Sony May Drop to Third-Largest Gaming Company After Microsoft-Activision Deal

When the Microsoft-Activision deal resolves, upon approval from the U.S. Federal Trade Commission, the merger may see Sony as the third-largest gaming company behind Tencent and Microsoft, according to a new report by Newzoo. The firm, which specializes in games and esports analytics and market research, believes that combining the revenue of both Microsoft and Activision would catapult the merger past Sony and Apple into second place.

The report shows upward trend for mergers and acquisitions

That said, the fight between Microsoft and Sony for the gaming company with the largest revenue is rather close. A chart of combined game revenues by Newzoo, as shown (above) in Venturebeat, reveals that Microsoft and Activision Blizzard would make a total of $21 billion in revenue compared to Sony’s $18.2 billion. The report also shows concerning numbers for Sony, which had negative growth while Microsoft had 9.6% positive growth and Nintendo had 1.9% positive growth.

Newzoo notes that the trend of mergers and acquisitions is growing in part because, while the gaming companies in the Top 10 generated a lot of revenue, their growth was limited. A separate entry in the chart shows that the merger between Take-Two and Zynga would place it in the Top 10 between EA and Sea Limited.

This counters prior statements made by other analysts like Niko Partners Daniel Ahmad who stated on Twitter that Microsoft-Activision deal would still put it behind Sony. However, he was admittedly using revenue figures from 2020 in his tweet.

Satya Nadella, Microsoft’s chief executive officer, also believed that his company would still be third behind Sony in an interview with Financial Times in early February this year: “Even post this acquisition, we will be number three with sort of low-teens share [of the video games market].”

At the time, Nadella acknowledged that the deal would likely go through because the merger wouldn’t change the company’s overall position too much, but this report from Newzoo goes against that perspective.

In other news, the Nintendo Switch has passed the PS4 in overall unit sales in the U.S., and Sony has seemingly registered a revised PS5 model in Japan.