Nintendo, the storied game maker behind popular franchises such as "Pokemon" and "Super Mario," saw its stock drop 3.21 percent on the day. Meanwhile, Japanese shares of PlayStation-maker Sony also fell 3.38 percent.
On Tuesday stateside, Google showed off its new game streaming platform, Stadia, which it claimed would allow people to play high-end games without shelling out hundreds of dollars for consoles or computers. Instead, all of the legwork to render those games will be handled by Google's cloud, the company said.
Google's entrance into the gaming sector has raised questions about the future of companies such as Sony and Nintendo, which have long dominated the space along with Microsoft. In particular, Sony and Microsoft are expected to announce more details about their next generation consoles in the coming months, with their current generation of consoles approaching the six-year-old mark.
The console gaming sector "remains a large and significant part" of the overall gaming market, Piers Harding-Rolls, director of research and analysis director of games at IHS Markit, said in a note following Stadia's unveiling.
Citing IHS Markit data, Harding-Rolls said console content and services spend took up 25 percent of the $128 billion market in 2018. Global consumer spending on console hardware also reached $14.7 billion, bringing the overall console market opportunity to $47 billion.
Google's foray into cloud gaming is unlikely to "dramatically impact the next cycle of console sales," he said, though it might "start to pick up some users that are not ready to spend $400 on a new console at launch."
Another analyst characterized today's market moves in Tokyo as an "overreaction."
"Google is a powerhouse and Stadia looks very promising, but gaming is a very tough nut to crack," Serkan Toto, CEO of game industry consultancy firm Kantan Games, told CNBC in an email.
Questions also remained about issues such as Stadia's cost, its availability and the cost of development and operations for game studios, he added.
"It's not so easy to create a Playstation 2.0, even for Google," Toto said.
— CNBC's Todd Haselton contributed to this report.