Gaming

Sony creates dedicated mobile games division to diversify beyond PlayStation

When the PlayStation was launched in December 1994, video games were just a curiosity for Sony, then the electronics giant, the leader in televisions and hi-fi equipment. This continued for years, even as these other activities declined. Today, games are the most profitable activity, ahead of music and film production. It still belongs to the PlayStation brand and is centered around gaming consoles, but that status quo is changing.

Focus on “live service games”

On Monday, August 29, a Japanese group announced the creation of a PlayStation division dedicated to mobile games, called the PlayStation Studios Mobile Division. It will run regardless of console activity.

Its creation is based on the acquisition of European developer Savage Game Studios presented on the same day. He is working on a “AAA mobile title” of the “live service” type, that is, which is played online and receives very regular updates so that players do not get tired of it and continue to invest in it for years. This type of game, such as Fortnite or Genshin Impact, is particularly lucrative.

Desire to diversify beyond consoles

It’s part of a broader diversification strategy, as the Japanese announced earlier this year their intention to publish 50% of their games on PC and mobile by 2025, up from just 25% at the moment.

This change is partly due to the current situation, which is particularly difficult for Sony. A shortage of electronic components has severely reduced sales of its PlayStation 5 and will continue to do so until at least 2023. High inflation has also forced the company to increase the price of the console by 50 euros in the European Union, a measure that is rare and necessarily poorly received by consumers.

Microsoft and Nintendo are less affected by the economic situation

Its two rivals in the console market are less concerned thanks to different strategic decisions: Nintendo is following a phased hardware upgrade cycle that will allow it, thanks to the Switch’s longevity, to avoid most of the scarcity pitfalls. He never sells his consoles at a loss and hasn’t lowered the price of the Switch since its release, so he’s quietly preparing his succession (a priori in 2023).

For its part, Microsoft is betting on cloud gaming and moving away from hardware in favor of a global platform available on multiple devices. In addition, it is obviously based on Windows, which most personal computers are equipped with. Microsoft has also made a number of acquisitions in recent years, and the latest one, Activision Blizzard, has a large mobile component.

Finally, from a purely pragmatic point of view, the console segment now accounts for 27% of the global video game market (estimated at $200 billion a year), while mobile games make up more than half, according to Newzoo analysts. Thus, the assumption of obligations is, first of all, an opportunity to get even more income by covering all categories of the market.

Meeting new competitors

Sony is likely to rely in part on its best-known titles for additional mobile games. The success of Call of Duty Mobile or the recent Diablo Immortal has shown the viability of this strategy. If the mobile games market is more than crowded, the Japanese group should do well, and their team of in-house studios can be brought in if necessary.

However, it will have to face new competitors who are well versed in this exercise themselves, such as China’s NetEase or Tencent. The latter has also been investing heavily in the “traditional” video game industry for several years, including in Japan.

He just bought a stake in From Software, whose game Elden Ring is very successful, on August 31 this year… with Sony. Now the Japanese own 14.1% of the studio, and the Chinese, through a subsidiary of Sixjoy, got 16.3%. Japanese publisher Kadokawa remains the majority shareholder of From Software, but note that Tencent previously invested in Kadokawa in 2021.

Julien Bergounhoux @JBergounhoux

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