Sony loses $20 billion in market value after Microsoft's massive deal to buy Activision Blizzard knocks its shares

• Sony's market value dropped $20 billion in a single day after its shares lost almost 13% in Tokyo.
• The stock fell after Microsoft said it plans to buy 'Call of Duty' maker Activision Blizzard for almost $69 billion.
• Sony's PlayStation console is a rival to Xbox from Microsoft, which could make some Activision games exclusive.

Shares in Sony plunged almost 13% in Tokyo on Wednesday, erasing $20 billion from its market value, after gaming rival Microsoft said it plans to buy Activision Blizzard.

Xbox maker Microsoft said Tuesday it has agreed a $68.7 billion all-cash deal with the publisher of "Call of Duty" and "Candy Crush."

Sony's stock closed 12.8% lower in the wake of the news, for its biggest one-day drop since 2008. The move dragged Japan's Nikkei 225 index down by 2.8%.

Its US-listed shares were down 4.3% early Wednesday, after closing almost 7.2% lower the previous session.

The Japanese tech giant and Microsoft are two of the biggest competitors in the videogame industry with their PlayStation and Xbox gaming consoles, respectively.

The deal for Activision would make Microsoft the third biggest gaming company by revenue in the world, after China's Tencent and Sony. It's the most valuable acquisition ever in the video game industry and for Microsoft, the BBC reported.

It marks a major escalation in the battle for dominance in the $200 billion gaming industry between Sony and Microsoft.

Some analysts said concerns that Microsoft could make Activision's hit franchise "Call of Duty" exclusive to its Xbox console contributed to the Sony share price fall, the Financial Times reported. The game series, which is available on all consoles including Sony's PlayStation, has been a consistent revenue generator.

To date, Sony has stayed ahead in sales and exclusive games over Microsoft. Games and network services make up about 30% of the Japanese tech giant's revenue.

Microsoft sees the deal as also giving it more scope in the metaverse, which some on Wall Street believe could generate millions of dollars in revenue.

"This acquisition will accelerate the growth in Microsoft's gaming business across mobile, PC, console and cloud and will provide building blocks for the metaverse," it said in a statement.

Microsoft's stock was up less than 1% in premarket trading Wednesday, after losing 2.43% the prior session after the news broke. Shares in Activision were edging higher, having gained almost 26% on Tuesday.

Other games publishers could become targets of an acquisition by Sony or may consider a merger with a rival, according to analysts.

In Tokyo, shares of other video game makers moved higher Wednesday. Capcom Co. and Square Enix rose 4.57% and 3.72%. Shares in Nintendo were up 1.95% at open but had fallen 0.22% at close, while Konami was up 1.72% at close.