Is this the end of PlayStation? It’s always easy to get apocalyptic in situations like this, but it’s obviously not. Sony’s gaming division remains a wildly popular brand globally, and no single publisher can ever detract from that. Make no mistake, though, Microsoft’s acquisition of Activision Blizzard for $70 billion is a blow of unprecedented scale – this isn’t just a haymaker or a right hook, it’s the manufacturer slumped against the ropes, blood dripping from its mouth, while it desperately gasps for air.
You might not like Call of Duty or any of Activision Blizzard’s other games, but you need to understand this: every year, the publisher’s first-person shooter is one of the biggest games on PlayStation. Call of Duty: Vanguard actually underperformed a little, meaning that in terms of 2021 PS Store sales, it was forced to sit behind FIFA 22 and NBA 2K22 in Europe and North America respectively. But typically, it’s Call of Duty at the top – year in, year out. And all its players contribute enormously to Sony’s bottom line, be it through microtransactions or PS Plus subscriptions.
Now it’s still unclear whether Activision Blizzard games will become exclusive, but we’ve been here before: there were a number of wishy-washy statements released about Bethesda before the buyout cleared, and then suddenly there was no more Starfield. Ultimately, we can infer a lot from this particular situation: service-driven games, like Call of Duty: Warzone, for example, may remain – that’s been true of titles like Fallout 76, after all – but anything else is almost certainly gone for good. The implications of this to Sony’s bottom line cannot be understated.
In the cold light of day, looking back, the Bethesda buyout for $7.5 billion did make sense. This was a publisher that was signing timed exclusivity deals with Sony, and was reducing the price of its games drastically within months of their release. It was also a privately owned organisation. Activision Blizzard is publicly traded – although its stocks have taken a battering of late, presumably making it all the more enticing to Microsoft’s upper-management. Still, we’re talking $70 billion in cash here. It’s, to labour a point, unprecedented.
So, what next for Sony? Well, this isn’t the end, obviously – but we may be witnessing the beginning of the end for PlayStation as the market leader. The Japanese giant has done an outstanding job of growing its intellectual property over the past 15 years, and it’s now the steward of some of the biggest brands in gaming – but it’s not Nintendo, and it’s always used its exclusives as additive to a robust third-party content slate. The removal of Bethesda was a blow it could weather, but Activision Blizzard is a gut punch that’s going to leave the company battered and bruised.
We won’t see a change in the immediate future. This acquisition will take some time to close, and it’ll be business as usual – presumably with less sexual harassment – for the next year or so. Sony will continue to sell as many consoles as it can manufacture, and the likes of God of War Ragnarok and Horizon Forbidden West will be big hits. This is going to take time to manifest, and the impact on PlayStation’s bottom line will be slow and subtle.
But conversation has been dominated recently by Xbox Game Pass and Sony’s rumoured Project Spartacus reboot, with the sentiment being that PlayStation simply doesn’t have the funds to compete on Microsoft’s level. That conversation will once again be brought into sharp focus: there’s no acquisition that the Japanese giant could feasibly make to fill the void of one of the biggest brands on its platform, and it’s not going to be able to develop a comparative competitor – practically every publisher in the industry has been trying to dethrone Call of Duty for the past 15 years and failed.
So it’s going to have to double down on the first-party franchises it’s got, but whether it can sustain itself in the way Nintendo has over the years is up for debate. If we’re being optimistic about it, that might make for a more varied and diverse software slate, but PlayStation is unlikely to enjoy the benefits it historically has as a market leader. Presumably, this will force Sony to strengthen its relationships with the remaining third-parties, like Ubisoft and EA, but when Microsoft’s in this kind of mood we wouldn’t rule out further buyouts down the line.
And none of this addresses the elephant in the room: Xbox will be bundling every game into its Game Pass subscription, and while the economics and end goal of that particular service still remain head-scratching, the Redmond firm is clearly not short of a buck or two. In addition to losing one of the biggest franchises on its format, Sony must also navigate an environment it deems “unsustainable”, which is putting its multi-million dollar software investments into a low-price, monthly service.
There has been some suggestion that Sony’s only way out may be to allow Game Pass onto its own platforms, which is an outcome we’re sure Microsoft would whole-heartedly embrace. But this kind of thinking ignores reality: PlayStation makes billion dollar investments into designing and marketing hardware so that it can reap the rewards through software royalties and subscriptions. It’s not going to put in the hard yards building a platform to then cede all of the income on that particular device to a competitor.
It’ll be a while before we see what the future holds for PlayStation, and there’ll be no change in the short-term. But as we write this article now, it’s hard to see Sony remaining the market leader. It’ll soon lose its biggest franchise for good, and we suspect this isn’t the end of Microsoft’s acquisition spree. It’s been a good run – an amazing one even – but eventually the big fish gobbles up the smaller ones. And right now, Microsoft is a shark.
How are you feeling about the Activision Blizzard buyout now you’ve had time to process the news? What do you think this means for PlayStation moving forwards? Go for the throat in the comments section below.
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