Sony Group shares slumped 9% on Wednesday after gaming competitor Microsoft announced it would buy developer Activision Blizzard in a record-breaking $68.7 billion transaction.

While Sony's PlayStation is widely seen to be ahead of Microsoft's Xbox in the generational rivalry, Microsoft's acquisition of the "Call of Duty" developer comes at a time when the latter is aggressively expanding its Game Pass subscription service.

In the last year, Sony has bolstered its network of in-house game studios and delivered a slew of exclusive hits, particularly in the "Spider-Man" franchise, leaving Microsoft scrambling to keep up.Sony Logo, history, meaning, symbol, PNG

In a letter to clients, Amir Anvarzadeh, a market strategist at Asymmetric Advisors who suggests shorting the company, wrote, "Sony will have a huge job on its hands to stand its own in this war of attrition."

Sony is a virtual reality pioneer, and it teased a little information about its next-generation headgear this month, but deep-pocketed and non-traditional players like Meta Platforms, which owns Facebook, are investing in the metaverse, or virtual online worlds.

Activision's PlayStation is a big source of cash, complicating any choice by Microsoft to pull titles from Sony systems and squeeze its competitor.

As developments in cloud technology lessen links to the cumbersome gaming hardware that made Sony and Microsoft industry gatekeepers, many industry experts feel that operability across various platforms is critical for the success of a metaverse where users can freely game, shop, and work.

In a client note, Jefferies analyst Atul Goyal said, "If Microsoft continues to deliver these games on (the PlayStation) platform as well, it would signal that it may be positioning itself for metaverse in the long-term."