Friday, July 14th 2023
Sony Assigns $2 Billion R&D Budget to Games Division
Sony Corporation was in a boastful mood back in March of this year—Hiroki Totoki, the firm's executive deputy president and CFO declared that a $5+ billion (JP¥700 billion) budget had to been allocated for strategic investments across several departments in 2023. At the time it was not made clear how much of that pot would be assigned to Sony Interactive Entertainment/PlayStation, but a new report published by Nikkei Asia's Business section has revealed that the Japanese multinational conglomerate is set to open up and reach deep into its "war chest."
As its battle with Microsoft/Xbox heats up, Sony has designated a 300 billion yen (converting roughly to $2.13 billion) to research and development for its game division for the fiscal year ending in March 2024. This is reportedly 40% of its total R&D spending, which will exceed its investments in two other key interests—namely electronics and semiconductors. Nikkei notes that "earnings before interest, taxes, depreciation and amortization (EBITDA) for the company's game business was about 337 billion yen ($2.4 billion) last fiscal year, up more than 60% from five years ago." Sony anticipates that the live service gaming market will hit a high of $19 billion in 2026, so it is shifting priorities from its traditional hardware-based model to an online system where customers are expected to buy add-ons for streamed content. Its $3.7 billion buyout of Bungie in 2022 formed a central pillar for this new strategy—the MMORPG-specialist studio is reportedly serving as a consultant on several live service projects in development at other SIE-owned outfits. The main goal seems to a targeted launch of 12 live service titles by the fiscal year ending March 2026.
Sources:
Nikkei Asia Business, Wccftech
As its battle with Microsoft/Xbox heats up, Sony has designated a 300 billion yen (converting roughly to $2.13 billion) to research and development for its game division for the fiscal year ending in March 2024. This is reportedly 40% of its total R&D spending, which will exceed its investments in two other key interests—namely electronics and semiconductors. Nikkei notes that "earnings before interest, taxes, depreciation and amortization (EBITDA) for the company's game business was about 337 billion yen ($2.4 billion) last fiscal year, up more than 60% from five years ago." Sony anticipates that the live service gaming market will hit a high of $19 billion in 2026, so it is shifting priorities from its traditional hardware-based model to an online system where customers are expected to buy add-ons for streamed content. Its $3.7 billion buyout of Bungie in 2022 formed a central pillar for this new strategy—the MMORPG-specialist studio is reportedly serving as a consultant on several live service projects in development at other SIE-owned outfits. The main goal seems to a targeted launch of 12 live service titles by the fiscal year ending March 2026.
14 Comments on Sony Assigns $2 Billion R&D Budget to Games Division
Without that, there will be the maximum extraction of revenue as you said, exclusivity deals, cosmetic DLC, loot boxes, high base prices etc.
Just consider streaming services (Netflix. DISNEY+, etc.), researchers have observed that with the increased consolidation of studios and streaming services, we now have fewer media choices from fewer providers and at a higher cost.....consolidation, cartelism, and monopoly NEVER benefit the consumer.
What's wrong with Sony spending 2 billion of gaming R&D? Sony makes great games and my only wish is they would all come to PC.
Sony is using the 2 billion to make games. Not mergers and acquisitions. As a gamer, I'm excited to hear game developers spending a lot of money on new games.
But for Sony specifically, this is their response to the merger approval. They realize they have their work cut out for them now and will have to double-down on putting out good quality exclusives. Good for gamers in the short-term, but Sony will have to be prudent moving forward and not have too many big budget misses. I really hope Sony is still in the space in 10 or even 20 years, because we already know that in gaming without good competition we get unoriginal bug-ridden trash games overflowing with microtransactions and DLC.
Gamers will have more choice and the bottom lines will speak for themselves if AAAs don't deliver.
Indie games are alive and well on both PC and console now (currently filling a fat void on game pass).
Also this is more PC specific, but how much you wanna bet the next Battlefield goes back to basics after getting cold-cocked by 3x devs and some potato graphics?
I doubt they will change the formula, that's what people want, that's what makes money, they will just try and polish the turd
Sony needs to stop with half-baked games/integrations. GT7, Discord, etc etc...