According to a new report, Sony is set to significantly increase its research and development (R&D) spending in the gaming sector, with a particular focus on live service games and the field of extended reality, which merges the physical and digital realms.
The company plans to invest 300 billion yen (approximately $2.13 billion) into its game segment R&D for the fiscal year ending in March 2024. This figure represents around 40% of Sony’s total R&D expenditure, surpassing its spending in electronics and semiconductors.
This move marks a substantial increase from the 271.1 billion yen spent on game R&D in the last fiscal year and more than doubles the 144.5 billion yen spent in fiscal 2020. Sony Group’s company-wide R&D spending for this fiscal year is projected to reach 760 billion yen, a 3% increase from the previous year.
The gaming sector is a significant driver of Sony’s business, with earnings before interest, taxes, depreciation, and amortization (EBITDA) for the company’s game business reaching about 337 billion yen last fiscal year, a more than 60% increase from five years ago.
Sony’s shift from a hardware-centric approach to a subscription-based business model is prompting the company to bolster its R&D efforts. Traditionally reliant on sales of its PlayStation game console, Sony is now focusing on live service games, which allow customers to purchase add-ons for titles streamed online.
The company predicts that the market for add-on style games will reach $19 billion in 2026, surpassing the market for hardware like the PlayStation for the first time.
By the fiscal year ending March 2026, Sony plans to have 12 live service game titles in its portfolio, a substantial increase from just one in fiscal 2021. The company intends to allocate 55% of PlayStation 5 game development spending to live service games in the year ending March 2024, and 60% for the year ending March 2026.
Sony is also setting its sights on the metaverse, with extended reality technologies that blend the physical and digital worlds moving closer to mainstream adoption. The company plans to pool the resources of the nine overseas game studios it has acquired or invested in over the past two years to aid extended reality development. This includes an investment in U.S.-based Epic Games, whose “Unreal Engine” is a leading computer graphics game engine in the industry.
We will continue to make strategic investments going forward, prioritizing intellectual property.”Hiroki Totoki -Sony Group President
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