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Sony’s stock drops 5% after Microsoft-Activision deal

By Yashasvini on Jan 20, 2022 | 03:30 AM IST

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• On Tuesday, Microsoft offered to pay $95 per share, in an all-cash deal to Activision

• Analysts believe that this deal marks the rise of tough competition against Sony

Sony Group Corp’s (NYSE: SONY) shares witnessed a drop after Microsoft Corp (NASDAQ: MSFT) announced it will buy “Call of Duty” videogame maker Activision Blizzard Inc (NASDAQ: ATVI) for nearly $69 billion in the biggest gaming industry deal in history.

Sony’s stock moved 5% lower in Wednesday’s U.S. trading session after declining 7% on Tuesday. Investors likely fear rising competition to Sony’s PlayStation division as well as the potential for Microsoft to pull some popular games from the Japanese entertainment giant’s platforms, reported CNBC.

On Tuesday, Microsoft offered to pay $95 per share, in an all-cash deal, representing a premium of 45% to Activision’s Friday close, totalling $68.7 billion, marking its biggest-ever acquisition.

ALSO READ: Microsoft to buy game developer Activision for $69 billion in push for metaverse

With the deal, Microsoft is betting on the “metaverse,” a virtual online world where people can work, play and socialize, as many of its biggest rivals are currently working on it.

Roadmap for Sony

Sony runs the PlayStation console business and subscription-based service PlayStation Plus. With Activision’s biggest games such as “Call of Duty” now most likely to be added exclusively to its Game Pass roster, analysts believe that the competition against Sony is going to get tougher.

Meanwhile, Sony isn’t new to such huge acquisitions. Market analysts interviewed by CNBC said that Sony would hunt for new acquisitions and fight back.

Meanwhile, Sony has been investing heavily in first-party exclusive content for some years bringing exclusive hit games such as Spider-Man and The Last of Us to the PlayStation. It has also invested heavily in virtual reality and this month took the wraps off its second-generation headset called the PlayStation VR2.

ALSO READ: Activision replaces Blizzard head J. Allen Brack after facing gender-bias and sexual harassment lawsuit

Picture Credits: Al Jazeera

Inputs from CNBC

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