Activision Blizzard is being acquired by Microsoft Gaming, which is terrible news for Sony. Of course, this does not imply that the PlayStation brand is dead. The PlayStation 5 will be as successful tomorrow as it has been since its release in November 2020. However, Sony must consider how Microsoft is transforming the industry in the image of Game Pass, and it has a few alternatives for doing so. The right approach, on the other hand, is to not respond at all.
Following the announcement that Microsoft will now be the home of Call of Duty, Overwatch, and World of Warcraft, PlayStation executives are assessing all of their choices. Sony might react by making large purchases of its own, or it may ignore Microsoft’s activities and continue doing business as normal. However, Sony has a third alternative in which it lowers its barriers and offers a version of Xbox Game Pass to PlayStation 5 users right now.
It may seem inconceivable that PlayStation would enable Xbox Game Pass to be installed on their system, but why? On PlayStation, Electronic Arts’ EA Play subscription service is available. And, in addition to Apple TV+, you can subscribe to Netflix on your Apple iPhone.
These businesses are competing, but they aren’t fighting. They don’t always come out on top when the other team loses. If they earn more money tomorrow than they did yesterday, they will win.
Putting all of the mattress businesses at one location
According to a theory in economics, the easiest way to stay up with your competition is to open a store immediately next door to them. This is why three mattress businesses are located at the same crossroads. It is for this reason why cities have diamond districts and vast stretches of car showrooms.
In the content wars, this notion might be even more feasible. On a PlayStation, Sony’s services might profit from being shown alongside Xbox services. Furthermore, PlayStation 5 would become the only site where you could acquire both PlayStation and Xbox titles on launch day.
However, Sony should take action as quickly as possible. It still has a lot of negotiating power now. On PlayStation, Call of Duty earns a lot of money, and PS5 sales aren’t likely to slow down anytime soon. Sony may impose strict revenue-sharing agreements and limit the titles available on a PlayStation equivalent of Xbox Game Pass. Sony, for example, may insist that Xbox confine it to first-party titles exclusively. Perhaps it would be enough to scupper the agreement, but I doubt it.
The point is that Sony’s situation is only going to deteriorate over time. It could be able to acquire the finest offer today. In a few years, Sony may find itself needing to hand up greater control over the terms of the arrangement to Microsoft.
Now, I don’t believe Sony will go this path, but I believe it is the greatest strategic alternative for the company. The only viable option is to engage in a cold war with Microsoft over acquisitions. Sony could easily fund a lot of large purchases, but accumulating debt is a significant danger, particularly when Phil Spencer is paying cash.
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