Friday, July 14th 2023
Sony Assigns $2 Billion R&D Budget to Games Division
Sony Corporation was in a boastful mood back in March of this year—Hiroki Totoki, the firm's executive deputy president and CFO declared that a $5+ billion (JP¥700 billion) budget had to been allocated for strategic investments across several departments in 2023. At the time it was not made clear how much of that pot would be assigned to Sony Interactive Entertainment/PlayStation, but a new report published by Nikkei Asia's Business section has revealed that the Japanese multinational conglomerate is set to open up and reach deep into its "war chest."
As its battle with Microsoft/Xbox heats up, Sony has designated a 300 billion yen (converting roughly to $2.13 billion) to research and development for its game division for the fiscal year ending in March 2024. This is reportedly 40% of its total R&D spending, which will exceed its investments in two other key interests—namely electronics and semiconductors. Nikkei notes that "earnings before interest, taxes, depreciation and amortization (EBITDA) for the company's game business was about 337 billion yen ($2.4 billion) last fiscal year, up more than 60% from five years ago." Sony anticipates that the live service gaming market will hit a high of $19 billion in 2026, so it is shifting priorities from its traditional hardware-based model to an online system where customers are expected to buy add-ons for streamed content. Its $3.7 billion buyout of Bungie in 2022 formed a central pillar for this new strategy—the MMORPG-specialist studio is reportedly serving as a consultant on several live service projects in development at other SIE-owned outfits. The main goal seems to a targeted launch of 12 live service titles by the fiscal year ending March 2026.
As its battle with Microsoft/Xbox heats up, Sony has designated a 300 billion yen (converting roughly to $2.13 billion) to research and development for its game division for the fiscal year ending in March 2024. This is reportedly 40% of its total R&D spending, which will exceed its investments in two other key interests—namely electronics and semiconductors. Nikkei notes that "earnings before interest, taxes, depreciation and amortization (EBITDA) for the company's game business was about 337 billion yen ($2.4 billion) last fiscal year, up more than 60% from five years ago." Sony anticipates that the live service gaming market will hit a high of $19 billion in 2026, so it is shifting priorities from its traditional hardware-based model to an online system where customers are expected to buy add-ons for streamed content. Its $3.7 billion buyout of Bungie in 2022 formed a central pillar for this new strategy—the MMORPG-specialist studio is reportedly serving as a consultant on several live service projects in development at other SIE-owned outfits. The main goal seems to a targeted launch of 12 live service titles by the fiscal year ending March 2026.