Sony Eyes Microsoft, In the Distance

The PlayStation developer is infusing $300 million more in its first-party games as Microsoft spends billions on acquiring competitors.

The console wars are no longer a war. They’re a slaughter.

On Tuesday, Sony published its 2021 finances and spoke about its direction for the future. For PlayStation, one item stood out: The company is investing an additional $300 million into developing first-party games and will push harder to publish some of those titles across multiple platforms.

The past few months have illustrated a push to consolidation and a land grab of intellectual property in gaming. In January, Microsoft agreed to acquire “Call of Duty,” “World of Warcraft” and “Candy Crush” publisher Activision Blizzard in the largest gaming acquisition ever—$68.7 billion. Weeks later, Sony announced it will absorb “Destiny” developer and former Microsoft subsidiary Bungie in a $3.6 billion deal. In a world where gaming companies are for sale, Microsoft and Sony are the two buyers at the table.

Yet, unlike the PlayStation 4-Xbox One generation—where Sony firmly sat in the driver’s seat as far as trend setting—Microsoft is leading the charge now. Sony’s decision to push to other platforms is evidence of that.

Over the past three years, since it began gearing up for the holiday 2020 release of the Xbox Series X, Microsoft has substantially changed its strategy. It doesn’t care so much if you buy an Xbox anymore. It just wants you to play its games. 

Since that strategy shift, Microsoft has focused heavily on publishing its breakout Xbox first-party titles to PC—such as “Halo Infinite” and “Sea of Thieves”—and others to the Nintendo Switch. That isn’t slowing down, either.

“We’d like to bring [‘Call of Duty’] to Nintendo devices,” Microsoft president Brad Smith said in a CNBC interview about the company’s pending acquisition of Activision Blizzard. “We’d like to bring other popular titles that Activision Blizzard has, and ensure that they continue to be available on PlayStation, and that they become available on Nintendo.”

Microsoft also expanded its offering with Game Pass, the subscription-based service that lets gamers play many of those games for one flat, monthly fee. After all, Microsoft owns Windows, so a PC customer is just as valuable as an Xbox one.

Sony is following that path. In June, it’s changing its online membership plan, PlayStation Plus, to mirror Game Pass—offering hundreds of games at no additional cost. It has also published previous titles to PC in the past two years, including “Horizon Zero Dawn” and the new “God of War.”

The console wars are no longer a race to who can publish or release first. They’re a marathon, and Microsoft has more muscle and resources. Sony’s going to have to figure out how to compete with less.

Microsoft has not published its finances since July 2021, but in that filing, it revealed it has $14.2 billion cash on hand. In Tuesday’s filing, Sony reported 102.1 billion Japanese yen ($782 million) of cash available. As of market close Tuesday, Microsoft is the third-most valuable company in the world at $2.02 trillion. Sony, meanwhile, is worth $104.7 billion.

In a world where the two are fighting for market share and gaming is increasingly becoming a part of their businesses, Microsoft’s financial edge is unmatched. 

For Sony to catch up, the walls of exclusivity must continue to come down. That doesn’t mean publishing PlayStation titles on PC three years after release as it has. It means taking a page out of Microsoft’s book, figuring out how to improve margins on software, and increasing market share to all gamers—not just PlayStation ones.

Weekly Reads

We normally do the Weekly Reads on Fridays, but there’s a lot going on in the gaming world right now. So here’s a Tuesday edition, with the top news items and who’s covering them well: