$20bn (£14.7bn) has been wiped off the value of Sony after its rival Microsoft announced a record-breaking deal to buy the Call of Duty publisher Activision Blizzard and take the console wars into the metaverse. Shares in the Japanese conglomerate closed down 13% on Wednesday, their biggest fall since the global financial crisis in 2008, as investors reacted to the possibility that the $70bn bid for Activision Blizzard could result in hit games being pulled from the Sony PlayStation console and subscription service and offered exclusively on the rival Microsoft Xbox. The blockbuster deal is not only the largest Microsoft has struck but also the biggest ever in the gaming and tech sectors. It sparked a wave of investor interest in further consolidation, with shares in Electronic Arts, the maker of the Fifa football series, and Take-Two Interactive, the maker of Grand Theft Auto, rising. The shares of other video games companies also rose. France’s Ubisoft, which makes Assassin’s Creed, was up almost 12%, while Japan’s Capcom and Square Enix each rose 3.5%. “Sony’s response [to the deal] will be one to watch, of course,” said Clay Griffin, an analyst at the research firm MoffettNathanson. “But we question its ability to go toe to toe with Microsoft financially. We doubt Sony could digest something of the scale of Electronic Arts or Take-Two.” Sony has led Microsoft in the sale of consoles and exclusive games, such as Spider-Man and God of War, which have bolstered revenue from its PlayStation Plus subscription service. On Tuesday Microsoft said it aimed to offer as many of Activision Blizzard’s hit titles, which also include World of Warcraft, on its Xbox Game Pass and PC Pass subscription services. Analysts were divided over whether Microsoft would look to take the flagship game Call of Duty exclusive, as it would mean a huge financial hit by not licensing it globally. As much as 65% of Activision Blizzard’s games console revenue comes from Sony’s PS5. Microsoft has said more broadly that the deal will “provide the building blocks for the metaverse”. Griffin said: “The vision Microsoft laid out yesterday was not of ‘winning’ the console wars versus Sony, necessarily. That’s part of it, of course. But more than that, it was about broadening … access to [premium] video games beyond the constraining barriers of expensive hardware.” The deal, which could still be countered by a rival bid, will result in Microsoft becoming the world’s third biggest gaming company by revenue behind China’s Tencent and Sony. A rival bid is considered to be unlikely given the scale of the offer. The deal dwarfs Microsoft’s $7.5bn takeover of Zenimax, the owner of Bethesda, the maker of the Elder Scrolls game, in 2020. Its previous biggest acquisition was the$26bn buyout of LinkedIn in 2016.
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