The very idea of MS leaving gaming if this doesn't go through is ridiculous. They have bought 40+ studios since 2018. That's not all suddenly riding on this deal. It's phenomenal how this trillion dollar company is seen as a poor wounded dog but I guess the MS PR is doing its job.
Companies leave industries all the time.
Why did Microsoft shutter the windows phone after buying Nokia for 7 billion dollars? How much did they sell Nokia for? 350 million dollars. They kept them for only 3 years...
Microsoft is flush with cash from 365 and they're using that money to invest and double down on gaming subscriptions and cloud with Activision. That isn't a guarantee of the future of Xbox though. Especially should this M&A not go through.
If GamePass doesn't succeed and Xbox doesn't transform its position in the industry, I don't expect Microsoft to stay put. And I'm again, unsure as to why people find this a hot take when Microsoft themselves stated they considered leaving the industry. Maybe you ignore that because of the investments they've made recently, but that honestly doesn't mean anything. Microsoft is not primarily a video game company and they never will be. Their primary products are Windows and Office.
You look at Sony and is there a chance they get out of gaming? Absolutely. It's less likely because they're in a market position placing them at the top, but does the trend of PC and mobile gaming erode the console business entirely in the future? What the market looks like today, isn't necessarily what it'll be in 2040. You look at how brick and mortar retail has been mostly shut out of gaming in just the last 10 years by digital and online warehouse.
Things change, be a student of history and business.
Microsoft's history in the game industry mirrors a lot of Sega's. Difficult first entry, but mistakes from their chief competitor allowed their second entry to be more successful, but the 3rd entry wasn't nearly as successful. We'll see if the 4th entry is similarly the last entry.
Cloud gaming may eventually seize the day as well, but being too ahead of the market has caused many a company to struggle or fail. We're not there yet, but the day you can remove the console as a necessity and either replace it with a streaming stick or even have it built into TVs is a game changer for the industry. The problem they'll face then is the tv manufacturers will try to ape royalties. This is exactly what happened with the shift to CDs. Sony wanted royalties and Nintendo wasn't about that life. Enter Sony. But without a console, 3rd party software companies will ALSO see the potential of escaping the need of paying royalties, by maybe releasing their own app on a TV or their own streaming stick.
We're entering the wild west and people think the status quo is just going to continue. There has never been a sustained status quo in gaming.
Atari was the market leader. Then it was Nintendo. Atari was essentially out the next day. Then it was Sony. Then Sega left the industry and Microsoft entered. Then we went digital. Nintendo pivoted and found its own success with the Wii and Switch. Meanwhile, Mobile gaming has become huge worldwide and PC has rebounded from their dark days due to Steam (and again digital). This doesn't even touch much on iOS, Android, and Apple Arcade...
Sony has been the market leader for the longest amount of time, but that's really not saying much either. Before them, Nintendo had been the market leader for what 10-15 years give or take?