In retrospect, one can argue that Sony was negligent. Crash Bandicoot was a creation of Naughty Dog but licensed to Universal Interactive. Universal merged with Vivendi Games and Activision eventually got the rights when it merged with Vivendi. Spyro was an Insomniac creation, but something very similar happened. Meanwhile, PS2 classics like Jak and Daxter (Naughty Dog) and Sly Cooper (Sucker Punch) have been languishing without new games appearing in those series for many years – and with those studios now moving towards ‘Prestige’, Sequels remain unlikely.

Sony has an extensive library, but much of it is gathering dust. There is evidence of backwards compatibility for modern PlayStation consoles, but Sony would need to upload many games digitally (unless the expectation is that gamers will become disc collectors). Microsoft has a huge advantage here, with many older Xbox games still available on the platform via Game Pass and supported with backwards compatibility. Sony has to start from scratch.

The rumored forthcoming PlayStation subscription service – codenamed Spartacus – could be a worthy rival to Game Pass, but Sony will need more games for it to properly compete. Game Pass owners have day one access to Totem series like Halo and Forza. Will Sony be able to offer something similarly enticing?

Sony has bet a lot on blockbusters with titles like Horizon Forbidden West, God of War Ragnarok and the Last of Us series, but these types of games require huge investments of time and money to produce and there aren’t enough of them. PlayStation may also need a new FPS with good multiplayer to compete with Halo and cover the possibility of lost CoD players.

It’s still really about the games and Microsoft is backing them up with studio purchases. The company acquired ZeniMax last year for $7.5 billion and along with the nearly $70 billion deal for Activision Blizzard, Microsoft has the rights to Fallout, Elder Scrolls, World of Warcraft, Call of Duty, Doom, Overwatch, Tony Hawk’s Pro Skater, Diablo, State of Decay, Wolfenstein, Dishonoured, among many others, under his belt. Not to mention the big moneymakers in Minecraft and Candy Crush adding to their war chests.

What can his Japanese rival do? “Sony did [a] a number of acquisitions recently, but they were much smaller and included studios with which they have established relationships,” says Jijiashvili.

Game Pass Ultimate Halo Infinite
via Xbox

“The acquisition of Activision Blizzard could force Sony to take a bold step with its subscription offering. In particular, we may see Sony include some day-one releases as part of its rumored subscription overhaul to better compete with Game Pass.”

The analyst also expects Sony to double down on its “unique strengths” like its hard-hitting PlayStation VR back catalog and leverage on its other entertainment assets. This last point can be seen in the upcoming Uncharted movie.

But the point remains. Sony has to react and it will be expensive.

Next: The PS5 is the most innovative PlayStation since the PS1

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