While Sony's PlayStation is widely seen as
having a lead in the generational battle with Microsoft's Xbox, the purchase of
the "Call of Duty" maker comes as Microsoft is aggressively expanding
its Game Pass subscription service.
Sony has strengthened its network of
in-house games studios in recent year and delivered a string of exclusive hits
including in its "Spider-man" franchise, with Microsoft left playing
catch-up.
"Sony will have a monumental challenge
on its hand to stand its own in this war of attrition," wrote Amir
Anvarzadeh, a market strategist at Asymmetric Advisors who recommends shorting
the stock, in a note to clients.
Sony is a pioneer in virtual reality and
announced a few teasing details this month of its next generation headset, but
deep pocketed and non-traditional players such as Facebook owner Meta Platforms
are investing in the metaverse, or virtual online worlds.
PlayStation is a major source of revenue
for Activision, complicating any potential decision by Microsoft to remove
titles from Sony systems and squeeze its rival.
Many industry observers believe operability
across multiple platforms is essential for the success of a metaverse where
users can game, shop and work freely as advances in cloud technology weaken
ties to the bulky gaming hardware that made Sony and Microsoft industry
gatekeepers.
"If Microsoft continues to provide
these games to (the PlaySation) platform as well, that would indicate that it
may be positioning itself for metaverse in the long-term," Jefferies
analyst Atul Goyal wrote in a client note.