Sony spends record amount of money on game development

In recent years, the video game industry has experienced an unprecedented expansion, its scale dwarfing all prior epochs. The budgets of leading game publishers have grown commensurately to maintain market competitiveness. Microsoft is likely on the verge of concluding a $68.7 billion acquisition of Activision Blizzard. While Sony has not made comparable strides in acquisitions, it has intensified investment in game development.

According to Nikkei Asia, Sony intends to inject approximately 300 billion yen (roughly equivalent to $2.166 billion) into game development during the fiscal year 2024, ending in March of that year. This commitment, doubling the 144 billion yen of fiscal 2020, constitutes 40% of Sony’s total R&D budget, surpassing any other department.

Beyond increasing budgets, Sony is reshaping its capital allocation strategy. Online service games have captured a substantial portion of the budget in an effort to mitigate reliance on PlayStation console sales. 55% of PlayStation 5 game development expenditures in the fiscal year 2024 are earmarked for online service games. Sony envisages a portfolio of at least 10 online service games by the end of the fiscal year 2026 and projects that around 60% of the game R&D budget for the fiscal year 2025 will be assigned to online service games. Concurrently, Sony has curtailed investments in traditional games, suggesting a future-oriented focus on online service games.

Additionally, Sony is augmenting its content in virtual reality, mixed reality, and augmented reality. The plan is to channel more of the PlayStation studios, newly incorporated through acquisitions, towards specializing in PlayStation VR2 (PS VR2) and other extended reality content.