Sony, the renowned technology and entertainment conglomerate, is making strategic moves to strengthen its position in the gaming industry.
With plans to invest $2.13 billion in gaming research and development (R&D) in fiscal 2023, Nikkei Asia reports that the company aims to dominate the evolving landscape of live service games and mixed reality experiences.
This significant increase in funding signifies Sony's recognition of the gaming sector's importance and its commitment to innovation.
Sony Boosting R&D for Live Service Games
Sony, known for its story-led blockbuster titles like "God of War" and "Horizon Zero Dawn," is shifting its focus to live service games offering continuous updates and revenue generation through new content.
By investing heavily in this area, Sony plans to expand its live service game portfolio from just one title in 2021 to an impressive 12 by March 2026.
This transition also involves allocating 55% of PlayStation 5 game development spending to live service games by March 2024 and further increasing it to 60% by March 2026.
The aim is to compete more effectively in cloud gaming and virtual reality (VR) landscapes, especially if Microsoft's potential acquisition of Activision Blizzard materializes.
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Sony Taking on Microsoft's Gaming Dominance
Microsoft, a key competitor in the gaming industry, holds a considerable lead in cloud-based game streaming with Xbox Cloud Gaming. Sensing the need to catch up, Sony has initiated tests for PS5 game streaming.
To reinforce its position, Sony plans to leverage its recent acquisition of Bungie, a major U.S. game studio renowned for its expertise in live games.
This strategic move will help Sony boost its live game development and bridge the gap with Microsoft's impressive game catalog, including renowned franchises like World of Warcraft, Call of Duty, and Destiny 2.
Embracing the Potential of Mixed Reality
Sony's vision extends beyond traditional gaming experiences. With the upcoming release of Apple's Vision Pro headset and its own PSVR2 headset, the company aims to invest further in the so-called metaverse and extended reality technologies.
To achieve this, Engadget reports that Sony plans to synergize the resources of its nine overseas game studios, including Epic Games, which provides the powerful Unreal Engine used in augmented reality applications.
By combining its gaming expertise and these studios' capabilities, Sony aims to deliver immersive experiences that blend the physical and digital worlds, catering to the evolving demands of tech-savvy consumers.
Sony's Game Business as a Revenue Driver
The importance of the game business in Sony's overall portfolio cannot be understated. Earnings before interest, taxes, depreciation, and amortization (EBITDA) for Sony's game business reached approximately 337 billion yen last fiscal year, a remarkable increase of over 60% compared to five years ago.
This revenue surge highlights the gaming industry's growing significance and the potential for companies like Sony to capitalize on the expanding market.
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