Microsoft's purchase of gaming publisher Activision Blizzard for $68.7 billion could bring pain to struggling retailer GameStop.

"Microsoft's acquisition of Activision Blizzard changes the scope of key inputs into our prospective GameStop model. Both companies are key vendors to GameStop. A combo fortifies power over the retailer; could reshape volumes for Activision titles if made exclusive to Xbox; and portends a more rapid transition to cloud-driven IP gaming," said Jefferies analyst Stephanie Wissink. 

Wissink lowered her price target on GameStop (GME) to $100. Shares of the game retailer were unchanged in pre-market trading Wednesday at $109.

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In a surprising move Tuesday, Microsoft said it would acquire Activision Blizzard for $95 a share. The deal, valued at $68.7 billion, is Microsoft's largest takeover ever. The deal comes as Activision shares had dropped 27% in the past year before the deal amid multiple cultural controversies inside the company.

Moreover, it arrives a week after Activision rival Take-Two Interactive said it would shell out $11 billion to buy veteran mobile gaming publisher Zynga.

Activision Blizzard shares rose 26%, while Microsoft fell 2.4% Tuesday.

When the transaction closes, Microsoft will become the world's third-largest gaming company by revenue, behind Tencent and Sony, according to the tech giant. Microsoft will be acquiring iconic franchises like "Warcraft," "Diablo," "Overwatch," "Call of Duty" and "Candy Crush," all which have massive potential in the metaverse experts such as Ives believes.

Warned Wissink, "Central to our evolving thesis was GameStop's enviable role as a manager of a robust database of core gamers — across platforms, publishers, genres, forms, etc. Both Microsoft and Activision are key vendors to GameStop and a merger would strengthen their combined power to alter economics, merge data, and leverage verticalization across hardware and software. Should Microsoft elect to make Activision's "triple A" titles exclusive to Xbox, it would impact a key source of new software sales volume for GameStop. While Microsoft iterated no desire for a single-centralized gaming metaverse, the combo of Microsoft + Activision aggregating content and properties within their specific ecosystem could pose a potential walled garden risk to GameStop."

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Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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