One of the reasons why Jim Ryan he left command of SIE is because he focused too much on the live service? Let’s try to understand why this isn’t the case and why he couldn’t have taken any other path PlayStationgiven the current market configuration.
In the book Control Freak: My Epic Adventure Making Video Games, Cliff Blezinsky recounts that: “Tim (Sweeney) explained that the original Gears (of War) cost $12 million and produced revenues estimated at ten times its production cost. He estimated that Gears 3 would have cost $40-50 million, without generate the same return on investment. Business is changing, he said, and will continue to evolve.” Blezinsky uses this example to explain why Epic Games decided to abandon the traditional games market, starting to follow other paths, those that will lead it to Fortnite (development of which began at the end of Gears of War 3). Sweeney himself explained in an interview that Gears of War 3 had produced the same revenue as the first, despite having cost much more.
Always the same audience
The underlying problem is that the audience of traditional video games it does not increase, at least not in a way that compensates for the enormous increase in development costs. He didn’t do it then and he’s not doing it today. PS2 sold 158.7 million units, PS5 is at around 40 million units sold (latest official data dating back to July 2023) in its third year of life. Meanwhile the production cost of Triple-A games has grown tremendously. The average break-even points of the PS2 era were calculated at 250,000 copies, with obviously more expensive titles needing to sell more. Triple-A games like Horizon Forbidden West, The Last of Us 2 and Starfield, to name three whose production costs are known, required more than $200 million to make, much more than the revenues produced by the first Gears of War , which was a huge hit for Microsoft and Xbox 360 at the time.
In the meantime, gamers have become more pretentious and, unfortunately also thanks to the press and various influencers, they tend not to understand how even prestigious development houses such as Naughty Dog or Bethesda have to make choices in the development phase and have to fight with the budget available. So here someone criticized The Last of Us 2 for not being open world, or here others criticized Starfield for some less than exceptional animations, where the budgets in both titles were evidently spent on something else, considering that we are talking about two games that are enormous in their own way.
Faced with a fundamentally stagnant market like the one outlined, a reality like PlayStation it cannot simply ignore reality and must try to assert itself also within the context of live service, if it wants to maintain its revenues at certain levels. Big single player games always yield smaller margins, even when they seem like huge successes, and you can’t imagine that every game has to sell more than 10 million copies to be justified. We live in a strange time in which we are forced to ask ourselves whether Final Fantasy XVI is a success or not, despite having sold more than three million copies.
This explains the acquisitions made by Sony in recent years, Bungie above all, and this explains Ryan’s strategy, which however knows the situation well and could not present itself to the shareholders with unchanged strategies compared to those of the PS4 era. His goal was to launch video games that produced revenues beyond the hardware. This is how operations like Babylon’s Fall or the State of Play are justified in which most of the first parties present were live services. Are twelve games as services doomed to failure? Probable, but nevertheless a business like PlayStation can no longer be set up only on single player games that cost from 200 million dollars upwards, otherwise it would risk collapsing at the slightest shock.
Paradoxically Microsoft from this point of view he has much more room for manoeuvre, because Game Pass allows him to launch games with different budgets, even single player games, where the objective is not to sell copies but to build and maintain subscribers, always provided that growth remains constant and the results do not become so negative that everything blows up. The business is designed in such a way that development costs are spread across all subscribers and what counts are very different metrics from those used to judge the successes or otherwise of the traditional market. Of course, even the Redmond company cannot ignore the live service market, as demonstrated by the acquisition of Activision Blizzard King, essentially aimed at strengthening itself in the mobile sector. After all, Candy Crush Saga has produced 20 billion dollars in revenues and can afford to look down on Master Chief, Kratos, Ellie, Joel and any other series it wants.
So those who expect the new CEO of Sony, the one who will take over from Ryan in 2024, to return to focus more on single player games can rest easy, because it is unlikely to happen, unless a way is found to drastically reduce development costs, bringing them back to more sustainable levels, so as to justify a return on investments.
This is an editorial written by a member of the editorial team and is not necessarily representative of the editorial line of Multiplayer.it.
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