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PlayStation is in a precarious position. It’s imperative we don’t overreact: the global economy is, for want of a better word, in the gutter right now – and it’s sad to see layoffs occurring across a spectrum of industries, not just gaming. But in the aftermath of a disappointing earnings report and an enormous downsizing operation earlier this week, we must take stock of the situation as it stands.
Sony’s gaming division is, in some aspects, firing on all cylinders. The Japanese giant is raking in record revenues, and while it’s had to scale back its hardware sales targets, its current goal of 21 million units in the current fiscal year is no slouch. It’d be easy to overreact and paint PlayStation as a failing business, but that doesn’t reflect reality; there’s a lot of good among the bad.
The division’s big problem is that it’s spending almost as much as it’s making. In its most recent financial report, it registered record-breaking revenue of ~$10.2 billion, only to a turn a profit of just ~$608 million. The optimistic viewpoint here is that it’s a profitable business overall, but with margins as razor-thin as this, the firm is effectively one misstep away from plunging itself into the red. That’s not healthy.
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This is why we’re seeing seismic changes across the business, many of which have been poorly received by fans. The firm’s push for successful live service games could guarantee ongoing revenue, although it’s important to remember that the costs associated with maintaining these titles is also high. Nevertheless, companies like HoYoverse are making bigger profits than PlayStation right now.
The division is also trying to expand beyond the boundaries of its own ecosystem, releasing software on PC and making plans to expand to mobile. The reality is that while the costs associated with creating blockbuster games like God of War and The Last of Us have dramatically increased, the size of the console install base has not; PS5 is unlikely to sell more units overall than PS4, for example.
This is one reason why we’ve seen the prices of software increase from $59.99 to $69.99, because software is simply more expensive to make but selling to roughly the same audience as it always has. As the scale and quality of games increases, so too do development budgets. To the most casual of observers, Marvel’s Spider-Man 2 is an iterative sequel – but leaked documents from Insomniac Games reveal it cost an eye-watering $300 million to make.
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That sum of money is simply unsustainable. The sequel may have gone on to sell 10 million copies, so the gamble has ultimately paid off, but Spider-Man is about as bankable as an intellectual property can be; the risks are much higher when it comes to less recognisable names, like Days Gone. You may love that game, but it’s easy to see why Sony is having to think really hard about what it funds.
Hermen Hulst, the head of PS Studios, hinted at these problems in the company’s statement about its recent layoffs: “Delivering the immersive, narrative-driven stories that PS Studios is known for, at the quality bar that we aspire to, requires a re-evaluation of how we operate.” In other words: these games are too expensive and take too long to make.
But here’s the rub: PlayStation has bet its entire first-party business on high-budget, cinematic single player games – and now it’s struggling to make the economics work. The fanbase is resolute: this is the software it wants. But the reality is that it’s going to take teams several years and hundreds of millions of dollars to deliver them to the quality that’s expected.
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The outlook is a bit bleak, then. Sony may look to creating smaller campaigns which recycle assets, similar to Marvel’s Spider-Man: Miles Morales, for example. We fully expect a shorter God of War campaign focusing on Atreus in the near-future, and we honestly wouldn’t be surprised if Naughty Dog cooked up something similar for The Last of Us, too. These could bridge the gap between blockbusters.
The platform holder may also be looking at Helldivers 2’s recent success and realising that there may be more money to be made by bringing games to PC quicker, but there’s a delicate balancing act to be found here; this could have an impact on PlayStation hardware sales, and so it’s going to need to be certain the advantages outweigh the negatives.
There’ll be no doubt commenters on Push Square who plead for a return to lower-profile software, like Concrete Genie and Gravity Rush 2, but as much as we adore those titles, we simply have to acknowledge the fact that they don’t sell in the quantities required to move the needle. Yes, their budgets are lower – but it’s worth remembering the cost of creating all games is increasing anyway.
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As always with the video game industry, there’ll be much hand-wringing and overreaction. Sony will be fine, and while its financials are disappointing, it’s worth repeating that it’s making record-breaking revenue and therefore just needs to tidy up its margins. That’s not an easy feat, and we don’t envy the person responsible for turning it around, but it’s possible.
PlayStation’s biggest issue is that it’s cultivated a fanbase that expects the biggest and best productions, and that may not be sustainable moving forwards. Exactly how it navigates this very unique problem, and finds ways to speed up development and lower costs without sacrificing quality, is a conundrum of the highest order. Nevertheless, it’s one it’s going to have to overcome.
What do you think PlayStation needs to do next to make its business more sustainable moving forwards? Would you accept smaller, lower budget games from Sony’s first-party studios – or does it simply need to persist with high-budget, Hollywood-style productions? What other changes can it make to improve its margins? Earn your seven-digit salary in the comments section below.
Comments 244
Here's the big problem more than the immediate software issues imo. The hardware manufacturing costs are no longer falling, they're increasing. The same profits Sony makes in the USD/foreign currency exchange is being lost when they are paying for goods in the same USD exchange rates.
There are multiple fascinating issues for Playstation to deal with which is why I feel there will be no PRO till 2025.
I feel even Nintendo delayed their console due to the same manufacturing concerns. Remember the Yen is weaker than ever and Nintendo relies on Japanese consumers (30+ million Switch consoles out 140 mil are Japanese consumers). Europe is in the doldrums due to the Ukraine war. The US is suffering under the insane rates.
I’ve long thought that every major first party release should also be accompanied by an expandalone, like Lost Legacy, First Light and Miles Morales. They’ll rarely sell quite as well as the major release… but will definitely recoup costs.
Three things I’ll add to this;
1. AI will make it cheaper in the long run, whether we like its inclusion or not.
2. What this article doesn’t account for is that a lot of countries finances are down the pan. This in turn means people’s wallets are smaller and naturally buying games is a last thought.
3. Live service will die off, PS will have a break while they arrange some single player titles to be developed. This break gives PS a chance to sell even more remasters which will be cheaper for them and bridge the gap before they have new first party property to sell again.
I don’t think the situations awful. It’s the state of affairs at the moment and these things have a habit of coming and going. Gaming is no less popular than it always has been, and the populations only getting bigger.
Also, as always, there’s an argument for cheaper games meaning more sold and potentially long term investment, or to change their subscription service to include first day releases and be in keeping with the times.
@breakneck Also a good point. It also means they can't reduce the cost of the console like they used to, which means some audiences and markets that extended the life of the PS2 may remain unreachable.
I just recently platted evil West and i had a blast. There were problems, Oh there were problems but somehow it looks like sony has forgotten to make games like that. Some people call it AA i guess.
Also, all the subscriptions cant be helping. All i know is subjective, but if i look at myself i just dont buy as much as i used to. And ps premium is a big part of that. The backlog is always full with an subscription.
@get2sammyb Exactly places like India have growing markets but most people tend to buy the consoles when the permanent price cut takes place. Playstation has been marketing over there really well for years but in rupees we are talking about 60k for a console which is too high.
@itsfoz
Seems like a sure fire way to completely tank their profits!
I just don't want Playstation to go the way of Valve with Steam to just be a platform for selling other publisher's games. They need their own games and closing studios is not a solution. Who's gonna make the games if they close all or most of the studios?
Just let studios like London Studio and Japan Studio put something smaller scale out, instead of closing them.
Sony don't help themselves by closing their smaller studios who could be making lower budget games and they seem to be putting all their eggs in one basket with the huge budget AAA games. I watched a video yesterday which shows the difference in the number of games published by Sony across their generations and the number on PS5 is tiny compared to what it used to be. Sure many of those were 3rd party developed but it was surprising how few there are today.
In general the industry and gamers need to start normalising smaller games with simpler graphics. Astro Bot is a great example, a free game included with the PS5 and is absolutely amazing but where is a sequel? Last year Robocop and the short Like A Dragon Gaiden were amongst my favourite games and I'd love more games like this
The game market is completely oversaturated. The Covid bubble has well and truly burst and given current interest rates and inflation, costs are only ever increasing for studios and publishers. It's very sad for those affected by all these cuts but there are likely more to come, especially as AI evolves and plays a more prominent role moving forward.
The reality is people only have so much free time and disposable income to dedicate to games. More and more of us also have ever-growing backlogs, and, given the current state of the economy, are showing far greater restraint when it comes to purchasing new games.
Shawn Layden warned everyone years ago that the growing development costs for AAA games were completely unsustainable. The fact that it cost more to develop Spiderman 2 than what PlayStation spent to acquire the damn developer shows just how insane things have become. Pouring hundreds of millions of dollars into AAA development for only a 6% margin gives very little room for error.
Bearing this in mind, can you blame Jim Ryan for looking at live service games as an alternative to make far greater margins off much smaller investments? The problem with live service games is they tend to cannibalize each other far more compared to single-player games. I'm currently enjoying Helldivers 2 - it's great fun, has tight gameplay mechanics, encourages cooperation, and isn't bogged down by excessive story arcs and cut scenes. However, in order for me to dedicate time to playing Helldivers 2, I've had to sacrifice time spent playing another live service game, Rocket League (a game I've invested more than 500 hours into since it released on PS Plus back in 2015). It therefore comes as little surprise that Sony is now cutting back on other live service projects given they could indirectly stunt the growth of Helldivers 2 and its potential to generate profits.
Personally, I am actually delighted to hear that no new major existing franchise titles are being released by Playstation in the next fiscal year. As a business, I appreciate that they have focused on existing IP to generate recurring revenue up until now. But everything first-party has become so boring, stale, and predictable. I couldn't care less about another Horizon, God of War, TLOU, Uncharted, Spiderman or Marvel game. So credit to management for trying to diversify with 2nd party titles including the upcoming Stellar Blade and Rise of the Ronin - without them I don't know what the next Sony-published game I would be buying. There is also a plethora of indies and 3rd party games I'm interested in - if only I had the time and money to play them all...
I reckon they should release a few more VR headsets in 2024, that’ll do the trick
I just hope Sony execs don't think they can repeat the success of Helldivers by releasing a (or even more) similar LS game and expecting them to all do as well as Helldivers. That'd be lunacy. Surely the best route is so make the 8th gen a bit longer, get budgets/gamer expectations under control and make first party games on timed exclusives? Maybe PC one year after release and Xbox two years after release? Thank god for AA publishers
@Fyz306903 Worth noting those AA publishers are also laying people off.
All of a sudden the Rockstar tactics make sense. Release huge title. Make it sustainable through an online part. Just like GTA. I don't care for GTA online, but so what? I still love GTA V. Make games that are easy to expand. Just don't force feed us those micro transactions
@colonelkilgore Sort of a Majora's Mask to it's Ocarina of Time. I've never understood why every AAA doesn't do this (I guess dlc expansions are kind of the same thing).
@get2sammyb Sadly we’re a subscription economy (I think that’s about to change though) so I can absolutely see a world in which PS do first day releases. There will be a Netflix style inflation of fees with this.
As for cheaper games - I should say cheaper games to develop which in hand are cheaper at sale. In other words, I didn’t mean selling an AAA (or Ubisoft’s AAAA……) for cheaper.
Push a little in AA/short games.
It would break up those big AAA releases, pad quiet times and bring in revenue to cover running costs.
The cinematic AAA stuff isn’t going anywhere. Hence the push into other forms of media involving them.
Unfortunately employees are an easy cost to cut. No matter what industry. More AI will probably be used also.
As it’s ’across The industry’ I don’t think Sony has to over worry, it just needs to stay strong and let the industry find its new happy medium.
@itsfoz Not convinced. Microsoft is doing a lot of creative accounting to cover for the fact that Game Pass is absolutely torpedoing its profits too, regardless of what it's telling you publicly.
If Xbox was a standalone entity, divorced from the obscene riches of Microsoft overall, it would have sunk long ago on its current business model.
@itsfoz at some point that bubble will burst, and in general terms of subscription. Too much fighting for our money. Even Disney are struggling to balance the books.
Something will give and it’s going to be painful for a lot of people.
@get2sammyb yep creative accounting at its finest. Not that you can blame them because all companies do it.
But I’d love to see the full details on it.
The best games these days don't even require so much power. Talking about you wanna see a game that utilizes the latest tech to the fullest and then it only sells 2 million after 100 years of development. Naah, the strategy would have to change.
I still genuinely can’t fathom how Spider-Man 2 was 300 million dollars. I get that Marvel’s expensive, but it didn’t have that long of a development + it might be the most incremental of the PS5 sequels yet. It’s largely the same map with no extremely noticeable increase in asset quality, it’s about the same length as the original. Sony literally could’ve made a God of War Ragnarok + a Ghost of Tsushima with the money they spent on Spiderman 2 (granted there’s inflation that needs to be considered but still).
Making smaller/shorter games may not be as good a solution as everyone says. How many people bought their PlayStations to play Gravity Rush or Concrete Genie? I know there will be people arguing that these are smaller games to fill the calendar, but isn't that exactly what Sony is doing with indie/third party games? What's the point of Sony having four Gravity Rushes a year if they simply don't sell to the point where they make sense to exist? Lost Legacy and Miles Morales worked because they're part of huge IPs and I doubt these games would take less than 4 years to make nowadays. Hellblade 2, which will be a "smaller" 8~12 hour game, is taking more than 5 years to be made.
I'm very curious to see how Sony will react to this "bad phase". There is no shortage of options:
Single player, one and done, cinematic games are increasingly going to be a smaller and smaller fraction of profits for Sony. This is inevitable. We have young adults who have grown up on COD, FIFA, Fortnite, GTA Online and the like, and to this future gaming generation this is largely what gaming is. Sure they may dip in to single player games moving forward, but this is not where the money is or will be.
I’m sure Sony’s money men currently see their tent-pole games as being a differentiator to get people to own their platform and so give them their 30% Microtransaction cut, which is where the vast majority of their revenue is generated.
The massive problem with this moving forwards is that the tides are turning and, soon, I’m sure all 3 major platform holders will be forced to allow other stores, and the days of Fortnite cash coming straight to Sony will, to a large degree, be over. The publishers will release their own stores and subscription services, and eventually just release their platforms as streaming services on TVs and phones etc, without having to pay anything like a 30% cut anywhere.
So, how do they increase or even just maintain profits? Not by concentrating on single player games (even if costs could be cut 100% this would barely make a dent in the money they are about to lose, so although AI will help it’s not a solution to the main problem), and not by being a platform manufacturer. Publishers make the money these days, as alluded to in this article, and GAAS is what they need to make, as much as most of us here hate that.
Alternatively be at the forefront of a new platform and tech such as VR. But that’s more of a long term thing.
Honestly though, I think things have peaked for physical platform holders. All these live service games run online and can be streamed. It will soon be goodbye cash cow and back to lower profits unless you can yourselves make the next big online thing.
As someone else mentioned, personal feelings aside, I think we’re going to see a huge increase in AI use as its use is further explored, incorporated and developed.
Never thought the robot takeover would begin with creative jobs, but here we are.
First of all the global economy is now way near the "gutter". If anything, it is in a better shape than during the pandemic or the first year after that.
The price increase of games is a normal thing despite all the crybabies. It was the first increase in like what, 15 years and was around 17% while in the last two years some dairy products have gotten almost 30% more expensive. Get a grip.
And lastly as harsh as it sounds people pursuing or entering a career in any kind of entertainment business (video games included) should assess the risks since in a case of any financial crisis it would be one if not the first to suffer since it's not a basic need.
Obviously its a few years removed from their original releases to judge Oranges for Oranges sales.
But can't help but wonder if they poured resources into less ambitious ports (Mixed in with a reboot of say Twisted Metal Black with both campaign/co-op & online modes ),of PS3 locked series like Resistance,Motorstorm,& Little Big Planet 1&2/Karting alongside their HD ports of single player titles ala Ratchet & Clank Trilogy, or Sly Cooper could've served as a test of tried IP's with online mtx to see if any were worth a full sequel or reboot.
Instead,we've seen PC linked remasters of PS4 games like TLOU 1 & 2,minus the PS4's factions mode on TLOU with the promise of "wait til you see our multiplayer only game!",which we didn't allegedly because it failed to impress Bungie higher ups.🤔
In theory the hiring of ex-Ubisoft,or Activision staff with a view of creating a new COD/Fortnite competitor seemed sound,but its an expensive experiment tooling up a several new studios from scratch on untested new AAA IP's all at once.
Been a while since the last Helldivers game but guessing it wasn't as higher budgeted as other games....the London Studio game cancellation sounds a pity given most western RPG AAA devs are owned by Microsoft.
Just feels like missed opportunities when there's old IP's sitting in the cupboard that could've tested the online waters with AND still had campaign modes to attract the traditional player base. Granted,I'm not the COD,GTA,Fortnite cash cow they want,so what do I know!
How is 608 million profit on 10.2 billion revenue ‘razor thin’?
That’s 6%. That’s absolutely not razor thin. I work at an engineering company where we make 3%-4% every year with thousands of employees and that company is standing for more than a century without big layoffs.
The true story is: Shareholders just want more and more. They don’t care about the employees one bit.
I'd say the higher ups are seriously relieved Helldivers is doing so well and they can pull the funding for some of the other live service projects. (If that is indeed what has been cancelled.)
I think AA projects are definitely looking more attractive atm, but they alone are not the solution. Far from it.
Third party exclusives and marketing deals must be a safer bet than a massive first party AAA project.
Stellar Blade, FF VII, Rise of the Ronin. Potential marketing for GTA V.
I'll be very eager to see how all of these do.
I bought my PS1 for FF VII and RE2. My PS2 was all about GTA III.
I can see a lot more of this happening.
But ultimately they need to get those first party budgets under control and figure out a way to reduce the hardware costs.
And double down on that Helldiver success.
@PsBoxSwitchOwner I agree. Sony doesn't need to panic. They need to let things settle for a while and adjust to the new post COVID reality.
There are ways to make these projects more sustainable, it's just not pretty to watch (as we're seeing atm). AI for example will definitely play a part.
@Fyz306903 kind of… but personally I would always prefer standalone extensions like Miles… and LL over dlc expansions like Iki island and Burning Skies. Maybe that’s just me though.
This wheel was set in motion a long time ago, and there’s not much Sony can do to solve it immediately. Yes we get wages and manufacturing costs have gone up, and disposable incomes have gone down. But PlayStation has made a rod for their own back by streamlining and not diversifying. They don’t care about the casual gaming market. They don’t care about the handheld market. They don’t really care about Japanese and Asian markets. They’ve just assumed everybody is a core gamer that has five hundred quid to buy a box to plug into their thousand pound 4K Sony TV and play the same sort of bloated western open world games that cost £70 a pop. They’ve limited their audience to ‘the core gamer’ because they think they’ll blindly buy whatever they put out and allow this $300m a game cycle to continue for their ego. In reality a lot of these ‘core gamers’ also have families now and can’t justify this hobby day one. And the ones that can have bought PCs instead. The new generation of gamers and family gamers are playing on phones or happy with their Switches, or have just kept their PS4s.
But as I said, this was set in motion a long time ago, a Sony can’t fix this overnight. But they can plan for a future where everything has to be so flashy and so expensive- because it’s bound by the law of diminishing returns.
@Shepherd_Tallon it can be argued Sony are in a relatively strong position once all is sorted.
They are known for quality products. Games regularly get public and critical praise. Sony have ALOT of talent in their studios and usually during a slump people turn to what they know and trust. Luckily for Sony they have a lot of goodwill.
Whereas look at stuff from Ubisoft for example struggling for sales etc. and compare to helldivers
I would suggest the math on SM2 be considered. If they had sold 10M and if each sale had netted $60 on average (some countries more than others etc) then thats still only $600,000,000 in revenue . However of course the actual money that gets back to Sony, i.e. to pay off that $300,000,000 cost is a fraction of that total - with much going to retailers, distributors, marketing etc etc. In fact I'd be surprised if Sony saw $30 from each of those $60 sales. Thus my guestimate would be that it was breakeven at best.
There's usually two options for profit, (1) sell more, at lower cost and price or (2) sell fewer at higher cost and price. Only apple has really mastered the magical art of (3) sell more at higher cost and price.
The ridiculously long wait between major IP releases just screams of too long, too slow, too costly. They've tried option (2) and it isn't working. I really think going back to option (1) with lower cost, but more releases is the answer.
Really good article @get2sammyb that covers so many angles and cuts off many of the arguments people have that don’t seem to work (e.g. “just make smaller AA games” etc)
Unfortunately this need to balance the books is driving so many business decisions and about the types of games that are made. E.g.
Sadly WE collectively have to shoulder a lot of the blame here as we buy sequels and remasters, giant AAA, and spend on Live Services & F2P FAR more than we do buy new IP, AA etc.
Individually we might be say we don’t want those type of games, but in reality Sony is only reacting to where the money is spent.
@PsBoxSwitchOwner Yeah, agreed.
I'm definitely not worried for the future of the brand.
It's a shame about the people who will lose their jobs, but having observed the post COVID adjustment wave where I work, it's clear to me that over hiring and knee jerk investments during the lockdown bubbles were some of the main causes of this, plus rising costs and budgets of course.
It's easy to perceive that the industry is in a freefall, but it's more of a brutal adjustment.
Whoever is making a profit now and able to adjust quickest will come out of it strong.
I know i’m bringing Xbox into it so apologies in advance but hear me out:
Xbox bringing the smaller titles like Pentiment over to other consoles will hopefully let us see smaller titles like that in the future. Now whilst I think it should have just been kept as an exclusive; it’s a much better alternative than shutting the studio.
My point being that instead of gatekeeping for the sake of it and now shutting the smaller studios; Playstation could have pivoted like Xbox and released their smaller games multiplat eventually. I know it was Pixelopus and not London Studio but I don’t think anyone was buying a Playstation for Concrete Genie for example.
Knack 3 would sell 10 copies to every PS5 owner. Why have they not made it yet?
@Friendly
You are comparing two completely different industries and business models.
With the cost of making the hardware not falling, and Sonys aggressive marketing and sales for 12months, being number 2 (behind the switch) in console sales is not enough, its a loss leader, even more so than in the past. It was mentioned by their CEO that part of their problem was that they missed their target by atleast 4million despite aggressive sales and discounts, something I mentioned about 4months ago on here and got shot down by alot of people.
With Sonys big high production value games barely being viable anymore, with their budgets going crazy, I think part of their answer is to start to make double AA games like Nintendo, MS and all 3rd party's make.
Some of us have been beating this drum for a few years, and we knew this was comming, but everytime it is mentioned we get shot down by the diehards who never criticize.
Sony used to have variety in the software line up and it was one of the things that made them special to us. They lost their way after the ps3 and its really starting to catch up with them.
A business of record breaking revenue of hundreds of billions but less than 6% profit is absolutely pathetic and very few industries in the world operate under those extreme margins, it is unsustainable.
Investors would almost get the same return if they put their money in a bank instead of Sony. That is very worrying and is is a huge problem
@lindos
1. $30 is way too low. You're forgetting that a significant number of copies sold is digital.
2. That's assuming that it completely stops selling from now on.
3. It doesn't take into account how many ps5s it has moved. It has improved the ps5 library significantly. Especially when first party games have been so few this generation.
4. By promoting Spidey 2 (or FF 7R2 at the moment), they're also promoting ps5. That's why they're spending so much money on advertisement.
@Sakai
We've had one "double AA" game so far with Skull and Bones. Look how that turned out.
Sony got lucky with the PS4. They were able to support the expensive single player adventures with HD ports of older quirky portable titles to maintain that unique indie feel the PS3 brought to things.
But the PS5 era has seen Japan Studio shuttered and an over-investment in obviously now-cancelled live service titles that the market never asked for. Hoyo pull in the money by meeting players where they are on the hardware they already own rather than needing a dedicated console and the markets are very different.
In other words Sony need to keep spending the money on the big single player titles, which Nintendo have proven can be evergreen with solid update support. Who knows how much they’ve raked in by supporting Mario Kart 8 with ongoing DLC? But they need smaller, cheaper titles to fill in the gaps and remind us why we love PlayStation in the first place.
@Sakai
Having a variety in the software lineup might've made Sony special but realistically looking at things how many of those smaller titles managed to make any significant profit?
@ZhuckelDror Skull and Bones was the first AAAA quadruple AA according to Ubisoft. Literally the opposite of double A. The game had a massive budget and a protracted development, in no way is it double AA
A double AA game would be Palworld or helldivers 2, both of which are hugely popular
@Sakai "With Sonys big high production value games barely being viable anymore, with their budgets going crazy, I think part of their answer is to start to make double AA games like Nintendo, MS and all 3rd party's make."
How is that working for MS? As for Nintendo, it's the only company that get away with pretty much anything. They have excellent games that sell well, but also mediocre games that sell well because they slap a mascot on the cover. Sony can't do that. They can't make an average Kratos golf game and expect it to sell well. Or release something with as little innovation as Pokemon year after year and sell 10m+.
Each company plays to their strengths knowing their audience. The playstation audience for some reason rejected great games like Tearaway on ps4 or Concrete Genie. Also Knack 2, which many found to be great.
AA is not the answer for Sony.
@Sakai
Double AA makes AAAA in my math book.
This is where I respect Nintendo for their success in low(er) budget titles on weaker hardware still selling in massive quantities.
Maybe Sony should consider some smaller budget titles? Yes budgets are going up in general but it’s not imperative to spend $300m to make a successful game.
“Delivering the immersive, narrative-driven stories that PS Studios is known for” — and that’s why the problems are what they are
Problem for Sony is that they just can't scale back with scope of their AAA single-player games.
They trained audience to expect best visuals, no microtransactions, plenty of features and smorgasboard of cutscenes. So the most expensive features of their game development are exactly the things that audience expects from them as a standard.
I honestly wonder what the want to do with that.
I expect PC day one releases are matter of "when" not "if." Because as Spencer said. Either you find a way to extract more money from same audience or you will find a new audience.
Maybe Sony should focus more on making franchises that didn’t outsource their budgets to Marvel or the ilk. I can’t see Ghost of Tsushima costing £300 million to make and that sold incredibly well and probably cost a fraction of Spiderman 2s budget. Don’t get me wrong, insomniac did an amazing job with Spiderman, but after the leak from them, they are tied down to a lot of Marvel games that will cost well over a billion to make in total. That definitely worries me. As technology improves, it would be financially harder to make games that used all the capacity of the consoles, the difference from PS4 - 5 is not a massive jump from what we have seen and the console is capable of way more. Nope, I hope both Sony and Microsoft drag this generation out past 7 years and don’t go searching for a technology jump that won’t even be able to be cultured upon, because if the prices to make a new game right now are astronomical (as far as AAA goes) then the next generation will be a complete industry breaker.
@Dodoo nintendo knows they can rehash the same thing and don’t have to try as hard with anything to sell millions every time .
@ZhuckelDror Even without the comparison 6% profit is more than sustainable.
@itsfoz
1. Yes, AI will help.
2. He literally mentions it the first sentence of the article. But I agree, it plays a big part.
3. Seriously doubt it. As long as they are being more profitable (which many of them are) they won't go away. Live Service games aren't necessarily bad either, just as AAA aren't automatically good.
Finally, it's well known the subscription services aren't growing any longer and putting first-party games in PS Plus on day one would just hurt their revenue even further. You have to remember that Microsoft can afford to lose (or make little) money on Game Pass. Sony don't have that luxury.
@Friendly
It might be sustainable but it's still a low margin.
@Robocod Have to agree - Resistance, Motorstorm, Modnation Racers & Little Big Planet 1 & 2 shouldn't be stuck on the PS3.
Obviously with the demise of Evolution and United Front Games, those middle two might be more tricky but I'm sure someone could do a decent port? Or, crazy thought, resurrect Driveclub?
Commenters on here seem convinced that AA games are the answer, but based on what? We've already seen what is guaranteed to sell tons of copies on console: big AAA sequels. Simple as that. Even though gamers have no shortage of AA games from third party studios to choose from.
It's not about what your or I, the average Push Square reader, wants. Sure, if everyone was like me, those AA games would sell and the live service model would never have existed, but that's clearly not what the wider audience wants.
@Ainu20
100% correct. Ask an average videogame consumer to name couple of gaming related sites or forums and he will struggle. More or less invested people don't understand the reality of things.
I just want a modern day PlayStation 3 experience.
I want a fantastic game that offers 7 to 18 hours of gameplay with a tacked-on multiplayer.
I would be down for a new linear Resistance that ran around 11 hours with a multiplayer.
I would be down for a new Infamous in a smaller map with a linear story.
Whatever it takes to get costs down but games in my hands at a quicker pace.
Waiting 5-7 years for these 30+ hour games sucks. Take me back to the 3-4 year development times of smaller games. Uncharted two and three immediately come to mind.
@ZhuckelDror maybe not for an American company.
But in general, a healthy company would want that margin to be relatively small but steady because it’s out of pocket money towards investors. You want to also invest in your own people/company to keep it healthy, not create a huge profit margin for just a few years which flows out of your company and makes your company susceptible to the winds of the stock market.
But Sony apparently isn’t apparently a company anymore where in general mainly the employees get to see the profits of their work. That profit apparently has to go elsewhere. It’s not a Japanese company anymore.
Nintendo are doing just fine and they will be keeping their exclusives.
This is about spending too much on game budgets but also about appalling business management.
And Sony want to bring out a PS5 Pro?!! It will sell fine but will only make the profit margins even tighter!!
Who do they have making these decisions? It’s madness. Anyone who knows even the tiniest bit about business can see that , whilst PlayStation sells well, it’s going to have to cut huge corners to avoid imploding altogether.
This is all caused by greed and totally mismanagement.
All the talk recently has been around the death of Xbox , yet in reality, Xbox is not the one that is anywhere near its grave right now.
Sony must change and change quickly.
I struggle to see how the actual game production cost has increased this much. Modern tools and computing have brought creation times down massively. A lot of features that were previously self code are now package installs. And the new console hardware leverages the PC space hardware massively. Get these studios to tell us total cost and the marketing cost. I won't be surprised if this is the same crap going on in the film industry. Marketing budgets are stupid now and to be honest I don't think I've ever seen an advert for any ps5 game I purchased. PC games studios don't seem to be screaming about this, do they? So maybe this is a corp bloat issue and not an actual cost of production issue.
@Flinch Fees for actors in the huge games have risen a lot. These could be replaced by AI but no one wants that.
It’s all about poor business management. Marketing from Sony is everywhere. Yes it’s sold them lots of consoles but you can’t sustain that.
They’ve spent big to sell hardware but let their margins evaporate.
Xbox was supposedly dead a week ago. It’s far from dead and PlayStation needs to change it will be they who become the next Sega.
There is one element missing here and this is the point of shareholders and continued growth. The key reason for mass layoffs in a lot of multinationals is to artificially show an instant reduction in costs and thus show better profit projections.
It is a problem with the concept of constant growth. In the pandemic, gaming got record investment because people were spending loads on it. So now any drop in revenue and profitability is seen as a major problem for shareholders and layoffs then follow. The article is right, Sony is not unprofitable. In fact if they laid no one off right now they are not losing money. But it makes investors nervous so best to chop people now and worry about consequences later.
There is a real conundrum at the heart of AAA gaming- better graphics and larger games are needed to fuel software generations and hardware purchases. What is the point of a PS5 Pro or new GPU cards or whatever if games can't take advantage of that? At the same time the cost to wow is higher than ever. Consumers aren't that fussed with these incremental upgrades so the games have to speak for themselves.
One of thing to remember though is talk about the community demands this and that and dosnt like whatever is those of us that actual care are a very small amount. Probably like 90% of PlayStation owners have no real interest in what the industry is doing, what Sony are doing, the costs, job losses and massive budgets 🤷 I means nothing to them.
So Sony could focus more on smaller games and smaller GAAS which I will annoy some the more intreasted groups but overall.... Won't really effect anything.
For example spiderman 2 sold so well I don't doubt in any part because of the films so alot of causals got the game as well
@BaldBelper78
To be fair going publishing only didn't turn out that bad for Sega.
Some folks might have said it before but seriously, it's time to dial back on those Spider-Man-style massive games. Many gamers just blitz through the main storyline without even touching the side quests. Those side missions demand a colossal map, tons of variables and a boatload of graphic assets to look halfway decent. Creating these eats up millions, of course. Honestly, most times, I'd be totally cool with a shorter, snappier game that still packs a punch (check out The Last of Us Part I or Resident Evil 4 for reference). Personally, I'm kinda over those gigantic open-world games. They're just too much to handle sometimes and get boring rather fast.
@BaldBelper78
>All the talk recently has been around the death of Xbox , yet in reality, Xbox is not the one that is anywhere near its grave right now.
Neither is PlayStation.
@matekomlosi
>Those side missions demand a colossal map, tons of variables and a boatload of graphic assets to look halfway decent.
Not to mention they are usually boring filler trash.
@itsfoz I wouldn't have thought live services games are going anywhere tbh. There will be a few less but here to stay unfortunately
@get2sammyb Microsoft has said many times that the average Games Pass user tends to spend more money on other software within the eco system than those that don't have Games Pass.
@cragis0001
But do they have actual proof of that?
@BaldBelper78 I imagine the actors see the revenue and want a higher cut. Would still lean towards poor management like you said. I don't think society is ready for AI replacing main characters yet. Nvidia had shown a pretty good example of a dynamically adjusting script which I could see happening soon. But any attempt at replacing actual actors will just cause a huge uproar in the acting community. I'd put money on that profession in most non live action roles evaporating with AI taking over but that will be a while.
@ZhuckelDror PlayStation needs to change otherwise it will be. If those margins drop into negatives , they are totally f00ked.
@ZhuckelDror True enough.
@Friendly
Don't forget all this "6% margin" talk is about Spider Man 2 only. Which is an IP that will sell good no matter what.
Now if we assume that their other big titles have roughly the same but they are definitely a riskier bet.
Even if say Ghost of Tsushima cost far less than SM2 it's still a substantial amount of money to gamble on a 6% profit bet should it flop.
@Hyena_socks the robot takeover started decades ago. Everyone forgets about manufacturing
@get2sammyb gamepass is an excellent loss leader and has forced Sony to switch their style up abit which is nice
I don’t buy that the audience is even roughly the same as it’s always been. Gaming used to be an uncool hobby for adolescent/teenage boys, now it’s a cool hobby for boys, girls, adults, and wii-playing grandmas. Kids who got into gaming are adults now, and those adults are likely to have gotten their kids into gaming. Not to mention kids who find gaming on their own or through friends.
@SlothMachine It's true. The audience for console game has hardly grown since the 90s. We all just spend way more than we used to.
@Deoxyr1bose it doesn't matter if its the same or not.
Prices have sky rocketed. Bread and milk now costs pretty much a fiver.
Bread used to be less than 50p, 4 pints of milk used to be a pound.
My money ain't gone up.
I see it all the time and we all probably do it to without thinking. But everyone is asking for more
Money for the same job they did with 0 increase in business.
The NHS striking for more money
Train unions striking for more money
Everyone asking for more money.
Government dont have more money, not really.
People are not buying the same as they dont have more money.
Let alone energy companies tripling our bills for the same amount energy, yet they are making record profits and no one actually cares. The world just keeps going.
Mega corporation or not. Their bills must be gone up to numbers I cant even think up.
Let alone studio time and voice actor wages.
The double size teams which cost sheer less a few years ago, their wages must be alot now.
Everything adds up.
But think about it.
Energy bills cant be changed.
Game development time cant really change without crunch.
Voice actors wages are just going up.
How else can they cut cost? Fire the fluff employees.
@cragis0001 They’ve said many things without ever actually providing the data to prove it.
There simply has to be a way to get the budgets under control. Maybe let that puddle look a little less shiny. Maybe don't spend some much time on Kratos's wrinkles on his face. Maybe don't over agonize over everything looking picture perfect in the open world. I don't know.
I'm no developer and I'm certainly no bean counter but as great as Spider-Man 2 was I have no idea why that cost so much to develop. Perhaps that's what the new interim boss is going to try and tackle head on. It may not be as cool a job as the creative but it's important to have someone who understands money and budgets at the top.
I have faith they will figure it out. Playstation has been around for a while now and if they could figure out how to navigate the tough situation they were in during the PS3 era, I'm sure they can navigate this one too.
@ZhuckelDror
Yep. They're boring because most open-world games only offer like 2 or 3 types of side quests, and they just recycle them a thousand times over. The worst part is, if you don't grind through a ton of them, your character doesn't progress at all, which totally messes with the later parts of the game... I play games to have fun after work. But this isn't fun; it's just another job. Except this time I'm not getting paid — I pay them.
@OmegaStriver agreed with all your points, kudos!
Okay so I would say they don't need to chase after the ultra detail and realism that they seem to strive for, Ghost of Tsushima proved it isn't exactly necessary, a game just needs a nice art style and they could reduce the cinematics a bit and sprinkle in a little bit of AI to reduce costs and further speed up development time.
Then they could give us some remasters in-between that we actually want. Like Killzone, Motorstorm and Resistance etc. They also don't need to bring them up to PS5 Quality levels like demon souls either. Just improve them, touch up the textures a bit, stuff like that and then make them native 4k 60fps or 4k 120fps.
GTA 5 will also hopefully come out when it's supposed to and that'll be a big boost and hopefully one of their remaining live service games are also successful like Helldivers.
All in all, the main problem lies in management.
Idk if it was because pandemic threw everything in disarray, but it seems like Sony, and the whole industy tbh, is still trying to catch up with something.
For me the only "healthy" company right now is Nintendo, they seem to be the only one with no apparent problems, a steady release cycle and a good ROI.
Like Xbox, the issues with Sony are with management chasing money rather than listening to their customers. They are looking at what their shareholders want rather than what the people that purchase their consoles want. Give people value and they’ll come. Sony has created an uncertain future by making it known that the games they are known for may be unsustainable and have said they’ll remedy this by investing into a more expensive and more chaotic gaming space that they have less experience with in the live service push, which is even riskier as many live service titles are imploding. Gamers only have so much time to play these kinds of titles. I don’t think Sony are helping their public image by hiding what they’re developing either. Right now, they are creating consumer fear, same as Xbox, just in a different way of speaking. Does no one teach PR executives how to speak to the masses anymore, so that they can spin things in a positive way? At the end of the day, Sony needs to realize that it needs to take care of the people to yield greater profits. They need to take care of their own employees and their customers, so that there is a brand loyalty. Nintendo thrives with this. I don’t understand why Nintendo, the most profitable country in Japan, isn’t used as an example for other game developers right now.
Sure thing is we don't need a ps5 pro..they barely touched the original hardware..Maybe, just maybe if you want to recoup costs you need to work the damn thing before you develop something new.
I like how through out the article you make out not to overreact as the company is making profit
But then post that total bait headline with an image of the brand tanking.
Quality
I do enjoy reading all these business degree graduates though explain to Sony what they should be doing
@zebric21
The thing is PS5 was already underpowered when it came out. It isn't capable of running 60 FPS with decent visual quality.
@sanderson72 Feels like a bit of a mystery where Bluepoint who'd done great jobs through the years (& multiple PS Gens),seemingly working on possibly an original IP felt mystifying.🤔
Yep,a pity some of those studios no longer around,but if emulation (particularly of PS3), is such an expensive (hardware based),or tricky (software based),situation,it boggles the mind they would buy Mobile & PC devs but not setup any internal porting houses with their library of legacy titles?🤔
Embrace Gen AI, particularly for the back-of-house and executive functions and low-level creative work. Huge efficiency savings to be made there.
@ZhuckelDror 4k60 with upsampling tech like fsr2.0 whould be really easy, but i guess they need to sell us new hardware again no matter what.
The problems started with the launch of the PS5. It came too soon, with too few units available, and they kept releasing the same games for the PS4, making it all a disaster. They're finally coming around to making good games on the console (I'm sure 90 percent of the 50 best rated games on this site are less than 15 months old) - if they release a Pro version now, things could turn bad.
@breakneck inflation for the west was already there before the proxy war of UA/RU. As the world was still coming off of the Covid economy which was the true cause of inflation the past few years. The minuscule economies of UA/RU are just a convenient excuse politicians use. Couple this with an over reliance on one region for semiconductors to add to the problem.
The Covid era can be attributed to the present state of gaming. As many companies went all in on GAAS and semiconductors were priced high. Demand for semiconductors only increased during Covid as more people wanted all types of electronics. And most came from China and Taiwan whom like most places had restrictions for work. Couples this with semiconductor manufacturing not getting cheaper due to physical limitations. Consoles will just have to be more expensive. As gaming has remained relatively cheap compared to inflation overall. Console makers and game companies haven’t kept up with inflation like every other industry by charging more for their products like everyone else. So people should expect to pay more for this Hobby of ours. Which many feel entitled to.
@ZhuckelDror Sony should bring their games to switch and xbox to reduce the risk
@Vaako007 yes. It’s ‘greedflation’.
@somnambulance remember when Sony was creating an ‘NFT’ store section on their consoles?
Yeah, good times, good management. It all went downhill after their PS4 period.
Edit: they filed a patent 4 days ago, they are still creating it. With this management, and these greedy shareholders who love to see stupid stuff like a limited edition golden PS5 or a PS5 in a car, Sony is doomed. https://playtoearngames.com/news/playstation-patents-a-new-way-using-nfts
I feel like this article is playing devil’s advocate on behalf of a large multi-billion dollar corporation.
Sony has a lot of options they don’t need to fire 8% of their employees to up their profit margins.
@get2sammyb The economy is in the gutter based on…what? Record highs in stock market, inflation rate going down, low unemployment, and on all indicate a healthy economy. Did you mean the VIDEO GAME INDUSTRY? That and the global economy are very different.
Guess we will have to leave it to Nintendo hopefully later this year to give a true AAA game this year, out of all the big three console manufacturers.
Rushing out an unfinished game is a costly mistake. Games like "Days Gone" achieved eventual success, but missed their full financial potential due to a premature release. This IP should not be abandoned. Franchises like this, with established fanbases, are prime candidates for sequels, which have the potential to sell millions.
Remastering recent games is a less effective use of development resources, typically yielding only modest profits. However, remakes of classic titles can be highly successful, as evidenced by the strong sales performance of the "Dead Space Remake" in 2023.
@koffing you are 100% correct. Getting rid of 8% of the work force is just a quick fix to up the margin for upcoming year, and then what? Even less games.
Not even Nintendo fired 8% of their work force during the Wii U days. Instead, president Iwata took a pay cut. Will we ever see a western CEO do that?
@kirkn
Dead Space Remake was released in 2023.
Sony as a whole seems to be doing well though.
At the group level, Sony reported a 22% surge in quarterly sales for the October to December period – the third quarter in its ongoing financial year. Sales hit ($21.8 billion), with net after tax profits increasing by 13% to ($2.42 billion)
It does seem PlayStation has had issues getting their first party games out lately. I know they were shooting for so many live service games and some were canceled so it’ll take time for those companies to create new games, and that Sony just laid off a lot of people. This is hitting many across the industry. It’s sad to see.
I think many of these companies need to start making more AA titles. They might not be as polished as the AAA titles, but they can be just as fun and not cost as much to make.
Doing a quick google search on the best selling games of all time, Sony and Xbox only had one first party game on that list. The rest were either all multi platform or on a Nintendo system. This makes me wonder if this really could be the reason Sony fought so hard during the ABK acquisition? The PlayStation systems sell well, but there’s got to be a good portion of the base that don’t buy the first party titles. Probably just the CoDs and GTAs. The AAA single player games on PS are great but they need to find where to trim some of the fat. It’s not sustainable.
In the end I think nintendo is the one in good position right now, they successfully cultivated fan base that not only want 1st party AAA games like zelda botw/totk and mario odyssey, but the smaller games as well, like 2D metroid & mario, mario paper games, 2D kirby, etc.
Sony needs smaller cheaper games everything shouldn't be about AAA I have a PlayStation 5 but I have never bought a brand new game asking £70 is too much and I like most people are just waiting and picking them up on sale or second hand also they keep wasting money look at the portal and VR
People r also making more money than ever working for these companies that salary goes towards budgets which is a significant increase of cost in development
I would be fine with smaller games
There isn't an easy answer, but it's clear the answer wasn't to double down on 40 hour AAAA prestige games. The market for these titles are only so large - GTA excluded - and you can only sell them for so much.
The answer also certainly doesn't seem to be live service games, as we've now seen Sony cancel multiple titles that were never even officially shown. And the titles that have been announced don't have gameplay and the audience reception is already looking pretty apathetic.
I know first-party indie style experiences do no sell consoles, but I think there is a market and an appetite for shorter AAA games. Miles Morales did use recycled assets, but it was also just a tighter experience overall.
I think the obsession with flashier graphics and reigning in the scope of these games is where to start. I mean, it's wild to think, but the PS5 is in its fourth year and there are still multiple first-party teams that haven't released an original game this generation. I know making games is hard, super hard, but we don't even have games officially announced from Naughty Dog, Bend, Sucker Punch, Media Molecule.
I think this is where we look at Nintendo. I know they have their secret IP sauce, but it's highly unlikely their flagship titles, a Mario Odyssey for example, is costing hundreds of millions of dollars to produce.
Isn't it a big factor that, since the PS3, Sony has fed PS players a diet of a certain type of game, at the expense of a more balanced diet.
Years down the line and the PS consumer is dependent on this sugary 'high style, high production values' diet and so the idea of eating a few more veggies and high fibre foods is completely alien to a large proportion of the PS market.
Game development should always focus on what makes a game enjoyable to spend time with, rather than what looks good in a trailer. Get the gameplay good, then determine the graphical budget.
No-one's saying Spider-Man 2 wasn't fun to play, but was $300mill. really necessary to achieve that or could it have been largely the same game for a quarter or third of the budget?
I don't understand how Team Asobi hasn't delivered a follow up to a tech demo from the PS5's launch. We still have no idea what they're even making 4 years on.
Astro Bot was universally loved and was exactly the kind of game that shut up all the whining about Sony's heavy focus on cinematic games. These kinds of games would be the perfect release between the heavy hitters; shorter, lower budget releases at a cheaper price point and would go a long way to satiate the increasingly starving 1st party landscape.
@truerbluer Perhaps the honest answer is it’s not even and cheap to make “simple” games like Astro Bot anymore.
They (and a lot of studios) should learn from Ryu Ga Gotoku Studio....
Reuse assets, models, mechanics, etc and bring cheaper games with muuuuch shorter times between them.
This model worked fine in the ps1 and ps2 era, I don't now why so many studios abandoned it
@Savage_Joe Agree, Photorealistic graphics and physics are killing the game industry.
There is no scenario where is better having a Photorealistic game every 10 years instead a not so good looking game every 3/4 years.
@Ashkorsair
Agreed. I also drastically reduced the number of games bought because of the big ps plus catalog, but not only because of that. Big games that i would have bought, entered the service very early, like forbidden west, and now I'm conditioned to wait for them to appear in the service. All of this likely has an affect on other first party and third-party games sales and may be also contributing to these layoffs in the industry.
@ZhuckelDror Define "decent visual quality". We've already seen stunning games run at 60 fps on PS5, some even with raytraced reflections. It is absolutely capable of running "decent" games at 60.
But as always, different developers use different tech and make different decisions when it comes to graphics and performance.
Their options are costs, profitability, or reach.
Focusing on the latter - keep the current fanbase and single player games, but go back to being "fun" and collaborative too to increase reach beyond the loner gamer (I include online multiplayer in that tag too) i.e. sitting on the couch by yourself.
What happened to "Buzz" and the party game genre. Deliver "fun" concepts that don't need a monster visual budget - ChuChu Rocket on the Dreamcast was amazing for a few drinks and messing with friends. They probably had one artist for that game but all the thinking went into the mechanics.
Create something that yea you can get lost in immersive worlds by yourself, but equally you can invite friends over, play with your spouse or partner, and enjoy with your kids.
I would classify myself as their primary fanbase of single player story gamer, but I'm incredibly unprofitable because I'm so short on solo time that I end up getting their AAA games a year or two down the line as it takes me so long to complete them. Whereas I've bought about 10 other games to try to play with my wife, and I would do far more if the gaming scenarios were wider - fun with friends, with my kids etc.
Just my 0.2c
On a sidenote, i wonder how much of these lay offs are a corona correction.
I have no data to back this theory, but during lockdown loads of games were sold because it was a entertainment source you could play home.
What if developers hired people based on those two years, and now we go back to more 'normal' (hah!) Situations those extra people all laid off.
Whatever the reason, it sucks if you lose your job.
@get2sammyb If that's true then Sony 1st party is doomed.
Astro Bot would never cost as much as most of Sony's other 1st party offerings; it forgoes things like voice/performance capture, extensive writing for story, lore and characters, detailed real life models and simulations (Gran Turismo) or a constant drip feed for new content (live service).
How did Naughty Dog manage to release 4 high quality games in the span of 6 years during the PS3 gen (2007-2013) but Team Asobi aren't able to release a single game? Is the cost and scope of a new Astro Bot really more than a PS3 era Naughty Dog game that it requires over 4 years for release?
I believe Sony will do fine.
I think we’ll have a shift in the mindset on how a generation should work.
PS5 will probably have at least 10 years more of life before a new hardware arrives.
The usage of PS5 hardware processing power is barely being scratched.
Not to worry in 5 years time AI will be able to knock up AAA titles in a day 😉
Yeah those games cost too much and take too long.hopefully everything turns extremely good for sony.word up son
I think with all these costs of AAA games I think we should go backwards in generations
I’m one of those guys who loves single player story driven games. It’s why PS5 is my favorite place to play games, especially since I don’t own a gaming PC. Keep the blockbusters coming, Sony!
Nobody wants a god of war game featuring Atreus. Nobody.
Yup, these days I would happily have games that are a bit like Elden Ring in quality, not super graphical but more in depth and creative with gameplay that can be played longer for the price tag instead of what gets released today which can be completed in 30 hours (3days) for 70 beans, Nintendo do ok in that playing field but you know, people are conditioned now, believing that if it is not super graphically intensive it isn't good and it's trash, I had this debate with a friend recently, a super photorealistic looking game in the future will not appreciate over time compared to a game that people can just hop on and have a blast with whilst becoming a staple like Tetris or Pacman (for example), a good percentage of games are just the same now but it's all about the story, cinematics and some Hollywood movie stars voice acting the games now not the gameplay, that's another reason why I stated Elden Ring but hey this what happens when it becomes mainstream, not like when it was a niche for nerds & no one else like it was in the 80s & 90s but here we are now, I'm not going into that dogma.
@itsfoz
Somebody missed the memo about Game Pass's business model being "value destructive" according to multiple major gaming CEOs (and anyone who didn't sleep through economics classes).
If you don’t want reduce quality, reduce quantity. The Last of Us was 18 hours of gameplay, Part 2 was 30, which certainly affected production costs and time. Who would argue that Part 1 is the inferior game because of that, or that it doesn’t deserve full price?
Great article, Sammy. It really outlines the state of affairs and puts things into perspective.
Unfortunately people are usually the greatest expense, and so lay-offs are the way these companies trim the fat when poor executive level decisions have been made like overestimating revenues, investing in failed projects and ideas, and chasing trends that are too little, too late.
There’s a lot of classic “survivor bias fallacy” going on that affected their development plans, ie. success of an idea cloaks the similar multiple failures of that idea. So, for every Genshin Impact and Fortnite that we see, there’s dozens that fail miserably. And as someone said above, there’s only so many players and so many hours in the day. Their game development plans had projects that were set to cannibalize each other. Thankfully they discovered that and shut down some of these projects but wasted a lot of time, resources, and good-will in the process.
This is what happens when the retail cost of games does not increase along with the cost of everything else. Since the PlayStation released in 1994, the cost of games has barely even moved.
Games are too long these days. Some game shall be long, but take a look at God of War Ragnorok, great game, but it needed 33-50% of it cut. That’s stuff that didn’t even need to be made for the game and costs that cover been avoided, but it’s bloated and that probably bloated the cost of the game by millions too.
To me, all their games feel incredibly samey. Sony is leaning into a safe formula for their games and for me they are all meh.
I've lost interest in the studios release of games years ago! That is not to slam others who enjoy these games, but because they take so long to make, when they release a game and it doesn't hit with a certain audience, that's a whole group of people not buying your game again.
@NorrinRadd
Careful with that statement here. Majority of people on this website are all "but corpo bad bruh" while lacking basic understanding of economics.
Scale back the ott marketing, it was stupid how much marketing Spider-Man 2 got and all these rubbish promo suits based on famous names no one will wear.
Sony needs to cut down production and marketing costs. We do not need cutting-edge graphics and 5 years of development time for each game. Learn from Nintendo how they invest minimally and reap the maximum rewards. Their games look like PS3 games but they are selling ganbusters. Even their hardware is profitable.
Hopefully they are approaching these layoffs from 2 directions then. What is needed and what is problematic. DE&I departments and moving key facilities to corporate unfriendly states like California or New York are not helping to push that line out of the millions and into the billions. The latter should be obvious, but the former is a state of engaging in non business related activities that could result in quality reduction in product. We've seen this impact of ideology on the last of us part 2. While still making money, it didn't see the kind of increases in sales over its predecessor as other sony ip have seen. A steeper drop at that. Many of the decisions that lead to that games development and risk behind the scenes can be traced back to de&I. We're not talking about dion in ff16 here, we are talking about a game that fixated on a single community pretty hard to the point of absurdity. DE&I isn't the sole problem either, just one case where it is decaying franchises for the perception of doing good, while committing evil, evil in the sense of ruining livelihood for a message no one is listening too and ignoring those who aren't interested in making that sort of game being forcibly silenced or fired for stating what should be obvious. Other factors like chasing fads has hurt sony. We use to see 2 to 3 first party releases a year from sony. We are now lucky to see one. Smaller releases weren't uncommon either. Chasing after live service titles which are far more risky to launch and require far more time to produce was also likely another contributing factor. Look at how badly ubisoft has struggled to make everything a live service. They've ruined many of their brands reputations, burned resources on aspects of a game people are actively ignoring. Spending more money to produce a product with the same level of success. Why produce a game in 10 years to less fanfare than one with a fraction of that time that sold more money. Look how much money they sink trying to save these sinking ships. Excuse the pun. Sony wanted to incorporate that into their portfolio? How much more successful is destiny than halo? There are things that are better about destiny than halo, but how many people have stuck around for this 10 year journey they promised? Did it ever hit the mark? Why do I hear people say it's alright and shrug or simply complain about how they are tired of the game.
Sonys got problems. I think they are losing touch with the industry. Simply laying people off is only part of the problem if they aren't fixing the things that could start eroding them.
@OneWingedAngel
Name at least one main Sony franchise which game would sell a reasonable amount of copies while "looking like a PS3 game".
@Savage_Joe
Both these are second tier IPs.
Not dissimilar from what many have said in different ways, one thing that gets lost these days is PS's own history. Yes, the industry is in the tank across the board for entirely self inflicted and easily foreseeable reasons that most of the actual customer base called long ago. But Sony's problem is uniquely Sony's in that management (Layden) saw it happening, called out the problem, while it was still developing, and had strategies in mind for heading it off. For saying so he was sandboxed and forced out by the higher ups, and replaced with a fellow traveler who'd go all in on using money as toilet paper and ignoring the warning signs. This isn't merely mismanagement, it's active mismanagement, where the would-be saboteurs oust the management that foresaw and intended to address the problem, to maximize short term gains, only for the inevitable problem to strangle them.
But beyond that, this focus on Playstation being the most powerful hardware with the flashiest most detailed games with cutting edge graphics is not who Playstation ever was before. It's not what put Playstation on the map and made it #1. The problem PS faces now isn't that Playstation's business model isn't viable in a changed world. It's that they abandoned their own business model in persuit of someone elses and repeated the mistakes of those others. PS hit the top because Nintendo and Sega were gouging and PS undercut them. Cheaper hardware, weaker graphics, more variety of games, more developer friendly to make and distribute games at lower developer cost. That's how PS1 dominated, that's how PS2 dominated.
It was Nintendo that went all in on hardware, graphics and cutting edge technology at the time and it nearly collapsed them next to Sony's much more adopted value box that was cheap to develop for. Then they threw the Wii out there, sold it for a song with ancient graphics and owned the industry and have printed money with that model ever since, sans the WiiU misstep, but it didn't matter because 3DS still dominated with the same strategy (Hi, Vita!)
PS4 dominated with a return to form, it was, at the time of launch, the cheaper box, with the better value to consumers, lower overall cost of ownership than the nearest competitor in X1, and the better development environment.
It was X1 flaming out early that led Sony astray though. Without a viable competitor to focus on undercutting they started to become bloated and started to become the very N64/GCN era Nintendo they had undercut to victory. They got dreams of grandeur and started behaving like other Sony (electronics) divisions that have destroyed themselves by perceiving themselves as some sort of luxury status symbol.
And PS5 has doubled down on this entire idea. It's a giant semi-phallic symbol of SIE/Ryan/Hulst/(Ken) Yoshida era hubris that abandoned the lessons they learned and led with for decades. Now they have a bespoke box they can't discount in manufacturer, development model designed after the worst failures of Hollywood only using more money, and a bunch of status quo protectionist money men at the top that don't understand where it all went wrong.
I think corporate now understands where the problem lies, thus Ryan finally out, only after he planted the explosives, but the problem they're going to face is there's no easy way out of the corner they've backed themselves into while MS and Nintendo have cornered their old "value" stomping grounds only to discover premium/luxury gaming isn't viable or sustainable. Even though a more arrogant Nintendo taught that lesson to a young Playstation long ago.
They won't have the value of an S/cloud + GP and they can't subsidize as heavily. They won't have the family appeal of the bespoke Nintendo. And their premium model has financially failed them, which Layen told them would happen.
What they need is a new Kaz Hirai. Someone that understands the market, understands how to gain traction and generate demand, and how to reach a larger audience. Hulst needs to go soon after Ryan. They can't get rid of both at the same time and leave a management vacuum but they need to be rid of the bumbling spend-happy duo. They need to focus on what actually made PS popular with the masses to begin with. And it wasn't $500+ consoles and super shiny photo-real games that cost $300M to make while feeling like a game everyone already played.
Heck even in the VR market, while that's not in line with the original principles of PS, and while I am a huge PSVR fan, if we look at that market, Meta Quest 3 is undercutting Sony in price, availability, AND managing to operate a better development pipeline and platform model. When Facebook of all companies is outclassing Sony as both a hardware manufacturer and Playstation as a platform/publisher, you know the wheels have really fallen off the bus in the management offices.
The industry is in trouble, but Sony's problem isn't an industry problem. It's a management problem that has become a product problem.
@Friendly I mean, yeah, they’re hemorrhaging money on foolish projects from a business sense. If I was Sony, I’d have pulled the plug on PSVR, based on the sales data we currently have, and definitely on these goofy vanity projects like PlayStation cars and NFT stores, etc.
And for those that think smaller games aren’t the answer, they totally are. If Sony could pop out a Balatro, for instance, the overheads are low, but the sales are great and the player engagement is great. Sony could certainly take advantage of smaller projects like that, and have a lower risk investment than huge risk, huge investment live service games. Even the AA titles could be huge gains. Look at Helldivers. Theres a lot of interest in smaller games right now and the sentiment that “no, no, no, we are chasing the trends” is disconcerting. It seems that the live service balloon is popping just as much as the console balloon. I AM curious how the engagement levels look amongst the big live service titles currently.
Good lord, some of the posts here go beyond the hysterical. Sure, there are valid concerns about their development pipelines and the sustainability of AAA development, but some of the doom and gloom posts here would have you believe Playstation is nearly dead and buried.
Despite the sparse amount of first-party titles, the live service stuff and the layoffs, Playstation is still in a healthy place at the moment. There are certain course corrections that need to be made and obviously the strategy is something that needs to be evaluated constantly, but if they make the right decisions now, I see no reason why they won't be fine in the foreseeable future.
I do not accept the premise that profitable enterprises like PlayStation need to screw customers and workers to chase unsustainable growth targets at the behest of financial markets.
That aside, it's obvious that Jim Ryan screwed the pooch chasing the Fortnite fad, they have next to nothing in the hopper, and they're scared.
I feel like Sony leave some quick wins on the table all the time. Ports for the VR being one. Remasters of old games that people actually ask for and want and franchises that players want revisited
If we like it or not they need some games with returning revenue I hate lifeservice with a passion it's the worst thing of gaming all rolled into one. But I also believe Sony needs to release some smaller titles with a lot less risks.
@Savage_Joe I think it's quite difficult to run something as big as Playstation and I believe we need some smaller stuff along the triple A violence a liveservice game is almost needed to survive.
If something as lazy as MW3 makes so much money then Sony probably need a piece of that cake they maybe a Helldivers 2 without outrages monetization would make the public happy.
@Jaz007 Can't wait for people to go on a ragemode when they cry that the game is to short.
@ZhuckelDror Demon Souls alone made my generation and then im leaving out a game like Rachet and Clank which looked fantastic. And why does everything need to look the best of the best Helldivers and Hades made it clear not everything need to be a 100 million plus budget to be good.
@somnambulance another reason why Sony should chase smaller games is what Nintendo is doing: they are using smaller games to experiment with specific engines or other stuff on the background while still getting paid for it. They now use Princess Peach Showtime as their first game in Unreal Engine 5, for instance. And they use Kirby games to train new people and gather new gaming ideas in their company.
All a bit devil’s advocate on the behalf of millionaire CEOs. Firing 8% of the workforce is literally only to push down costs the next quarter and artificially show growth in profits for the shareholders. It’ll hurt them in the long run but hey, capitalism!
@get2sammyb I think not being able to drop the price of the console will also result in a less successful intro for the Pro if it comes this year. I'd imagine it would have to be a $200 price difference to differentiate it from the regular PS5, and I think a price that high is going to result in pretty small sales. I could afford it, but I don't really see a reason for it. All the games look pretty fantastic already.
Nintendo pretty much sustains hardware and software on their own, while 3rd party and indies work as partners. They have record profits and zero debt as per last report shared in Nintendo Life.
PlayStation needs to start studying Nintendo. Pretty sure Zelda and Mario also cost a lot to make and things are working fine for Nintendo apparently.
@Flaming_Kaiser They cry it’s too short, then they cry it’s too bloated, they cry cry and cry. People go on this same “I want to only $0.50 per hour of gameplay”.
If you have that much time, but that little money, you might want to reconsider how your time is spent. Exceptions apply, but as rule I think I’m probably right.
"...this could have an impact on PlayStation hardware sales, and so it’s going to need to be certain the advantages outweigh the negatives."
And how, exactly, do they "be certain" of that?
One thing I think we're missing is exclusive software retention and don't get me wrong, it's far too late anyway, Sony took the Microsoft way when they should've went Nintendo's way.
Spidey 2 sells 10 million, great, will sell more this year of course, but with 50+ million PS5s in the wind, it should be higher.
The PC ports have zero guarantee of sales, as multiple have shown. So they opened up the kingdom, devalued their "exclusives" and didn't get the support needed from the PC side so now they're in a terrible limbo. Sony wanted Nintendo's cake and Microsoft's cookies, just not how it works.
Look at Nintendo's Switch sales and 1st party 100% exclusive software sales, THAT is what Sony wants and will never have again. They chased Microsoft and should have chased Nintendo.
I'm bored of mega budget AAA games.
They play it too safe, and focus too much on cinematics and realistic graphics.
Sony could have made those studios make lower budget AA games instead, to fill in the void between their AAA releases.
This will generation have been a huge disappointment, both from Xbox and PS. And from now on, I'll stick to PC and Nintendo consoles.
I think we'll definitely see a more aggressive move into the PC market. I think Helldivers 2 is probably gonna be the blueprint they look to for their future titles.
@RiotShieldsHurt They'll have access to data and analytics we could only dream of.
I feel like a good strategy would probably be to release one tentpole AAA per year, accepting that it may be a loss leader, and release the PC port 2-3 years later, and maybe 3 live service games per generation, forever exclusive, hoping that one of them becomes a must-play. The rest should be smaller titles that are developed at a price point they can sell for £30 day one, drop to £20 6 months in, and add to PS+ after a year, and on the same day release on PC for £30.
That gives people a push to play on PlayStation, it gives players on PC a taste of what they're missing, and it vastly reduces overall development costs from what you see now. The lower budget games should be a reasonable constant trickle so people aren't complaining about there being no games, and if the first party stuff brings players to PlayStation the third party sales should stay up, which is basically free money for Sony
Maybe they should try some more simpler games, I don't know such as echocrome, the last guy, motorstorm RC. Smaller game that you might pick up on a whim.
Oh yeah and turn up at some game shows and show their games off.
@Lonejester Yeah, there's a reason this is a games website and not an economics forecasting one, which is made clear here. That sentence raised my eyebrows too, but so much of the public goes on "feeling" rather than stats. Things in many places are looking up and the overall forecast is slow growth plus continued disinflation. The games industry is a portion of the economy, but the tech industry in general is really a different beast. https://www.imf.org/en/Publications/WEO/Issues/2024/01/30/world-economic-outlook-update-january-2024
@NEStalgia
>Playstation being the most powerful hardware with the flashiest most detailed games with cutting edge graphics
That's PC.
Also PS1 and PS2 didn't have worse graphcis than N64 and Dreamcast respectively.
@Flaming_Kaiser
None of the games you mention is a PlayStation top tier first party exclusive.
Hermen Hulst needs to be axed too. This AAA chase/this gaas chase happened under him. These mismanagement of studios resulting in the cancelations happened under him. These mistakes have ramifications setting back studios for years. He shouldn't survive it if lower level employees and studios have to pay the price for it.
@Friendly It’s really good, what Nintendo does, for training and retention. They build their talent and aren’t afraid to do new things. I said it elsewhere on this site, but when I think of what brought me into the Sony ecosystem long term, I think of things like Flower and Ico. They might not have been the biggest games, but they got me interested. Those games AND Final Fantasy, Metal Gear Solid, Resident Evil, Uncharted, etc. The balance between huge projects and smaller curios keeps us interested in what is next. Unfortunately, many tentpole third party series have gone the way of the dinosaur, and Sony’s been inconsistent with their “experiments.” I do feel that Sony, much like Nintendo and Xbox, should be able to get us an exciting exclusive every month or two with maybe two of them a year being big console sellers. Sony should try to take an ecosystem route to some extent.
@Savage_Joe
The only Sony's first party game there is Ratchet and Clank but by no means this franchise is as important for Sony as say God of War or Horizon.
Just a reminder how Nintendo responded when their business was suffering in the Wii U era:
Source: https://www.bbc.com/news/business-25941070
Nintendo's top executives are taking temporary pay-cuts to atone for a dive in profits following disappointing sales of its Wii U games console.
President Satoru Iwata said he would take a 50% cut, and other executives will see reductions of 20%-30%.
...
Mr Iwata told a press conference in Japan that he would draw a reduced salary for five months. Asked if the pay cuts could extend beyond June, he said: "I will make a decision after looking at the management situation at that time."
@somnambulance
>and Xbox, should be able to get us an exciting exclusive every month or two with maybe two of them a year being big console sellers.
When was the last time (if ever) Xbox did that?
@Ralizah
10 year old news are surely relevant today.
@Savage_Joe ah, i stand corrected. It’s the first game Nintendo has developed in the Unreal Engine though.
Why don’t we go back to having some smaller games that cost less to make and cost less to buy. Parappa the rappa was a 2 hour game.
@itsfoz You mention “live service”.
I am assuming that is reference to online multiplayer.
I had not done any since around 2007. Mainly because I am awful and don’t want to embarrass self.
Can also see enough players avoiding due to ban concern (including losing account and paid digital library to go along), even for just being accused of something.
I have not checked for online multiplayer number trends (even if Sony and Microsoft makes available), but most certainly have not remembered any news suggesting that such usage has been significantly declining.
@get2sammyb It depends. Loss leaders can work if marketed right. Cut £5 off a game price and sell more of that game - doesnt take long for that loss to become a healthy profit.
Yes there are risks attached but looking at how Sony have been running the PlayStation business, they could do worse than this with some of the bigger games.
The issue of currency is correct as well. That's a huge impact.
@get2sammyb Hmm, that's just conjecture. MS can handle losses easier than Sony can.
The key aspect is the profit margins.
When a film is made, a budget is set and predictions made of minimum profits to make the film make enough money to do the next and so on.
What PlayStation have done is made the gap too tight. They will have to change the types and sizes of games they produce for the foreseeable future.
Releasing a PS5 Pro this year, which simply is not needed , would be financial madness. But I suspect that they will still do it and it could be that error that pushes them into the red.
Dangerous game being played.
@Ralizah This was real leadership. This was a hands up, we have made a cock up. Rather than sacking loads of staff who were not responsible for the mistakes , they took the hit.
Look at them now. They kept the creative minds and the positive energy and they won’t be moving away from exclusives any time soon!
When things go wrong you act. Sony need to act now because selling loads of hardware is great. If the profit margins are not sustainable, as the article says, you are one moment in time away from a huge problem.
Can someone please explain to me how Spiderman 2 costs 300 Million to make or is marketing included and if so by how much ?
Second thing I can’t wrap my head around, on PC the graphic scales, better card better graphics, no one is complaining about the production costs for PC games.
I must have a thinking error, can someone clear it up for me? Thanks in advance.
Making more small-medium scale games and growing the install base are linked. It’s why Apple’s iOS platform makes more money on games than Sony, Nintendo, or Microsoft. As much fun as 100 hour AAA games can be, I don’t have unlimited free time and attention to play them. Maybe I could get through 2 or 3 per year at most, with everything else going on in life. But shorter games can be a lot of fun and it can be enjoyable to finish them without dedicating months of my life to it!
Not sure how many think like me, but I refuse to pay 80€ for an unfinished game. The only game I bought on PS5 in 2023 was Octopath Traveler 2 at around 40€. Higher prices mean people are more hesitant to buy.
Also, be aware that should Sony lose the lawsuit which has 90,000 signatures on it in the UK, it would amount to $7.9 billion.
That far outweighs the profit margins recently announced.
Sony lose that case and PlayStation is more than just trouble. I am not sure reading some of the comments on this that people are fully aware just how precarious the situation is right now.
A loss of that lawsuit would mean pretty much no 1st party games for, not just a year, but for a number of years to come. More layoffs would be all but inevitable.
Hopefully they can act and change things but I actually fear for PlayStation’s future if they are not very careful indeed.
@NoHope
There are no PC only games with similar level of animations and expensive voice over actors for example.
@BaldBelper78
That lawsuit won't hold in any court.
@Savage_Joe you’re savage
Ok, one of the.
How come I didn’t know this?… i blame myself. Tnx for enlightening me!
Profits would be in the vicinity of around 13%.
What the article doesn't mention is that the Bungie acquisition (which IMO was a waste of money) is taken into account starting from FY2022, Sony even confirmed they were planning on paying the $3.6B in multiple quarters.
i really don't understand the conversation on Spiderman budget. The game launched less than 6 months ago and already has made tremendous profits for Sony. At the end of it's cycle it will make far more. The same goes for Ragnarok and pretty much for all big AAA games that sony released until now. How come that this are the problem? Past console generations, the 3 first years there were always loses until they created the instal base to make money on the second half of the console's life cycle. This generation they made huge profits, more than ever in playstation history from day one. Sony is in the best position it ever was. The only thing that is happening, is that they regreted the turn to the gaas gaming, at least not on the scale that they were going initially.
@ZhuckelDror They should be able to. Xbox didn’t have an issue getting exciting titles two generations ago. It is a pity they jumped their platform off the ledge in the Xbone generation. It is possible that the second half of the year could be a better spot though. Avowed, Indy, and Fable look interesting.
I'm huge fan of psvr2 and I feel let down. There is a lack of bigger titles. I'm not even saying "big".
Things ain’t great are they. I worry for the future of consoles now truly.
Corporate greed. Profits stagnating, sack employees for management errors to appease share holders.
1) Hire based on merit and merit alone.
2) Be obsessive about improving efficiency company-wide. Rinse and repeat. Then again.
3) Manage expectations. Games cannot continue to get bigger with each new release.
Not a popular formula, but people need to understand that corporations are not job programs and exist to make money. So either they do make money, or their products eventually cease to exist.
What about making remasters of already forgotten very good PS exclusives like Resistance trilogy(1 have never had trophy support, 2 had one of my best coop experiences ever, 3 was fun as well), Killzone old trilogy(loved the multiplayer in 2 and 3)? Or for example get a deal with Criterion to make a Black remaster or remake(my most wet dream), old Burnout episode remakes(crash mode was insane and the games as well)? With some quality work these should be a must have for hc PS fans and probably cheaper than todays AAA titles. Just brainstorming........
Or on hardware side finally let me pimp up my controllers with removable covers as well. Buying a new one because of the color is not an affordable way.........
@daldrum Sony quickly released the hand of these innovative/exclusive hardwares. All of them(Eyetoy, PS Eye, Move etc.), VRs are not an exception. I loved Eye of Judgment for example, with some decent support back then it could be the Magic the Gatheting of PS with almost infinite opportunities and could be a PS star nowadays as well. But it was shut down after 3 released card sets.......a shame to miss this opportunity as well.
We talk of the first party games, but how are they not making more profit with their cut from selling all the other games? If they make good decisions as a publisher it should be higher.
@get2sammyb Spencer has said "[Game Pass] makes money." Microsoft is a company that relies on profits; if they saw their service wasn't profitable they would eliminate it. The Verge reports 34M GP subs... which is roughly $7B they're pulling in on it annually and Xbox has said they spend ~$1B on GP content.
@Secryt Phil Spencer says a lot of things. Let's see the accounts and we'll talk.
And now more layoffs at EA
The industry is in huge trouble
I disagree, @get2sammyb, when you say that Sony has bet the house on single player games, when there have been several stories regarding Sony chasing the mythical cash-cow that is GaaS. I believe the headline figure was that Sony had diverted 60% of funding towards that. If that is right, then they bet the house on GaaS, and it is clear from the number of games we have seen shuttered that that gamble is not necessarily paying off. Sure, we've had Helldivers 2, but for all the money that makes, just how much has been spent on GaaS games that have never seen the light of day?
I think it is fair to say that the new guy in charge at Sony has steered the ship away from GaaS, and that we are likely to see a return to the type of games that made the era of the PS3 and PS4 so successful. Ultimately, we can only hope that is the case...
I haven't bought a console for 16 years now. Switched over to PC and never looked back.
Recently got a Steam Deck OLED to complement my Gaming PC.
Consoles offer me absolutely nothing and are more expensive i.e more expensive games, pay to play online, etc.
Not to mention game preservation on consoles is extremely poor too.
I'm glad not to have invested in any of their ecosystems.
Not happy about their most recent push against emulation, but Nintendo seems to be fine. And generally the Japanese side of Sony (don't come with the Japan Studio argument, they weren't fired but restructured into asobi) and beyond seems to push along quiet but steady with big releases (like a dragon, final fantasy etc, heck even something as uninspired as palworld).
It takes a rethinking of western business practices and the laughable idea of infinite growth. Rethink why certain employees like CEOs need such hefty paychecks before reducing actual talent, rather than quarter to quarter shareholder soothsayers.
PlayStation fanboys (of which I am one) are just realizing the reality.
The days of big blockbuster Triple AAA Hollywood games are over. And it doesn't help to publish day and date on PC because then Sony would ruin their entire business. The only one who would win here would be Valve.
Sony, like Nintendo, now has to find its own way.
A start would be to bring back more classic IPs. of which Sony has a whole graveyard.
Games like Rise of the Ronin or Stellar Blade (which are more interesting than any TLOU or Spider-Man) are a good start.
It won't be easy to turn the usual PS gamer away from the big blockbuster titles, but it's not impossible either. Nintendo proves that all you need is a loyal fan base for games to sell well.
@ZhuckelDror And your point is? We also have great Spider-Man games, Horizon looked and played fantastic, Returnal. And so many fantastic games that look and run great exclusive or not. With my favorite controller and totally quiet console that is superfast with everything im totally happy
This was always going to happen eventually.
I always knew the tech race microsoft started with sony would end this way. It's not sustainable.
Sony should stop trying to win that race and focus on software like nintendo.
Honestly, ps4 level graphics are fine. I doubt anyone even notices a difference without zooming in on the image. We've hit the point of diminishing returns and it's ok to stop chasing the tech. 1080p was enough 2/4k is already more than enough and requires a huge TV. Really... it's ok to stop. Let's focus back on making games. The hardware is strong enough to deliver good performance at 60fps.
No need to make huge games either. Focus on pacing and quality and honestly... it's time to bring back the AA line and all those classic IP you left behind. Give them love and embrace them like nintendo does. The fact that wild arms had to go to kickstarter is honestly embarrassing. Be better.
Removed - disrespecting others
Removed - trolling/baiting
@Nem every game you mentioned was switch how about playstation games? Also SM2 released 5 months ago.
@Jaz007 Yes gamers can be quite exhausting as well as some movie watchers especially the group that goes to super heroes garbage.
Even without game appearing in subscription services day 1, it still hurts sales, for two reasons.
First, I'm one of those who still haven't bought Spider-Man 2, because I have a huge backlog (and one live service game) to keep me busy. I'm playing through Nier Replicant now, "free" from the middle tier of Plus.
Second, if I wait long enough, they'll announce some DLC for Spider-Man 2 just before they put the base game on Plus, at least on the middle tier for a while. I can wait, I haven't even started AC Valhalla, yet, or a half-dozen other Plus game that interest me.
I like the subscription service, and I think as long as Microsoft funds Game Pass, Sony has to have something similar. But it simply has to be cannibalizing sales for both companies. I don't see how the finances match up - not when delaying or cancelling one or two day 1 purchases can fund your subscription for the YEAR.
I hate shareholders in the video game industry. They need to stfu and accept only "modest" returns on their investments.
@ZeroprimalDB Shockingly enough Sony has not adopted the same strategy that Nintendo has, so we have no representative numbers from them yet. 🤷
@itsfoz the math of gamepass doesn’t work man. 25,000,000 subs at $11 a month= gross profit to all Microsoft studios of $3.3 billion. Remove development costs and the cost to secure third party titles. Most of Xbox revenue comes from that.
God of war ragnarok alone brought in NET PROFIT of almost $1 billion.
God of War Ragnarok - a stand alone title was more profitable than gamepass. This is why Sony won’t go to day one subscription. It’ll never happen.
@Friendly if you work for a company operating on 3% EBITDA you need to find a new job. I’d be scared.
My company just went through a massive restructuring because we had a year of 5%. We are back up to 10-12% which is healthy for $500 million company. 3% margin is one bad decision away from bankruptcy…
@Secryt the verge atricle lumped gamepass core subs in with standard gamepass subs. The real number is 25 million and has stagnated. Regardless of if it’s currently profitable it’s not sustainable.
$7 billion in top line sales isn’t enough to sustain the amount of development teams they have. Whenever they release a product they get no influx of capital because big releases don’t drive new subs. They’ve built themselves into a stagnant business model
@Sil_Am London Studio should have been working on something like The Getaway, which could have filled a niche that has been lost in a post-GTAV world. Instead the were relegated to making VR games and a live service (like all of Sony's studios). Japan Studio still hurts years later, but at least their legacy lives in on Team Asobi.
@Ajbr8687 as I said my company is doing this already for 130 years. And in the top of multiple markets. We’re a 700 million company. Also, there’s always work for my kind of profession, everywhere in the world.
Not afraid one bit
@Friendly wait - I might have misunderstood your comment. Do you guys manufacture anything or do you sell engineering services? If it’s the ladder then that makes sense as you have less overhead.
Sony manufactures products with fixed selling prices. If the price of super conductors or something they don’t have control goes up by 10-15% they could be screwed. You can’t live on 3% margins whenever you are buying components for manufacturing from somewhere else.
Also 6% margins for Sony is scary whenever they saw a 6% drop in EBITDA last year…another 6% drop…not good
@Nem this! Exactly this! The PS3 and PS4 were so good for this. I don’t care at all about the best graphics. 8 and 10 hour games are the perfect length. And if they want to push anything, push for 60fps at 1440p. That’s the sweet spot for making great looking games that are super smooth and fun to play.
@Nem Playstation and Nintendo are completely different brands, the ps portal is their switch. Sony wants next gen performance, not PS3 performance.
"As always with the video game industry, there’ll be much hand-wringing and overreaction." So like this entire article. lol
@ZeroprimalDB And that is the issue isn't it? That means higher development costs and smaller margins. In short, this article.
Nintendo offers an alternative path worth considering, even if you personally don't like it. It's about money.
Hopefully Sony will cut the budget for bad scripts from Sweet Baby Inc.
@Ajbr8687 I don’t agree I’m afraid. Sony is mainly a service platform. They earn more even from DLC than from hardware sales. Hardware was still only 30% of their earnings for a year where the PS5 was new and available with record breaking hardware sales, and where the PSVR2 was released.
https://www.tweaktown.com/news/91256/sony-made-8-3-billion-via-hardware-in-fy22-over-more-than-last-year/index.html
@Nem The fact is that if Sony do what Nintendo does they'll get criticism for low quality. It may cost more and take more time to make them but that's what games are now. Besides, at least ps5 game don't run at 20fps like totk. Imagine how well that would run on ps5.
Quite a short sighted view really.
They will always lose money on hardware.
The PS5 has had 4 revisions that we know of already, and the development of the VR2 would have been very expensive. Seems sony have given up on that faster than the vita.
They will make their money back with the games and the subscriptions..
The thing about this sector is that any money taken, even at small margins, is money not earned by the competition.
Keep on plugging away and slowly kill off your rivals.
@ZeroprimalDB it sold 20million running at 20 fps. I mean... the facts are the facts. It's not what i want, i am giving a business analysis.
Either way Sony is already on ps5 so it would never go to that point. But not going over 4k would certainly be a good idea. It has to stop somewhere cause it's not sustainable.
i feel like once naughty dog shows off their new games , sony bend shows off what they've been working on , along with sucker punch , santa monica ect. a lot of things will be forgotten about. i feel like when Coreys rumored sci-fi game gets announced people will go crazy for it.
@Nem As new tech develops, e.g 8k, the old tech (4k) will get cheaper so we are inevitably going over 4k, even though ps5 pro hasn't done that just yet. Also, totk sold 20 million at 20fps, it would still sell so much more on ps5 because it can do 120fps at 1080p.
@Dijita
Games that share similarities are not the problem.
Nintendo releases the same platforming games again and again across several (interconnected) franchises. If you played one game, you kinda played them all.
COD, FIFA, Fortnite, and Minecraft just to mention the obvious ones deliver the same experiences again and again.
@Friendly agree or not - their profit margins were down 6% last year vs 2022 and a 6% current profit margin is a bad place to sit for a publicly traded company. Also keep in mind Sony has business segments outside of PlayStation. They are still a manufacturing company - not a services/ software company.
6% EBITDA, once again for a company that does any type of manufacturing is very slim. Common agreement in the financial world is 10% is considered healthy…sony fell below that in 2023. Not sure the nature of your company once again - but the situations are obviously different. Sony operating on a 3% margin like your company would be seen as catastrophic…my initial reaction to 3% at your company was wrong - don’t know the business but I assure you Sony is struggling at 6%.
@Ajbr8687 it’s all about the word that less than 10% is ‘considered’ not healthy. It’s all in the eyes of the beholder on the stock market.
Profit is profit. Better to have a stable profit for years than a deviating huge profit and loss. Also for a company that has some manufacturing. But yeah, that’s stuff you have to dare to say to your shareholders. Apparently Sony chooses to fire employees instead.
RemasterRemake Station.
me as working dad, I prefer shorter SP games like 10-15hrs is completely fine and there is also higher possibility to replay/ng+ like with 30+ hrs games.
There's no way Spiderman2 cost 300mil if it's almost the same as previous games - this is really not sustainable long term.
Sony should probably reconsider ps5 pro now and rather bring ps6 in 2026 with full BC. In these hard times, I don't see this sell really good as it would be quite expensive too.
I really hope Sony will make some good decisions now and show us 1st party games very soon
@HeavymetalGordon the plus side if they keep using the same tech , ps4 / ps5 games will be playable on the ps6. if you are expecting ps3 bc its never happening.
@itsfoz Subscription are getting more expensive now if you look at something like Netflix it's fantastic but the real prices are starting to show up. I wouldnt be surprised that it will go up to €/$ 20 range eventually or even higher.
@MrGawain I love my Japanese and special games but do you even consider that they are extremely expensive to make and don't make a lot of profit.
I love ICO, Shadow of the Colossus my dream is to see another Legend of Dragoon getting released or remade I would even take a remaster like they did with FF10 on the PS4 a Dark Cloud.
But let's get back reality do they sell do they make lots of profit or make their returns. I tthik think the remasters are not made because they love to do them so much but it's quite easy money.
@Ajbr8687 People tend to forget that parties need to get paid for their games on Gamepass.
@breakneck There's also no incentive to make an upgraded variant of the console when there are still plenty of people happy to stick with PS4. If you know your current console is a hard sell, albeit easier than it was at launch, why double down? Don't get me wrong, I could switch to PC but I'm going on 34 this year. I am no longer willing to plunk down a huge amount solely for gaming, especially when I already have a machine that does that well enough. A PS5 Pro would absolutely sell, but not enough to truly break even. With scalpers as well, a lack of an increase in software sales to accompany it would be unhealthy at best.
@HeavymetalGordon Going on 34 here and I refused to buy Spiderman 2 after selling my initial copy without a steep discount. Snagged it for 39.99, but waiting to see if New game+ is any good before breaking the seal.
@DeathlySW There is a place for the Pro no doubt but the issue is the current economic climate and for the Pro to sell and prove its existence it need a Horizon Zero Dawn level game to sell it. I remember how big the difference between Base ps4 and PS4 Pro looked on DF. They need that Software to truly sell the hardware (why releasing near GTA6 would be an excellent idea if they have no major exclusives themselves)
@Friendly What i think you are forgetting is that companies are around to make money. I dont understand your comment at the end - why would Sony willingly keep people around that they didnt need? Would you pay employees that are not producing?
London got closed because they didnt make money. Sony didnt get rid of individuals that were high performing. Layoffs suck - it hurts families but unfortunately its important for future health.
As much as I dont want to pull this card - I do this for a living. As much as the executives got Sony into this position - they are sitting on razer thin margins - every analyst agrees with that. Regardless of the margins your business runs on - you're not Sony. 6% EBIDTA can crash down to 0 quick in the event of rising cost. Inflation is more than 6% right now - its not healthy.
If I worked at Sony and I was busting my ass every day and I saw other employees not working very hard and getting paid and not producing anything profitable - thus putting more pressure on me - I'd be pissed. Money doesnt grow on trees and if a company wants to retain talent they have to trim the fat.
At 6% margin you have pissed off shareholders, you are not able to take loans out from the bank to grow, and you are one bad bet away from being in the red.
@breakneck completely agreed. The rumours of it having proprietary upscaling tech would absolutely justify a purchase, however to do so it would need to be universal. If it’s once again a “developers need to enable it” then it’s moot, as the current issue with performance and specs is that games are just either not well optimized or the developers simply don’t care. Some games like Salt and Sacrifice don’t need to optimize too much, because graphically they’re not intended to be intense. But games like Wild Hearts, which still looks rough as hell despite being a joy to play, perfectly showcase how badly there needs to be standard to hold devs to.
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