Sony lost $20 billion in market value following Microsoft’s acquisition of Activision Blizzard

Sony shares fell significantly after Microsoft announced its intent to acquire Activision Blizzard for almost $70 billion yesterday.

The PlayStation company’s stock dropped more than 13 percent on the Japanese stock market on Wednesday, Jan. 19, the most it’s fallen in over a decade, according to Bloomberg. Despite Sony’s continued success in the Japanese market, analysts say that Sony may struggle to keep up with Microsoft if that company continues to go all-in on its Game Pass service. “Falling shares illustrate investors are worried that Sony may not be able to keep winning if indeed the industry shifts away from the hardware-based model,” Morningstar Research analyst Kazunori Ito told Bloomberg.

It wasn’t all bad news on the market, though. Other stocks saw bumps thanks to the acquisition. Capcom’s and Square Enix’s respective stocks were up more than 3.7 percent in Tokyo, which analysts attribute to investor confidence in developers and publishers with strong game franchises and IPs. Microsoft’s stock continues to be up 1.85 percent today thanks to its monumental announcement yesterday.

In a news post announcing the intent to acquire Activision Blizzard, CEO of Microsoft Gaming Phil Spencer said that one of the company’s goals for the acquisition was adding additional titles and IP to Game Pass. “Upon close, we will offer as many Activision Blizzard games as we can within Xbox Game Pass and PC Game Pass, both new titles and games from Activision Blizzard’s incredible catalog,” he said in the post. This massive investment in Game Pass could point the wider industry toward a Netflix-like model where users pay a subscription fee for a rotating suite of games rather than purchasing each game individually.