Former PlayStation executive Shawn Layden has suggested the platform holder will need to consider releasing more games on PC in future, in order to cover the huge budgets for its first-party blockbusters.
PlayStation Decade-Low Profit Margins Worry Analysts Amid Runaway Game Budgets
20.02.2024 - 00:57 / wccftech.com / Jim Ryan / Serkan Toto / Nathan Birch / Sony
Sony’s most recent earnings report wasn’t a great one for the previously-strong-seeming PlayStation brand. As we reported, Sony downgraded their fiscal year 2024 (which runs from the beginning of April 2023 to the end of March 2024) target for PS5 sales from 25 million to 21 million. They also admitted that no major AAA franchise entries will be published over the course of this coming fiscal year. Needless to say, this wasn’t received that well, partly leading to a plunge in Sony stock that subtracted an estimated $10 billion from the Japanese company’s value.
That said, a number of financial analysts are actually more concerned about another figure from Sony’s most recent earnings – it’s operating profit margin. A company’s operating margin basically measures what percentage of every dollar they spend is made back in profit, and for this past big holiday quarter, Sony’s margin was only 6 percent. By comparison, the margin was 9 percent for the same quarter a year ago, and around 12 to 13 percent prior to 2022.
Related Story PS5 Sales Fall Short of Estimates; Sony Confirms No Major Franchise Release in Next Fiscal Year
Jefferies analysist Atul Goyal found this declining operating margin particularly puzzling, as in his opinion, “various tailwinds that should have driven up the margins towards 20 percent.” These tailwinds include the increasing prevalence of digital games, which Sony reaps all the profits from without having to kick back anything to retailers, record live service spending, and revenue from the new multi-tier PlayStation Plus. Per Kantan Games analyst Serkan Toto, manufacturing costs have also come down as a result of the redesigned PS5 model released in 2023, so that’s not eating into profits.
So, what’s the issue here? The most likely culprit is ballooning game development costs – as we’ve reported, the recent Sony leaks indicated Spider-Man 2 cost over $300 million to make (three times the original game). There’s also been plenty of waste within PlayStation recently, such as the cancelation of Naughty Dog’s open-world The Last of Us multiplayer game, which was said to be the most ambitious thing they’d ever made and probably already racked up a pretty juicy price tag.
Perhaps it’s no surprise that one of the first things new Sony Interactive Entertainment’s interim CEO Hiroki Totoki had to say upon taking over for the departing Jim Ryan is that he wanted to increase profit margins, perhaps by being more aggressive with PC releases…
“In the past, we wanted to popularize console, and the 1st party titles' main purpose was to make the PlayStation console popular. It is true, but there is a synergy to it. So if you have strong first-party content, not only with our console but also other
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thegamer.com
09.03.2024 / 13:25
PlayStation-Backed Studio Shut Down Before Launching A Single Game
Deviation Games, a studio formed by former Call of Duty developers and in a partnership with PlayStation, has shut down. The company only opened in 2020 and did not release a single game, but was working on an unannounced PlayStation exclusive.
wccftech.com
08.03.2024 / 17:51
Dragon Ball Creator Akira Toriyama Dies at 68, Leaving Behind a Rich Gaming Legacy
Late last evening it was sadly announced that Dragon Ball creator Akira Toriyama had passed away. He was 68. While Toriyama stood as one of the giants of the anime and manga industry, largely due to success of Dragon Ball, as well as lesser-known series like Sand Land and Dr. Slump, his contributions to the world of video games were almost as significant and perhaps even more varied.
videogameschronicle.com
05.03.2024 / 18:13
March’s PlayStation Plus Essential games are now available to claim
Sony has released this month’s first PlayStation Plus games.
tech.hindustantimes.com
04.03.2024 / 02:08
Looks Like We're Nearing Peak PlayStation
It should have been a victorious few weeks for Sony Group Corp.'s PlayStation 5. Final Fantasy VII Rebirth, arguably the console's first must-have exclusive title, has been released to rave reviews. Microsoft Corp. has just announced it will allow games previously exclusive to its Xbox machine on rival platforms, tantamount to an admission of defeat in the console wars. And reports swirled that a successor to Nintendo Co.'s Switch is still more than a year away.
tech.hindustantimes.com
02.03.2024 / 10:44
Weekend OTT Watchlist: 6 must-watch delights - Maamla Legal Hai, Sunflower Season 2 to Shogun
Weekend OTT Watchlist: Are you planning to make your weekend a cozy affair indoors? Look no further as we bring you a curated list of the latest OTT releases across platforms like Netflix, Disney+ Hotstar, Amazon Prime Video, ZEE5, and more. Maamla Legal Hai, Sunflower Season 2 to Shogun, there's something for everyone. Grab your popcorn and get ready for a weekend of binge-watching!
gameranx.com
01.03.2024 / 09:35
Firesprite Games Alleges Sony Mismanagement And Toxic Culture In Light Of Layoffs
Firesprite Games have spoken about layoffs, revealing PlayStation has failed to protect the studio’s employees from their toxic work culture.
gematsu.com
28.02.2024 / 18:05
PlayStation Plus Monthly Games lineup for March 2024 announced
Sony Interactive Entertainment has announced the March 2024 Monthly Games lineup for PlayStation Plus Essential subscribers. All titles will be available from March 5 to April 1.
videogameschronicle.com
28.02.2024 / 17:05
Sony has announced March’s PlayStation Plus Essential games
Sony has confirmed March 2024’s PlayStation Plus Essential games.
gadgets.ndtv.com
28.02.2024 / 07:15
Sony to Cut 900 Jobs at PlayStation, Shut London Studio; Naughty Dog, Insomniac Hit With Layoffs
Japan's Sony is cutting about 900 jobs at its PlayStation unit and shutting a studio in London, it said on Tuesday as the videogame industry struggles to recover from a post-pandemic slump.
gameranx.com
27.02.2024 / 23:47
PlayStation Portal Is “Exceeding Expectations” At Sony
They say you don’t know what’ll work until you try it out, and that’s been a staple of the gaming industry for decades! Between arcades, consoles, handhelds, and everything in between, publishers and developers have tried anything and everything to get people to come to their systems and try out their stuff. It doesn’t always work, but sometimes, you get a revolution, and that can lead to big things on the horizon. Last year, Sony unveiled the PlayStation Portal feature, which would give fans a mobile way to play their PS5 games in a more mobile capacity. At first, it seemed like a “weird peripheral” to have. However, the heads of Sony have been blown away by what it’s doing.
rockpapershotgun.com
27.02.2024 / 16:41
Sony announce 900 layoffs across Naughty Dog, Guerilla, Insomniac and PlayStation studios worldwide
Another day, another videogame company jettisoning a large number of people "who have contributed to our success" so as to position themselves for growth in the face of "challenging times". Today it's Sony's turn with the axe: the PlayStation publisher have announced plans to reduce their global workforce by about 8% or 900 people, so as "to future ready ourselves to set the business up for what lies ahead", in the words of outgoing president and CEO Jim Ryan.