If Microsoft’s acquisition of Activision can be approved by the US Federal Trade Commission, according to the latest report released by Newzoo, Sony will become the world’s third-largest game company, ranking behind Tencent and Microsoft. Newzoo believes that Microsoft and Activision will directly surpass Sony and Apple and jump to second place after the combination of revenue.
That being said, the revenue battle between Microsoft and Sony as gaming companies will be fierce. According to Newzoo’s game revenue table, Microsoft’s total revenue with Activision Blizzard can reach $21 billion, while Sony’s revenue is $18.2 billion. Another figure for Sony in the report is that its revenue fell 2.3% year over year, while Microsoft grew 9.6% year over year and Nintendo grew 1.9% year over year.
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Newzoo believes that part of the reason for the increasing number of mergers and acquisitions is that the top 10 game companies receive most of the overall market revenue, and their growth is limited. As you can see from the table, Take-Two and Zynga will also be in the top ten in the industry after the merger, ranking between EA and Sea Limited.
Niko Partners analyst Daniel Ahmad believes that after Microsoft’s acquisition of Activision, its ranking will still lag behind Sony, while Newzoo’s analysis contradicts it. However, Daniel Ahmad admitted that he was using 2020 revenue figures.
Microsoft CEO Satya Nadella agreed in an interview with the Financial Times in early February that his company would still be third behind Sony: “Even after an acquisition like this, our share of the video game market is will still be in third place.”
At the time, Nadella thought the deal would be approved by the trade committee because it wouldn’t change the company’s rankings much, but judging from the Newzoo report, that doesn’t appear to be the case.