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Image credit: Sony
Renowned game expert Simon Carless recently conducted a thorough analysis of the trial documents from the legal dispute between Microsoft and the US Federal Trade Commission (FTC). In the investigation, Carless came across a remarkable report detailing a meeting that took place in 2022 between Jim Ryan, the CEO of PlayStation, who will retire in 2024, and high-ranking executives from Fidelity Investments, an esteemed investment corporation. This significant gathering delved into PlayStation's strategic vision and its ambitious plans to develop innovative game services.
According to the information Carless found, Sony's gaming business has ambitious plans to launch a minimum of 10 live service games by March 2026. PlayStation CEO Jim Ryan sees these live service titles as a significant untapped opportunity for the company. If executed successfully, Ryan believes there is enormous potential for Sony Interactive Entertainment (SIE) to benefit. However, Carless also emphasized that their signature single-player games will remain the cornerstone of their first-party publishing business.
To facilitate their new strategy, Sony's $3.6 billion acquisition of Bungie has been cited as a crucial move. Ryan believes that Bungie's expertise in multiplayer games will enhance PlayStation's ability to learn from past mistakes made by other companies attempting to enter the live service market. The aim is to avoid these pitfalls and capitalize on Bungie's knowledge.
Image credit: Infinity Ward, Raven Software, Beenox, Treyarch, High Moon Studios, Sledgehammer Games, Activision Shanghai, Demonware, Toys for Bob, Call of Duty
Sony is also open to exploring further mergers and acquisitions that align with their strategies. Ryan explained that an ideal target would be a company that can help deliver their goals in ways they cannot achieve independently. This emphasis on strategic partnerships and expansions reflects Sony's desire to become less reliant on third-party games and royalties. They want to increase the share of revenue generated by first-party games, aiming to double it from the current 15%.
Fidelity, in their analysis, highlighted that Sony's gaming business operating margins have typically been in the low teens (around 13-15%), compared to the 30%+ margins enjoyed by companies like Activision Blizzard, thanks to recurring revenue from successful live service hits like Call of Duty and Candy Crush. Sony's goal is to become more self-determinant by owning elements from top to bottom in its business model, thus reducing reliance on third-party games and royalties.
These strategic moves and focus on live service games demonstrate Sony's commitment to innovation and evolving with the gaming landscape. By combining the strength of their single-player titles with the potential of live service offerings, Sony aims to maintain its position as a leader in the gaming industry.
Image credit: Santa Monica Studio, God of War: Ragnarök
Carless has expressed skepticism regarding Sony's strategy. According to GameDiscoverCo, over the past year, there have been few new PlayStation games that have consistently maintained a daily active user (DAU) count above 100,000. The exceptions to this trend are notable hits like Hogwarts Legacy and God of War: Ragnarök, along with popular sports simulators like FIFA.
Carless further highlights an interesting paradox in the success of service games and notes that many of these successful titles are actually older games. Surprisingly, their enduring popularity can be attributed, in part, to their age.
Here's Simon's report and also, don't forget to join our 80 Level Talent platform and our Telegram channel, follow us on Instagram, Twitter, and LinkedIn, where we share breakdowns, the latest news, awesome artworks, and more.
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