The current gaming market is very much focused on live service titles, and now according to financial reports from Nikkei Asia, Sony will be working hard to join the competition. The Japanese based multi-national conglomerate will be investing $2.13 billion into research and development for live service PlayStation games by the end of the next fiscal year. It appears the motivation is for PlayStation to keep up with competitors by moving further outside the walls of single-player blockbuster titles. Nikkei provides the following numbers as to how this entire spending operation will work:
“Sony Group will ramp up R&D spending in its game business, as it seeks to hone technology in live service games and the emerging field of “extended reality” that blends physical and digital worlds.
The company will pour 300 billion yen (about $2.13 billion) into research and development for its game segment for the fiscal year ending in March 2024. The amount, which will account for around 40% of its total R&D spending, now surpasses spending in electronics and semiconductors.
The figure is more than the 271.1 billion yen spent on game R&D last fiscal year, and more than double the 144.5 billion yen in fiscal 2020. Sony Group plans to spend 760 billion yen in company-wide R&D this fiscal year, up 3% on the year.
Games are a major pillar driving Sony’s business. Earnings before interest, taxes, depreciation and amortization — or EBITDA — for the company’s game business was about 337 billion yen last fiscal year, up more than 60% from five years ago.”
The article goes on to talk about how PlayStation has moved away from a focus on hardware and put more money into subscription services. There is now more centralized attention on keeping gamers online and continuously putting money into a a singular title. Live service games are expected to provide $19 billion to the industry by 2026, which would overtake hardware sales if true.
What Are Live Service Titles Exactly and Why Are They So Popular?
When March 2024 rolls around, Sony is hoping for 55% of PlayStation 5 games to be live service and to get that figure up to 60% by March 2026. The plan is to have at least 12 of these types of titles on the PlayStation 5 by then. But what exactly are these live service titles, also known as “games as a service” or “live ops?”
Live service games focus features toward online play and in-game purchases. Examples of games with live service elements include Fortnite, Call of Duty: Modern Warfare 2, and League of Legends. They provide some free features, while also giving gamers the option of purchasing additional content such as skins or new weapons. It has become very popular for brands to crossover to sell new content, like what Call of Duty has recently done with The Boys television franchise.
Although the first two games listed above are available on PlayStation, it appears Sony wants to further set itself apart in the market. Given the high probability Microsoft will acquire Activision-Blizzard in the near future, Sony wants to stay ahead of the impact such a deal will make. Investing in more titles that continually produce income appears to be the way PlayStation will combat such competition. Certainly it will be interesting to see how this new strategy will affect Sony Interactive Entertainment games and what will be the cost of such a decision.
What do you think of the push for more PlayStation games to be live service in nature? Is Sony giving gamers what they want or is this really no more than a way for the mega conglomeration to make more money? Drop a comment and let us know what you think about this live service initiative.
Source: Nikkei Asia
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