Sony is planning to increase its R&D spending in the gaming sector according to Nikkei. It will be focused on Fortnite-style live service games and mixed reality experiences. The company aims to invest $2.13 billion in fiscal 2023, representing around 40 percent of its total R&D budget, which is more than double the amount spent in 2020. This move is driven by the need to stay competitive in cloud gaming and virtual reality, especially considering Microsoft’s potential acquisition of Activision Blizzard.
While Sony has been known for its story-driven blockbusters like God of War and Horizon Zero Dawn, the trend in the gaming industry is shifting towards live service games. These games are continuously updated with new content such as maps, skins, and weapons, allowing companies to generate ongoing revenue. Sony has been relatively behind in this area, having only one live service game in 2021. However, the company plans to expand its portfolio to include 12 live service games by March 2026. It intends to allocate 55 percent of its PS5 game development to live service games by March 2024, increasing to 60 percent by March 2026. The recent acquisition of Bungie is expected to support this strategy.
In contrast, Microsoft is pursuing the acquisition of Activision Blizzard, which would provide it with a strong lineup of live service games such as World of Warcraft, Call of Duty, and Destiny 2. Microsoft also holds a significant advantage in the live-streamed gaming space with Xbox Cloud Gaming, while Sony has only begun testing PS5 game streaming.
Additionally, Sony plans to invest more in the metaverse concept by expanding its development efforts in extended reality, including virtual reality (VR), augmented reality (AR), and mixed reality (MR). To achieve this, the company aims to leverage the capabilities of its nine overseas game studios, including Epic Games, known for its Unreal Engine that powers augmented reality applications. This move aligns with the upcoming release of Apple’s Vision Pro headset and Sony’s recent launch of the PSVR2 headset.
The increased investment underscores the growing importance of gaming within Sony’s overall business portfolio. The game and network services segment has become a significant revenue generator for the company, surpassing other segments such as imaging, movies, and TVs. Sony recognizes the need to adapt to the changing landscape of game development, shifting away from the traditional model and emphasizing the ownership of game development studios.