In 2021, GamesIndustry.biz spoke with former PlayStation CEO Jim Ryan about his hopes for the company’s future. And he gave the following answer:
“I’d like to see a world where the games we make on PlayStation can be enjoyed by many tens of millions of people. Maybe hundreds of millions. Right now the success with the current console model, the really great PlayStation hit… you” I’m talking about 10 or 20 million people can play this game.
“We’re talking about games that stand up to music, we’re talking about games that stand up to movies. Music and movies can be enjoyed by almost unlimited audiences. And I think some of the art that our studios are creating is the best entertainment that’s been created anywhere in the world.
There’s a problem with that vision, which Ryan acknowledges when he mentions “the current console model.” The audience for game consoles hasn’t grown in decades. Especially for the PlayStation, it never exceeded 150 meters. In a GI.biz panel held on IGN Live last week, former president of PlayStation Worldwide Studios Shawn Layden said the gaming market is “still in the total active console install base of 250 million, and that’s a challenge.”
The console game market has done a good job making more money through things like digital distribution and subscriptions. But overall, like Xbox, PlayStation and Nintendo just got the same number of players to spend more.
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PlayStation wants to popularize its games. He wants to turn his franchises into true entertainment powerhouses. But more than that, it needs to be done. His games are often at the cutting edge of what’s possible, and that takes time and costs money. Development costs have (in some cases) tripled in the last five years. And if Sony wants to keep their games top notch, they need to make them more successful.
I’m picking PlayStation because they just announced that Lego Horizon Adventures is coming to the Nintendo Switch. A PlayStation-owned IP running on a competing console is unheard of. You’d have to go back in time to 1998 and Wipeout 64 to find another one. But of course it’s not purely a PlayStation thing. Almost every company in the gaming industry is looking to push their biggest franchises into new territories to try and find new fans, and I’m not just talking about games. We’ve seen AAA Assassin’s Creed and Resident Evil on the iPhone, Mario on the big screen, Halo on the small screen, Sonic in Roblox, Final Fantasy coming to multiple consoles… they’re all in it.
The situation seems more significant for platform holders, as there is a contradiction at the core of placing their franchises on different gaming platforms. Xbox, PlayStation and
Nintendo basically has two parts to its business: platform and IP. The business platform includes everything from hardware sales, accessory sales, subscriptions and in-store sales. These companies receive a large cut of the revenue (in most cases 30 percent) for each third-party game sold on their platform, making the platform business an extremely lucrative and important part of their revenue. There’s a reason why Sony was horrified at the idea of Xbox owning Call of Duty, and it wasn’t purely because of the impact on its console sales. It made money from every game sold.
Meanwhile, we are talking about the IP business, which includes selling games, merchandise, expanding to TV and movies, and so on. The easiest way to find new players for these games is to go looking for them and not expect them to come to you. In other words, if Microsoft thinks PC gamers might like a certain console franchise, it’s better to launch it on Steam than expect them to go buy an Xbox.
But it’s a key challenge for console manufacturers. If they aggressively pursue players on other platforms by releasing their games on them, they risk weakening their business on the platform.
Looking at the platform holders, Xbox has perhaps the least to lose by going multi-platform given the relatively small size of its platform business. Its main focus was expanding the franchise to PC and mobile devices. It’s currently building a mobile game business, launching all of its first-party titles on PC the day they come out on consoles for the better part of a decade. It is also expanding its franchises through television and film.
But given the install base of PlayStation and Nintendo, there’s clearly a decent audience to reach through those consoles as well. And the company is strategically releasing select titles on PS5 and Switch.
Nintendo has shown no interest in deploying its brands to its direct competitors. And it’s in a slightly stronger position because its console platform has actually grown quite a bit from one generation to the next. Still, they’re aggressively pushing their brands beyond the Switch, initially through smartphones and now through movies and theme parks. Things like Super Mario Run and Mario Bros Movie are ways to find new fans and it works. The mobile games attracted hundreds of millions of players (although they weren’t as lucrative as expected), while the Mario movie was one of the biggest animated movies of all time, and its release even boosted Switch hardware sales.
Back to PlayStation, and the company has focused on PC as a place to release its games. It has even acquired a PC port specialist (Nixxes) to ship its franchises on Steam. However, with a much larger audience of PlayStation owners, it has more to lose than Xbox, so (outside of live service efforts like Helldivers 2) it has primarily waited one to two years before porting a PlayStation game to PC. The hope is that this way it will not only reach more players, but that it could create new fans of PlayStation games who would buy a PS5 console in the future.
“We are finding a new audience [via PC] which will potentially be of great interest to play, such as sequels on PlayStation platforms,” PlayStation CEO Hermen Hulst said in a business update last month.
Meanwhile, like Nintendo, the company is investing heavily in TV and film expansion, including last year’s The Last of Us TV and Gran Turismo movie. It is also the first step towards creating mobile games.
For many companies, mobile is the biggest opportunity. We’re seeing more and more AAA games coming to Apple’s latest phones, like Assassin’s Creed Mirage and the Resident Evil 4 remake. This platform might not seem like the ideal place to experience these games, but it’s worth reminding the console that business isn’t really global . There are many major gaming markets, including China and India, where the console install base is very small and most games – even among hardcore gamers – are played on mobile devices. The challenge, as it always is with mobile, is how this audience pays for their games. It’s a free-to-play market that doesn’t usually lend itself to premium AAA console games.
Releasing games on mobile and PC carries less risk for console manufacturers than releasing their games on other consoles. And given the relatively small size of the console business, it’s understandable that they’re focusing more on areas like smartphones. Still, depending on the game, there will be cases where releasing titles on competing platforms can make strategic sense.
“People aren’t going to turn their backs on the PS5 because of Lego’s retelling of a 2017 game coming to another platform.”
The news that Lego Horizon Adventures is coming to Switch may have come as a surprise, but it makes a lot of sense. Guerrilla is actively trying to build the Horizon brand with comics, toys, a board game, and even an upcoming TV show. Part of this strategy is the Lego game. It’s a game that targets a younger audience compared to the main Horizon series, and if you’re actively looking for younger players, what better platform than the Switch, where Lego games tend to sell extremely well?
Sony will evaluate this move and consider it largely additive. People aren’t turning their backs on the PS5 because of Lego’s retelling of a 2017 game coming to another platform. The risk is low. The Switch represents an untapped audience for Horizon that could, on the other hand, go the other way: “Like a Lego Horizon game? Why not try one of the main PlayStation games?’.
In contrast, the Xbox version of the game is not as appealing. Xbox’s audience is much smaller than Nintendo’s and not as family oriented (there are also plenty of Lego games available on Game Pass).
Xbox has been more open to publishing games on PlayStation and Nintendo, which makes sense given the size of its console business compared to others. But even that is selective and strategic with the plays it picks. Take Sea of Thieves and Grounded, which are live service games that benefit greatly from more players. Or Hi-Fi Rush, which is a game that could potentially do well in Japan, so it should really be released on platforms that Japanese gamers actually own. Or the Ori games which are in the genre – Metroidvania – which is extremely popular on Nintendo.
In the future, we should expect more games to appear in surprising places. And there’s likely to be some tension behind the scenes about what’s right for each game. Somewhat tellingly, PlayStation has appointed two CEOs this time around, one to run the platform business and the other to be in charge of games. And there’s a potential challenge in that relationship, because what’s best for God of War or Uncharted isn’t always best for PlayStation 5.
Consoles aren’t going away and neither are exclusives, not completely. But as gaming becomes more and more mainstream, with an ever-growing number of multi-billion dollar franchises, there will be a need to make these features as accessible as possible.