Sony boss Hiroki Totoki has offered what he called his “frank impressions” of the PlayStation business, suggesting its studios can do more to cut development costs.
Rising development costs and increasing development schedules are two of the hottest topics within the video game industry right now. As huge layoffs devastate developers, the triple-A business is seen as under threat, with fears of a market crash.
The release of data stolen from Sony-owned developer Insomniac late last year revealed internal concern at the growing cost of the studio’s games. According to Kotaku's report on the breach, Spider-Man 2 development costs ran $30 million over the original $270 million budget, and ultimately needed to sell 7.2 million units to break even. The latest sales figures suggest Spider-Man 2 has now veered into profitable territory, although Sony has yet to confirm that itself.
Responding to a question from an analyst during a financial call viewed by IGN, Totoki reflected on his four month-tenure as chairperson of Sony Interactive Entertainment, a role he took on following the announcement that previous SIE boss Jim Ryan was leaving the business.
“I’m trying to demonstrate leadership, and trying to have as many meetings as possible with the management team,” Totoki said. “Also visit studios. Everyone is working really hard to fulfill their responsibility, to try to optimize the business, and I understand that.
“But overall growth and sustainable profitability, or increasing margin, how will that translate to these goals? I don’t think people understand that deeply. I think that is the problem of the organization.
“So as far as I am concerned, I’m trying to understand what is happening in the company, in the industry, and also the perspective of analysts, and try to explain in a transparent manner so people can recognise and notice these issues, so we can have a harmonized approach going forward. That is a very general comment since I became the chairperson.
“There are concrete points, which I will not go into today.”
Totoki then went into more detail on what he called “room for improvement” at PlayStation studios, specifically calling out development costs and scheduling.
“Now, about visiting the studios, I’ve had meetings with leaders at the studios,” he said. “People who work in the studios are very highly motivated, they’re very good people, and they’re very creative people, they have great creative minds, and they also have knowledge about live streaming.
“However, having said that, when it comes to the business itself, I think there is room for improvement. And that has to do with, how do you use the money? Or about the schedule of development, or how to fulfill one’s accountability towards development. Those are my frank impressions.
“So I will continue to engage in dialogue with the people so we can find the right way to proceed.”
Following the release of the data stolen from Insomniac, files revealed Sony-owned studios were put under pressure to make staff cuts. As reported by Kotaku, the files contained meeting notes that claimed “there will be one studio closure” at PlayStation Studios. It is currently unclear if this claim remains valid. Sony and Insomniac are yet to comment.
Elsewhere, the files showed Insomniac was under pressure to make budget cuts, with 50-75 layoffs earmarked for the studio. Insomniac staff reportedly discussed how to “remove 50-75 people strategically”, as requested by Sony, with the best option supposedly to “cut deeply” into the Wolverine and Spider-Man 3 teams, and replacing staff with team members from the unannounced new Ratchet & Clank game and a new unannounced IP.
According to the leaked documents, Sony called on staff cuts across its first-party studios. Officially, we know of a number of layoffs at PlayStation Studios, including a wave of redundancies at Dreams developer Media Molecule, significant cuts at Destiny developer Bungie, and layoffs at The Last of Us developer Naughty Dog.
During the financial call, Totoki said Sony would try to improve PlayStation game margins by leaning further on non-PlayStation platforms, such as PC and mobile.
“In the past, as you all know, we wanted to popularize console and the first-party titles main purpose was to make the console popular,” Totoki said. “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 platforms like computers, first-party can be grown with multiplatforms, and that can help operating profit to improve. So that is another one we want to proactively work on.
“I personally think there are opportunities out there for improvement of margins, so I would like to go aggressive on improving our margin performance.”
Sony has already demonstrated a willingness to release its big first-party PlayStation exclusives on PC some time after they launch on console, although has so far resisted following in Microsoft’s footsteps by launching its games day-and-date across console and PC. However, it has released some of its multiplayer-focused games on console and PC at the same time. The recently released Helldivers 2, for example, launched on PS5 and PC via Steam on the same day, and has become Sony’s biggest game ever on Valve’s platform with over 200,000 peak concurrent players.
Sony has revised its PS5 sales forecast for the current financial year, down from its lofty target of 25 million consoles sold to 21 million. This despite a year-on-year increase in PS5 sales for the holiday 2023 quarter, from 7.1 million sold to 8.2 million. Elsewhere, Sony has said it will not release any major existing PlayStation franchise games before April 2025, ruling out big sequels in the God of War and Spider-Man franchises any time soon.
Image credit: Sony
Wesley is the UK News Editor for IGN. Find him on Twitter at @wyp100. You can reach Wesley at wesley_yinpoole@ign.com or confidentially at wyp100@proton.me.
