How Sony intends to transform PlayStation

Sony is starting to dream bigger

It’s still exceedingly difficult to find a PlayStation 5, but Sony’s latest investor briefing released last week makes clear that the company’s console business will soon just be one slice of a much larger pie.

We’ve been hearing for months now that Sony is getting more serious about big industry trends like live service and cross-platform gaming, ones its prime competitor Microsoft has gone all in on while Sony largely stayed the course during the PS4 era. But this presentation gave us some much-needed hard data on Sony’s early efforts to transform the PlayStation business and provided ambitious forecasts for the next few years.

Sony has finally seen the light of multiplatform gaming. Sony describes the next few years as “a transformation from PlayStation’s current console-centric approach to a future where large elements of our community extend beyond the console.”

• The company has made promising inroads in PC gaming, and now we have our first real data on how successful the push has been.
• Horizon Zero Dawn, the first of Sony’s big first-party PC ports, has sold nearly 2.5 million copies, generating roughly $60 million in revenue. God of War has sold around 1 million copies since its release in January, generating more than $26 million.
• Sony is now working on bringing Ghost of Tsushima to PC, and a leaked Steam listing suggests a Returnal port is in the works, too. Sony now estimates its PC revenue will more than quadruple this year to $300 million.
• While its PC business is growing fast, Sony is only just beginning to consider mobile. The company has yet to develop any smartphone versions of its first-party games, but it estimates about 20% of its game releases by 2025.
• PlayStation chief Jim Ryan spoke by videoconference after the presentation, saying PlayStation Studios’ track record of single-player games has helped build its leading position in the console business. But, he added, “it is certainly the case that we have restricted ourselves to a rather narrow portion of the gaming market.”

Sony’s second pillar is live service gaming. Part of the company’s major push into the mobile market also involves a broader strategy shift toward live service games. Sony hasn’t said too much on this to date outside its acquisition of Bungie. But it’s clear that games like Destiny and free-to-play successes like Fortnite and Genshin Impact have had substantial effects on the gaming market, and Sony now wants hits of its own.

• Sony now sees live service gaming — whether on console, PC or mobile — as arguably the most important element to its business transformation. “I think if we do this right,” Ryan said, the chance to grow its overall audience is “potentially an extremely large one.”
• Right now, Sony considers MLB The Show 21 its sole live service game. But by 2025, it expects to have 12 different live service games running. The company expects to grow its investment in live service gaming from 12% of all spending in 2019 to 55% by 2025.
• Sony also said it expects its overall gaming revenue to grow from $35 billion in FY 2020 to $41 billion by 2025, largely by expanding the “digital add-on” category, otherwise known as microtransactions. As it stands, free-to-play gaming made up 25% of all spending across nearly 120 million PS4 units sold.
• The main takeaways: Sony sees console hardware, physical disc sales and even digital game sales as declining or flagging parts of the games business. Most of the growth, the company predicts, will come from microtransactions, mobile, ports and subscriptions.
• “If we are successful in making a portion of the 12 live service games that we have under development at PlayStation Studios, if only a portion of those enjoy critical and commercial success, the impact of that will over time be completely transformation to our business structure,” Ryan said.

It was easy to accuse Sony of resting on its laurels. The company won the PS4 era handily by focusing on the traditional business model of console gaming and creating an ecosystem of exclusive powerhouses.

• But Ryan, who became CEO of the PlayStation business unit in 2019, has shown a prescient understanding of the game industry’s trajectory, enough to rival that of Xbox’s Phil Spencer.
• While Sony will continue to invest in exclusive PS5 games while it builds out its cross-platform, live service and mobile businesses, it’s also not shying away from bets that may pay off far down the line, like a revamped PS Plus subscription plan that includes a cloud gaming component.
• The PlayStation VR2 is also expected to launch some time in the next year with an initial lineup of over 20 games, Sony’s briefing confirmed. Also, its investment of nearly half a billion in Fortnite maker Epic Games also signals a strong interest in the burgeoning metaverse.
• “By expanding to PC and mobile, and, it must be said … also to live services, we have the opportunity to move from a situation of being present in a very narrow segment of the overall gaming software market to being present pretty much everywhere,” Ryan said.

— Nick Statt

Overheard

“Once the deal closes, we would absolutely support [an] employees’ organization that’s in place. We think it is a right of employees and something that can be a part of a relationship between a company and people who work at the company.” — Microsoft Gaming CEO Phil Spencer told Xbox employees at an all-hands meeting last week that it would respect Activision subsidiary Raven Software’s union election results, Kotaku reported.

“I do believe ‘Diablo Immortal’ is going to change a lot of people’s minds on what they think of as a mobile game. That was one of our goals since the beginning. Let’s elevate the standards for what people can expect from a mobile game.” — Blizzard game designer Wyatt Cheng, the game director on Diablo Immortal, told The Washington Post that the studio has high hopes for the dungeon crawler’s big debut on mobile. The game comes out Thursday.

A MESSAGE FROM SAP

For the last 50 years, SAP has worked closely with our customers to solve some of the world’s most intricate problems. We have also seen, and have been a part of, rapid accelerations in technology in response. Across industries, certain paths have emerged to help businesses manage the unexpected challenges over the last few years.

Learn more

In other news

Apex Legends’ strong mobile debut. Electronic Arts and Respawn’s mobile port of the popular battle royale shooter generated $4.8 million in its first week, giving it a stronger debut than PUBG Mobile but far behind Call of Duty Mobile’s $14.8 million launch week.

Sony’s PlayStation State of Play this week. Sony gave up on E3 long before the pandemic, but the company is still hosting a digital showcase Thursday to feature upcoming PS5 games and reveal more of the PlayStation VR2 lineup. Microsoft has a Xbox showcase set for June 12.

Gucci’s metaverse town. The fashion brand has another collaboration with proto-metaverse platform Roblox, and this time it’s a full-fledged virtual town. The persistent space will contain a virtual store for in-game goods, mini-games and a cafe.

EA’s new Star Wars game will drop cross-gen support. The publisher finally revealed its sequel to Respawn’s Star Wars Jedi: Fallen Order on Friday with a new trailer. Unlike many of EA’s releases over the past two years, it will be exclusive to newer console hardware when it launches next year.

The BBC’s plan to go digital-first includes lots of cost cutting. The British broadcaster wants to save around $630 million a year by consolidating its traditional channels and shifting efforts to iPlayer and other digital platforms.

The metaverse has a latency problem. Making the metaverse work will require retooling U.S. internet infrastructure to support lower latency and higher bandwidth requirements, according to one Meta executive.

Tesla is planning a drive-in theater. The company has filed plans to launch a restaurant that doubles as a theater in Los Angeles. But don’t expect Elon to host any Marvel movie showings: Films will only last 30 minutes, because that’s how long it takes for most people to charge their car.

The one game Sony should revive

I witnessed one of the cruelest jokes in gaming take place on Monday, when a Twitter profile pretending to be the account of lightning-fast gaming news aggregator Nibel posted a PlayStation blog post with the line, “Bloodborne remastered is coming to PS5 in August 2022 and PC in Q2 2023.” As of Tuesday evening, the tweet had amassed nearly 20,000 likes and garnered replies from some of gaming’s most popular personalities.

FromSoftware’s Bloodborne is not in fact being remastered … at least, not yet. The blog post was from 2015, and it was about Bloodborne adding post-launch dungeons. The account, though it borrowed the “Mob Psycho 100” profile pic and had a slightly altered handle, did not belong to Nibel, who has almost 400,000 followers on the platform and is regularly among the first accounts to tweet out breaking news about the game industry. “No, I do not have any Bloodborne news for you today,” the real Nibel tweeted shortly after.

Yes, it was cruel. But it was also quite savvy, so you have to respect it. Nibel is among the most trusted aggregators in Twitter’s gaming sphere, and the Bloodborne fandom has for years been desperately pleading with FromSoftware and Sony to remaster or at the very least re-release the gothic horror game on PC. (It remains a PlayStation 4 exclusive.) Whether Sony’s renewed investment in its PS Plus subscription might translate into a Bloodborne remaster is anyone’s guess. But the appetite is there.

— Nick Statt

A MESSAGE FROM SAP

When companies invest in maintaining their “green ledger” with the same commitment they have to their financial ledgers, they will be able to connect their environmental, social, and financial data holistically so they can steer their business towards sustainability. At the end of the day, what gets measured, gets managed.

Learn more