Should PlayStation Panic About Xbox’s Activision Blizzard Deal?

Activision Blizzard is currently under investigation following accusations of harassment, discrimination, and fostering a hostile work environment. You can read more about the investigation here.

By acquiring Activision Blizzard (pending approval), Microsoft and the Xbox team have made a deal that many people once said was impossible. More importantly, they’ve changed the future of the PS5 vs. Xbox Series X/S console wars in a way that has some PlayStation fans wondering if it’s time to panic.

While it’s always important to remain calm and reasonable when talking about the “console wars,” it’s also easy to understand why there is a lot of panic and confusion out there at the moment. There’s never been a video game deal as big as Microsoft’s pending acquisition of Activision Blizzard, and only a fool could convince themselves that this move will not change the video game industry as we know it.

Still, it’s very important to consider the following points when you’re trying to get a feel for how big of a deal this really is and what it likely means for PlayStation (and Xbox) fans everywhere.

PlayStation is Still Ahead of Xbox in Terms of Sales and Revenue

Before we talk about any other part of this story, it’s important to realize that Microsoft’s decision to buy Activision Blizzard was at least partially inspired by their desire to “catch up” to Sony in terms of both yearly gaming revenue and hardware sales.

There are a few factors that complicate that assessment that we’ll need to talk about in a bit, but the point is that the PlayStation brand is still ahead of Xbox in terms of hardware sales and yearly gaming revenue, and this latest deal doesn’t immediately change that. The PS5 is clearly outselling the Xbox Series X/S (even if exact sales figures are a little hard to come by), and as industry analysts were quick to point out, Sony would still theoretically be ahead of Microsoft from a gaming revenue standpoint even if you combined Microsoft and Activision Blizzard’s recent yearly revenue numbers.

While it’s important to not oversimplify this subject and miss out on the details that matter most, it also needs to be said that regardless of what has happened and may happen in the immediate future, Sony and the PlayStation team are still in a very good position.

Xbox Will Probably Never Beat PlayStation in Japan

While Microsoft has tried to bolster Xbox’s popularity in Japan in the past, the fact of the matter is that Xbox still trails PlayStation and Nintendo in that region, and the Activision Blizzard deal does little to improve their position.

While Japan obviously can’t match the rest of the world combined in terms of console and software sales, that’s really not the way you should be looking at this advantage. Not only does a Famitsu report suggest that the PS5 outsold the Xbox Series X/S last year in Japan by nearly 850,000 units (the Xbox Series X/S didn’t even outsell the PS4 in Japan last year), but Sony has a cultural foothold in that region that likely can’t be matched by a Western company.

That last part becomes all the more important once you realize that Sony not only enjoys a sizeable sales advantage within Japan but is generally in a better position to potentially benefit from the many best-selling global games that come from Japan. Actually, that brings us rather nicely to our next point…

PlayStation Could Still Buy a Company Like Square Enix or Capcom

While there is a deeper discussion to be had regarding the exact value of Sony buying major studios at this time (and we’ll dive into that part of the discussion in just a bit), it must be said that it’s not like the PlayStation team doesn’t theoretically have options when it comes to possible studio acquisitions. In fact, as many have been quick to point out, they’re theoretically in a pretty good position to buy a major Japanese studio like Capcom or Square Enix.

Now, while that statement is obviously based on the assumption that Square Enix, Capcom, or other major Japanese studios have any interest in being acquired by Sony, it’s important to remember that Sony doesn’t even have to necessarily purchase those studios outright to benefit from some kind of arrangement. The PlayStation team hasn’t been shy when it comes to pursuing deals that either result in PlayStation exclusives or timed PlayStation exclusive content. It’s not the same as outright purchasing a company, but if Sony is at all worried about their exclusive lineup, such deals will still allow them to associate certain titles with the PlayStation brand.

In fact, it’s important to remember that this latest deal doesn’t necessarily impact what the PlayStation team is ultimately trying to do…

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PlayStation Has Their Own “Brand” That Focuses on Premium Releases at Premium Prices

While it’s impossible to ignore the impact of Microsoft’s decision to acquire Activision Blizzard, it’s important to remember that the move isn’t some kind of death blow that the PlayStation team can’t recover from. That acquisition really just highlights the ways that Sony and Microsoft are taking fundamentally different approaches to the console wars.

For the most part, the PlayStation team seems to be fine with focusing on a few major Triple-A exclusive releases a year that bolster the value of their brand and allow them to continue to sell hardware and software at a premium (though increasingly “standard”) price. As we previously noted, that’s a strategy that has worked out well for them so far, and it has certainly helped them carve a spot for themselves in the industry as a primary purveyor of premium products. By comparison, Xbox is increasingly interested in expanding Game Pass’ content library.

That being said, it’s becoming increasingly clear that there is at least one area where the PlayStation team really needs to start reexamining and altering their current strategies…

PlayStation Needs a Game Pass Competitor More Than Ever

We’ve talked about PlayStation’s rumored “Project Spartacus” subscription service in the past, but recent events have made it clear that Sony needs to figure out what their Game Pass alternative looks like sooner rather than later.

Microsoft knew that growing Game Pass was going to require time and money, and they have greatly benefited from their willingness to invest both of those resources into what has quickly become Xbox’s biggest selling point and one of the greatest assets in console war history. The rise of subscription services has been a marathon, not a sprint, and while PlayStation doesn’t need a viable Game Pass competitor to “stay alive,” they do need to show they have a plan for what is going to be a big part of the future of gaming.

PlayStation may never need to rely on their subscription service as much as Xbox needs to for the reasons we outlined above, but (with due respect to PlayStation Now) they need to start making moves to play catch up in this one area they just keep falling behind in.

PlayStation is Kind of At Microsoft’s Mercy When it Comes to “Trusting” Their Plans

While the general theme of this article is that PlayStation doesn’t need to panic about what Microsoft and the Xbox team are doing quite yet, I will say that it’s fascinating to watch the console war dynamic shift in such a way that increasingly puts PlayStation at the mercy of what Microsoft is doing.

While the Xbox team has stated that it’s not necessarily their desire to keep all their new toys to themselves (and there is likely some truth in that), the fact of the matter is that Sony effectively has no real say over whether games like Call of Duty, The Elder Scrolls, Crash Bandicoot, Tony Hawk, and more eventually stop being released on their platforms. Microsoft suggests that it’s not in their interest to go that far, but given that the PlayStation team has never really been shy about “locking” content, they have to suspect that there is at least a chance that Microsoft could make some pretty drastic moves that would certainly negatively impact them.

Indeed, the PlayStation team’s biggest fear at the moment has to be the unknown and the idea that they are more dependent than they’d probably like to be on the idea that the Xbox team isn’t interested in going nuclear with the console wars.