Sony to Increase Investment in Game Development as Rivals Strengthen
According to Nikkei, Sony intends to increase its investment in research and development (R&D) for gaming, with a particular focus on live service games similar to Fortnite and mixed reality. The company plans to allocate $2.13 billion for this segment in fiscal 2023, which will account for approximately 40 percent of its overall R&D spending. This amount is more than double what Sony spent in 2020. The objective behind this increased investment is to enhance its competitiveness in cloud gaming and virtual reality (VR), especially in light of Microsoft’s potential acquisition of Activision Blizzard.
Sony has traditionally relied on story-driven hit games like God of War and Horizon Zero Dawn, but the games on the live service use a different model. Instead of developing one game and moving on to the next, companies build titles that can be updated over time, generating revenue with new content such as seasonal maps, skins, and weapons. Overwatch and League of Legends are examples of them.
The company lags behind its competitors in this area – it had just one live service game in 2021, but plans to have 12 in its portfolio by March 2026. To do this, it plans to use 55 percent of the development of PS5 games by the time of the live service games. in March 2024 and 60 percent by March 2026. According to the report, it plans to use its Bungie purchase to further that goal.
Meanwhile, Microsoft is trying to buy Activision Blizzard, which would give it access to a powerful lineup of live service games (World of Warcraft, Call of Duty, Destiny 2, etc.). Microsoft also has a significant lead in live streaming games with Xbox Cloud Gaming, while Sony has only just begun testing PS5 game streaming.
At the same time, Sony wants to invest more in the so-called to the metaverse by promoting the development of augmented reality (VR, AR, mixed reality, etc.). To do this, it aims to combine the resources of nine foreign game studios it owns in whole or in part, including Epic Games, whose Unreal Engine helps to power augmented reality applications. This is due to the upcoming release of Apple’s Vision Pro headset and Sony’s recent release of its own PSVR2 headset.
The increased investment demonstrates the importance of gaming to Sony’s overall portfolio. Its gaming and online services segment now accounts for a large portion of the company’s revenue, and it forms superior segments such as imaging, movies, televisions and more. It also shows that Sony understands that it needs to adapt to the reality that game development is moving away from the traditional model – meaning it’s much more reliant on owning game development studios.
