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Could console wars erupt as tech giants vie for the next level?

  • Sony Corporation shares dived almost 13% as video game competition heats up.
  • Microsoft’s US$68.7bn tilt for Activision Blizzard is the biggest gaming industry deal in history.
  • Global video games industry revenues were expected to surpass US$138 billion in 2021.

Competition in the lucrative video games market is expected to heat up as global technology giants fight to get to the next level.

Sony Corporation’s (TYO:6758) shares have plummeted nearly 13% on the back of competition concerns after Microsoft Corporation (NASDAQ:MSFT) announced it will acquire “World of Warcraft” creator Activision Blizzard Inc. (NASDAQ:ATVI) for US$68.7 billion.

Should Microsoft receive regulatory approval for the all-cash acquisition, it will be the biggest gaming industry deal in history.

Gaming is a lucrative and growing sector in which industry revenues were expected to surpass US$138 billion in 2021, according to Statista.

The pending Microsoft and Activision tie-up is a potential threat to Sony, whose PlayStation console competes directly with Xbox. 

So spooked was the market that Tokyo’s benchmark Nikkei 225 index dropped more than 3% when market heavyweight Sony’s share price plummeted.

Whether this could spark Sony to pursue M&A remains to be seen, however the threat of a video games market war is possible as the Japanese multinational conglomerate would need to counter the move.

The next generation of consoles is on the horizon with researchers working on making quantum computing a possibility in gaming, which could form part of Sony’s growth strategy. Big tech companies like Meta (formerly Facebook), are eyeing quantum computing.

However, in 2022, Konami Holdings Corporation, another Japanese entertainment conglomerate, could be a game-changer. In a surprise move, Konami launched Yu-Gi-Oh! Master Duel, a new free-to-play card game which is available on all platforms. The cross-save means people can pick up their duels on any platform without having to lose any progress.

In the video games console world, that is progress.

And in a world in which computers, information technology, and increasingly augmented and virtual reality reign supreme, the question is: if console wars are declared, who will emerge the God of War – Microsoft or Sony? Or Konami, perhaps?

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