Activision Apocalypse: Sony Forecasts $1.5 Billion Loss by 2027 After Microsoft Merger
In the aftermath of Microsoft’s acquisition of Activision Blizzard King, Sony foresees a challenging future, projecting a significant financial setback of $1.5 billion by 2027. The tech giant perceives Microsoft’s strategic move as a potential game-changer that could propel it ahead of Sony in the fiercely competitive console market.
Sony had vehemently opposed the merger during the regulatory scrutiny process, expressing concerns about its impact on the gaming landscape. Although Microsoft addressed these concerns by committing to make Call of Duty available on PlayStation for the next decade, leaked documents from the recent Insomniac hack reveal that Sony remains deeply apprehensive about the acquisition’s ramifications.
A confidential presentation slide discloses Sony’s fear that Microsoft’s acquisition of Activision could enable it to “leapfrog” ahead of Sony in the console market. The acquisition is seen as providing significant strategic value, particularly in live service games, mobile gaming scale, and the PC storefront through Battle.net.
One notable aspect highlighted is Microsoft’s initiative to establish a mobile game store, slated for launch in 2024. However, the success of this venture hinges on regulatory changes that open up ecosystems controlled by Apple and Google. Sony appears skeptical about the prospects of an alternative Xbox store thriving on competing platforms.
Sony’s pessimistic outlook extends to the forecasted doom of Call of Duty by 2027, well before the promised 10-year period concludes. While Microsoft committed to making Call of Duty available on both consoles, Sony envisions potential threats through strategic exclusivity periods. The concern lies in Microsoft using this exclusivity to bolster its subscription dominance, introducing Activision games on Game Pass simultaneously with their release.
“[Microsoft’s] comprehensive ecosystem coupled with exclusivity creates greater dominance,” states another slide, underlining Sony’s apprehension about the potential shift in the gaming landscape.
Sony’s financial analysts foresee a significant threat to PlayStation Plus, leading to a projected $1.5 billion shortfall by 2027. The company acknowledges that its existing pillars are “dated and behind the competition,” emphasizing the need for urgent expansion in offerings. Sony grapples with the challenge of devising the ideal game subscription model, balancing player expectations of premium games with a sustainable economic model.
Unlike Xbox, Sony lacks a unified experience across mobile, PC, and console platforms, further highlighting its vulnerability. With the company admitting that a continued focus on a “premium sales model” may not suffice, Sony faces a critical juncture in navigating the evolving dynamics of the gaming industry.
