How PlayStation is transforming to face the future?

In the world of video games, investments and acquisitions are something we are used to… But we quickly notice that the wallet is not the same according to the manufacturers. In this context, where investment is a risk to be taken to remain competitive, Sony has decided to strengthen PlayStation’s know-how by acquiring studios, but also by strengthening its position in the entertainment industry in general. Opposite, competition from Microsoft is becoming stronger. The American giant no longer hesitates to spend tens of billions of dollars to secure not developers, but publishers with Bethesda and Activision-Blizzard. Financially, PlayStation is no match for Xbox, but as you will see, Sony has more than one trick up its sleeve.

Summary

  • All-round investments
  • Facing the challenges of tomorrow
  • Fierce competition
  • The transformation of Sony
  • Stemming the loss of trust

The following text is a transcript of the video above

All-round investments

So concretely, what has Sony bought lately? Jim Ryan, the big boss of Sony Interactive Entertainment, warned in July 2019 that content would be more important than ever in the industry. This was his guideline, his short and medium term objective. We remind you that the PlayStation segment is very important for Sony, since the turnover generated by the gaming brand represents almost 30% of what the whole company generates in the last quarterly results published. It is therefore normal to see the Japanese giant buy out development studios, because without them, it has no games, and therefore no money. Since 2019, there has been an acceleration of acquisitions at Sony. With Insomniac Games, Housemarque, Bluepoint Games, Valkyrie Entertainment, Nixxes Software, Bungie, and Haven, Jade Raymond’s studio, that’s 7 new studios acquired in just three years. Before that, the last studio acquired was Sucker Punch, the developers ofinFamous and of Ghost of Tsushima in 2011. And then, in just under two years, the Japanese giant also invested almost 1.5 billion in Epic Games, the parents of Fortnite and the creators of the ultra-popular game engine Unreal Engine. Finally, it is worth remembering that Sony bought out Crunchyroll, the juggernaut of Japanese anime, as well as EVO, the world-famous fighting game tournament. Finally, the Japanese company is accelerating the adaptation of its video game works on both the small and the big screen thanks to its Sony Pictures antennas, in order to transform its gaming licenses into cross-media licenses.

But what does all this spending mean that covers a broad spectrum and targets entertainment in the broadest sense?


Facing the challenges of tomorrow

The answer is simple. Sony places its balls while waiting for tomorrow’s confrontations. And these confrontations, they will be numerous, in addition to being intense. It is important to remember that currently the mega-groups, which we call GAFAM, have only one word in their mouths: the Metaverse, namely a large virtual world where all the services of all the brands on the planet will have a storefront. And the street here is virtual, of course… To go in this direction, we remember that at the beginning of 2022, Sony signed an astonishing partnership with the famous Manchester City club. The goal? Create an online space where fans can interact with the team within a “metaverse” representing the Etihad football stadium. Sony is therefore attacking different strata of the entertainment world while consolidating its grip on video games, which is rather logical for a group that has a “music” segment and a “pictures” segment dedicated to films and series. Maybe he sees in Fortnite the Metaverse of tomorrow already available today? Maybe… And it is therefore wise for Sony to invest a few balls in it. You should also remember that a few years ago, Sony relied on new media to sell its consoles: CDs with the PS1, DVDs with the PS2 or even Blu-Ray with the PS3.

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But in a world where the dematerialized is becoming more and more important, you have to know how to question yourself and go where the trend is. And the latter is clearly on the services. More specifically, she is subscription catalog services, such as GamePass, inspired by the boom of Netflix, Deezer, Spotify and company. This explains in particular why Sony has reviewed and corrected its PlayStation Plus offer recently. The other trend is service games, those titles that receive regular updates in order to keep players as long as possible, and monetize their playing time. This is Bungie’s specialty. which, as you know, was bought out by Sony for its expertise in the field. As for the acquisition of Nixxes Software, the box specializing in PC ports, this is proof that, like Microsoft, the Japanese giant does not intend to drop computers. Of course, PCs are integrated into many more homes than game consoles.

How PlayStation is transforming to face the future?

The game service, the catalog services, the importance of the PC in the equation… finally, isn’t Microsoft trapping Sony by bringing it to its favorite terrain?


Fierce competition

It’s hard to say with confidence that Sony is stepping up a gear on the investment side in response to what Microsoft is doing. Nevertheless, it is necessarily interesting to note that the company’s buying fever began the year following the announcement of the acquisition of four studios from Xbox: Ninja Theory, Playground Games, Undead Labs, Compulsion Games, not to mention the foundation of a new studio, The Initiative, by Microsoft. The Redmond firm displayed a more offensive face at the end of the Xbox One’s life, creating an Xbox One X more powerful than the PlayStation 4 Pro, and making the Gamepass offer more than attractive. And then, how not to mention the last two acquisitions of the company headed by Satya Nadella? In September 2020, the day before making Xbox Series pre-orders official, Microsoft announced the acquisition of Bethesda, the publisher to whom we owe the Elder Scrolls and Doom, two licenses that work very well in the United States and in Europe. Then in January 2022, it was with surprise that we learned of the planned acquisition of Activision-Blizzard, the group behind Call of Duty, World of Warcraft or Crash Bandicoot.

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This time, the American company seems to take video games really seriously, which is not necessarily good news for its competitors. Since then, as an immediate consequence, it is not uncommon to see in the United States or England that the Xbox Series are selling better than the PlayStation 5, consoles which however are all experiencing supply problems, remember, except perhaps the Series S. This observation of sales, it tends to prove that Microsoft’s strategy was the right one. Recently, a YouGov survey showed that one in two PlayStation players would be willing to subscribe to Game Pass if Activision games made it into the catalog. In this war of attrition, Microsoft now has all the weapons. It has the infrastructure, the services, the hardware and the studios. After an excellent year 2021 where the American won the publisher of the year award from Metacritic, there is a little smell of revenge for the Redmond firm.

How PlayStation is transforming to face the future?

Competition is therefore fierce in the world of video games, and Sony must face an adversary that is much more reactive than during the early life of the Xbox One. The objective for the creator of the PlayStation is therefore clear: to transform without leaving fans on the sidelines.


The transformation of Sony

Since the proposed takeover of Activision-Blizzard by Microsoft, what is pointed out by analysts is obviously the question of exclusivity for all these licenses, but above all Sony’s immobility in the face of what is going on. . Sony for a long time ignored the Game Pass until recently proposing the redesign of the PlayStation Plus… without integrating a formula including first party titles in day one. While Microsoft was trying to reach as many people as possible on PCs, mobiles and Xbox consoles, the Japanese firm decided to increase the prices of its first-party productions. The message could be read as follows: play on PlayStation, it is earned. Except that analysts now believe that the leader must follow the path opened by Phil Spencer. I quote, “Investors fear that Sony won’t be able to continue to win if the industry moves away from the hardware-based model,” said Kazunori Ito of Morningstar Research. Sony’s mission is therefore to continue to make incredible single-player games, its trademark, but also to definitely catch up on service games too long set aside by the Japanese group. The takeover of Haven goes in that direction, as the studio said it is working on a “systemic, scalable AAA that will entertain and engage gamers for years to come.” And if the battle definitely evolves towards streaming services allowing titles to be played on smartphones and other connected televisions, Sony will have to prove that it is capable of overcoming the technological and political challenges linked to this evolution.

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To think that these developments are only a detail would be to misunderstand market expectations. Because on the side of investors, we realize that Sony is perhaps not the so-called unbeatable colossus. Some even believe that the Japanese group could experience the crisis.

How PlayStation is transforming to face the future?

Stemming the loss of trust

As Microsoft has said in the past, its competitors are no longer Sony or Nintendo, but Google and Amazon. And by dint of being repeated, this message has been heard by investors. Financially speaking, the Redmond firm is in Olympic form. On the Sony side, the action has simply failed to regain the level it had before the announcement of the proposed acquisition of Activision-Blizzard by Microsoft. We must all the same temper our statements by admitting that the financial markets are particularly agitated at the moment. This future of video games that Microsoft is preparing inevitably pushes the opposing forces to reassess the directions that can be taken to fight. And one of them is the takeover of publishers. So, can Jim Ryan and his teams buy a Square-Enix, a Capcom or even a Konami?

Theoretically, Sony has the option of going into debt in an attempt to own a Japanese publisher. Nevertheless, Paul Tassi, journalist at Forbes, explained that PlayStation simply could not replicate. “Microsoft is building something absolutely huge” he said before adding “at some point it looks like Sony could be eclipsed if it doesn’t find a way to move in the same direction ”. ”’A lead taken by Microsoft deemed “insurmountable” by the talkative Michael Pachter, an analyst well known to video game enthusiasts. He went so far as to announce the death of the PlayStation brand in the next 10 years following the strategy put in place by Phil Spencer. A statement that generated more passionate than exciting debates, you can imagine. On our side, we are a little more optimistic, and we think that Sony has many cards in hand to continue to offer content that will encourage players to buy their consoles to enjoy it.

How PlayStation is transforming to face the future?

In this equation, the EVO, Crunchyroll, Sony Pictures or even Sony Music cards have not yet been played by PlayStation. The battle is therefore far from over.

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