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Why Downsizing Makes Sense for Sony

Last gen (7th), the ps3 started off poorly to say the least. With waning developer support and consumer interest, Sony had to work really hard to court consumers. Also, with an expensive console and Nintendo ruling the casual and family markets, it meant that games aimed at that audience were no longer feasible.

Against that backdrop, Sony began expanding its first party offerings in the direction of the "hardcore" market who would be willing to shell out $600, which saw studios not only expand but change direction. This saw the decline of certain genres on the system, mostly platformers, and a rash of games targeted at a more adult demographic(shooters and racing).

The expansions of these studios were also fueled by the hardware it self. Sony's Cell technology, while impressive, was very difficult to use and optimize and along with the demands of HD gaming, saw many studios take on personnel quickly in an effort to cope.

The outcome of these efforts were individually mixed, but the overall effort meant that sony eventually found their way in the 7th gen, and are now poised to have the PS3 overtake the Wii in 2-3 years time. Bear in mind that the PS3 is yet to be officially priced below that of the Wii Launch price.

However, this gen (8th) has seen Sony bolt out the gate ahead of Microsoft and the WiiU seems momentum-less for the short term at least. The result is two-fold. For one thing, they may no longer need as many first party games. They have retained third party support in general and thanks to a more developer friendly attitude and hardware, they have seen record support from PC game makers. Many first party games have performed poorly and sending these out into an even more crowded release calendar will not do them any favors. It's also worth noting that many of the franchises launched on the PS3 are either seeing or on the verge of seeing franchise fatigue. Games such as Resistance are a big risk given the progressive decline in sales.

The second consequence is a change in the types of games needed. First party shooters and racing games may not be as crucial this time around. What is needed are the games like Puppeteer and Tearaway that are aimed at the family market that has not as yet returned to Nintendo. The time to court these people is now, and we may have already seen early efforts in the form of Knack which seems designed to play with a younger child controlling a stronger second character.

This could explain the project cancellations and downsizing that has been occurring recently at Sony studios. They quite frankly don't need as many games as before and they definitely don't need the same types as previously.

This is not the first time that we've seen something like this and it certainly won't be the last. Think back to Microsoft at the beginning of the last gen as well. Microsoft came out the gate strong with many First Party studios and platforming games such as Kameo from Rare studios. However, as they found their audience and stronger third party support, they too changed directions. No more platformers came and fewer first party studios were retained. This gen, with a good but comparatively slower start, they once again have begun to bolster their first party stable.

The point of all this is that First party efforts are fluid and need to be diverted to flow in the direction that the company finds itself going at the time. While many fans welcome the sight of the PS4 tearing away from the pack, the success means changes and those may not always occur in your favor.

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Christopher1336d ago

Sony's stock is decreasing weekly and they are losing money due to their other areas in the market.

This affects the Playstation brand.

I'm not sure they are decreasing numbers because they want to, but because they can't afford to do otherwise. I believe they have to focus on the key IPs that they believe have the most potential and cut their losses at this time with other IPs.

In regards to the SSM IP, that one was too similar to Destiny initially and never recovered from the reveal of Destiny and their attempts to change the IP to be different. That's just how things go in this day and age when developing a game. Sometimes someone beats you to the punch.

KingKevo1336d ago

Well, your conclusion is that MS did that last gen because of the 360's popularity and the strong 3rd party support and Sony is doing it this time.

I don't see it that way. The reason why the PS3 ended up so strong was imho just because of the continuous support for 1st party games. When MS sat back and tried to safe money and made deals with companies like Activision (because MS didn't really care and has the money to even make a loss on that) Sony knew it could not do that. And to me PlayStation, way more than Xbox, is about the games. Sure they want to make money and it's a business, but Sony has always been that way and releasing that many great games proved that and also made their console win or tie with the 360 (I don't want to argue who won last gen here).

So why would Sony change that? They were a arrogant before and some time after the PS3 launched, they said that, wanted to be the boss of their own platform and show 3rd party that it's them who make better games on a hardware that is really strong. They have learned from that mistake and now work closely with 3rd party and indies. But they also learned how important 1st party games and original IP are and they sure won't make the mistake MS did. Imho this has all to do with Sony setting a new focus in business, which is normal. Since the PS3 launch and since those studios were extended some time has passed. The industry changes, the demands change, the world changes, from social media to new ways to play, new experiences people want, new competitors, it's all new and Sony has to update its internal structure to be able to compete with that, to maintain theri position. Sony is as we know investing heavily in future tech like cloud gaming,social gaming, VR and probably a lot more according to things we know from their press conferences (not just PS but Sony in gerneral.)

Also, Sony Corp has had a hard time, financial problems and all that and pretty much the entire Corp was and is still in the process of changing drastically to work more efficient, focused and consumer but also profit oriented. They had many layoffs and made many interesting, sometimes surprising business decision, all with the focus of staying relevant, making profit and even staying alive. And these changes do affect every part of Sony, some merge, some even hire, but in others people are getting fired. That's how it works and I admire Sony for their will to drastically change in a drastically changing world.

It does always sound bitter and sad if devs get fired and projects get canceled, but it's always been that way, just in the time we are now, we know more about it and these things happen easier, simply because gaming got bigger and the cost get higher and the risk for certain projects are just getting too high. I prefer Sony to make these hard decisions instead of PS or Sony getting into serious trouble a few years down the line where everyone would then come and say: "I saw it coming. Why didn't they; and why didn't they change?"

rambi801336d ago (Edited 1336d ago )

Fair enough points but one thing to note is that a lot of 1st party games have not sold well. Its a fact. And if given to opportunity to not lose money, i would take it.

They are not going to close all their studios, but with an influx of games from devs that are new to the console platform as well as a strong hardware start, they simply may not need to take as many risks as they did last gen.

they may have done well last gen in terms of hardware sales, but did they make much money?

iceman061336d ago

Nice blog. I think that the other thing that is missing from this analysis is the fact that the "time to triangle" has been reduced. Supposedly, it takes less time and effort to get PS4 games optimized and up to snuff. This means that the dev teams of the PS3 era were probably a bit large for what is needed currently.
I agree with the premise that this is a necessary evil. It will lower the overhead of the company, and individual studios, and hopefully lead to better profit. However, I don't think it is as much about risk as it is about making themselves as efficient as possible so that they can continue to be the company that their consumers expect them to be.

Aclay1336d ago (Edited 1336d ago )

I've felt the same way about the downsizing making sense for Sony, but for different reasons. With Sony's recent financial woes I just don't think Sony can afford a big 1st party right now.

It costs a lot of money to maintain all those studios at the same time. To be honest a lot of times I've wondered how Sony afforded to have the amount of 1st party studios they did for so long, because despite all the exclusives only a select number of them sold really well.

It might be better for Sony to downsize in the long run, because maybe then they can focus on giving more games the advertising they deserve. Having all those studios may be great and all, but when you're trying to support so many titles it's easy for some of them to get lost in the shuffle and not get the the proper Ad dollars and exposure towards them.

A lot of the layoffs in the gaming division have come off the heels of the recent news of Sony closing numerous Retail Store's and shuttering their PC business, and it definitely seems like a big reason for the layoffs are a result of those other deficiencies in the company.

joeorc1335d ago

while what you stated is very sound, Its not the big chunk of the loss, as a matter of fact the Playstation section is a LLC, its not for Public IPO, so its runs really outside the rest of Sony. Its already by default "spun off" you just cannot buy Stock because Sony owns all of its playstation stock So no Public IPO offering. example: just recently Sony expects to loose 1.1 billion for the year's results but look at this

Expects $1.1 bln net loss this year, core operations weak

* Plans separate unit for TV business, sells PCs division

* 5,000 job cuts to help lower costs by nearly $1 bln/year

TOKYO, Feb 6 (Reuters) - Sony Corp Chief Executive Offer Kazuo Hirai is seeking to cure a TV business that has lost $7.8 billion over a decade by isolating it to speed up decisions on future strategy.

By doing this Sony is saving about 1 billion a year!

But also, they are cutting off those parts that are netting such huge Loss for them, So taking the Hit now, but Offset those Loss reductions to Later for Good, I think Kaz and the Board will take that, to stop such huge Loss. I mean in 10 years accumulated time Sony's TV section lost over 8 Billion!

But yet, that also shows How Japan differ's than the west in How the Exchange of Stock market differ's than the west,many such billionaires from the west get or have been frustrated in the fact they cannot get anywhere in changing japans culture against Hostile Take over's.

Its the Bitter Pill vs the Perception of West Hedge fund's as "Vultures" and corporate raiding that the west does vs in Japan its viewed with Disdain.
Thats why Sony's board and Kaz voted
"Sony's board of directors has unanimously concluded that continuing to own 100 percent of our entertainment business is the best path forward and is integral to Sony's strategy," Sony CEO Kazuo Hirai said in a letter to Loeb, which was released by the company.
Think about that Sony in about 10 years time and they lost over 8 billion from the TV section and the Loss from the Playstation 3 and PC, and yet they still Told Loeb NO!

Majin-vegeta1335d ago

Man I hope this works out for the best and in the future they can start getting more people. Cuz if Sony goes under.I quit gaming.

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