Sony´s Live Service Bid seems poised to Fail

A little too much, a little too late.

It was February 2022 when Sony Interactive Studios, after their purchase of former Halo developer Bungie, proudly announced their big live-service push. Through collaboration with Bungie, who runs the successful live service title Destiny 2, they plan to have launched 12 live service titles by the end of fiscal year 2025. Around 1.5 years later, Sony´s live service tree has yet to bear any fruit but its leaves are already showing signs of rot. Changing consumer interest and trouble from within Sony itself paint a sombre picture of what Sony is hoping will be a big, continuous, revenue stream. 

Let´s dive into the entire situation and let me tell you exactly what is going on.

The big push

The reason for Sony´s live service push has everything to do with how the gaming market has shifted. I don't think that I have to tell you that it takes longer for games to be developed now than it did 10-15 years ago. Back then, we got new games in popular series every other year or so. Just an example: Uncharted: Drake's Fortune came out in 2007, with Among Thieves and Drake's Deception following in 2009 and 2011 respectively. Now the development of a game can easily last 5-6 years. Horizon Zero Dawn entered the scene in 2017 while its sequel, Horizon Forbidden West came 5 years later in 2022. 

The cause of this? Game development is a lot more involved than it used to be. There are a lot more moving gears with (AAA) titles these days. All those fancy graphics with near photo realism, 60fps, ray-tracing and all those 1000+ little things from all the layers you put in that can break the game if you're not careful or forward-thinking enough. 

Tears of the Kingdom was delayed by over a year not because the game was far from finished, it was as good as done, but because Nintendo wanted to polish it as much as possible. In an open-world game where you can go anywhere, anywhen and with 'creation' abilities there are so many bugs and glitches that can pop up. Nintendo took an entire year just to find and solve as many of the issues as they could so the game would launch stable. Which, to their credit, it did. 

All of this takes expensive equipment, a large workforce and time, all of which in turn balloon the budget. As revealed in the FTC document leaks, Horizon Forbidden West took over 200 million dollars and 300 developers to make in those 5 years. That is a lot. To make a game of that scale you need a lot of capital to fund the project but to also keep your head above water in between releases. 

We've seen gaming companies struggling with this and trying all kinds of things to find new revenue streams and keep up a healthy release schedule. From lots of remakes and remasters, safe and cost-effective bets, to, well, live service titles. Popularized by Fortnite, live service games are titles that see a constant stream of new content and updates to keep players invested. They are more often than not 'free to play'. You can boot the game up and play through it without any upfront costs. The game is profitable because of all the microtransactions, loot boxes and paid expansions it urges you to buy.

Live service titles, when done right, can be highly profitable. Fortnite, the golden boy of the genre, made nearly 6 billion dollars in revenue in 2021. It's why investors are so keen on them: these high-profit margins and the effect of this on the industry can be clearly seen. There are many live service-(like) games on the market today, from Apex Legends to Genshin Impact with even more in the pipeline such as Rocksteady's 'Suicide Squad: Kill the Justice League' and Square Enix's 'Foamstars'. 

Sony wants a piece of this pie. A big revenue stream that, once rolling, can be maintained, with less effort than developing a brand new title. With Sony's vault of established IPs with a baked-in fanbase increasing the chance that people will not only give it a shot but stick around and with experienced live service developer Bungie in the wheelhouse to advise and supervise, they hope that they will be able to get at least one or two successful live service games up and running that they own, not just publish like MLB the Show 2022. Preferably sooner than later, especially now that the minimal effort, maximum profit money stream from Call of Duty is going away. 

Sony's 'pitch' for their live service titles.

A dying trend

While this live service push might have seemed like a surefire idea 2-3 years ago, in late 2023, it's looking more and more like Sony made the wrong decision. 2023 is the year in which many live service games ran into trouble or even met their demise. Babylon´s Fall, Marvel´s Avengers, Knockout City, RumbleVerse, Apex Legends Mobile and more. There are even games that were canned before they were even released. Sega´s Hyenas, its most expensive game ever, was cancelled just days after its Beta test. Mass cancellations like these are not a sign of a healthy industry. 

Even Fortnite has run into trouble. Developer Epic laid off about 16% of its workforce at the end of September. In a memo by Epic CEO Tim Sweeney, he explains to his staff that “For a while now, we’ve been spending way more money than we earn, investing in the next evolution of Epic and growing Fortnite as a metaverse-inspired ecosystem for creators,”. In other words: for at the very least this year, Epic's has been putting more money into 'evolving' Fortnite and in all those guest characters and cross-promotional deals than what Fortnite has been making back. 

How have we arrived at this point? Live service games require a lot of a player's time. They are built for people to sink hours and hours of your time into them. Making it a regular schedule part of their lives and becoming invested in the game so that they would, in turn, invest in the game. Buy those skins, buy those lootboxes, buy that DLC. It's about people making countless, small transactions over a long period of time. For that to happen you need to keep people playing your games for years. 

It´s a fact, to the dismay of these live service game developers I must imagine, that there are only 24 hours in any given day. There's only so much time and money one can spend. In a highly competitive field such as the gaming industry, where new blockbuster titles that try to appeal to basically everyone, come out around every other month or so, it's hard to not just gain an audience but keep it. 

People might check out your spiffy new live service title for a few days, or weeks even, but many will move on when a new shiny game comes along or move back to the old, the familiar. Many live service games have suffered from just this. A good player base in the first few weeks that, sooner rather than later, drops off.  

Then there is the problem with attracting attention in the first place. There are so many games that it's difficult to catch enough player's attention. Even when you do have an ace up your sleeve, like The Avengers, that is still no guarantee for success. After all, Marvel's Avengers struggled through its entire 3-year life cycle before it got delisted last month.

Lastly: none of this means you've created an actual good game. What is good and what is bad is subjective, of course, but a pitfall many live-service games fall into is that they forget that they are video games. Developers built out the monetization strategy first, and the actual game second. That's not a way to make a unique, creative title. 

That many of these titles mimic 'Granddad Fortnite' in both style and gameplay and that they are 'looter-shooters' with quirky characters and bright colours doesn't help matters. The genre suffers from a serious lack of variety. 

All of this makes people less likely to try their hand at your game, even if it's free to start. They've seen, and played, this game before. Why do it again?

Trouble in the kitchen

Now, back to PlayStation. Back to those 12 live service titles. Back in 2018-2019, when saturation hadn't started yet, having your own Fortnite looked oh-so-appealing. But, because of the above, these days the risks are greater and in the eyes of many, outweigh the reward. That is why Sega cancelled Heynas even though it was as good as done. Because Sega simply didn't see a place in the current market. Didn't see a scenario in which it could succeed and turn a profit.

Sony is already facing this waning consumer interest in these types of games. When Sony gave gamers a taste of their live-service games in May's PS Showcase, it was largely received with apathy and disappointment. 

Haven Studios' Fairgame$, a competitive heist shooter, looks like a bland and by-the-numbers live service title from 5 years ago. Concord from Firewalk Studios and Bungie´s Marathon were nothing more than teasers that tell us nothing. The Last of Us Factions and the Horizon MMO, the games with the big IPs, were (and still are) missing in action. It was a poor first taste. 

All of these conditions don't just put Sony's strategy into question but also create a more immediate problem: a lack of output. Sony has said that their live-service push wouldn't affect their 'normal' output of strong single-player experiences such as God of War but I do think it's clear that it has. 

Just look at Sony's current slate of games. 2023 has been a bit of a dry year. Off the top of my head, the only big 1st party games are Horizon Forbidden West's expansion Burning Shores and Spider-Man 2. At the moment, we have not a single 1st party game past Spider-Man 2 with a concrete release date or even release window. As a result of COVID-19, according to Sony´s financial report back in August and while I don´t doubt the pandemic has affected the output, I do think that it´s not the only reason. 

Jim Ryan has invested in the 1st party studios to make them bigger and capable of taking on more than one project at a time. Even so, due to how big a time and worker investment games are these days, this 12-title live service push means that the 1st party studios aren't working on as many single-player games as they used to.

While Sony bought some studios that work on live-service titles, live Haven, most live service titles are made by classic Sony 1st party studios. Naughty Dog on the Last of Us Factions, Guerrilla on the Horizon MMO and more that we don't know about it. These studios are, reportedly, just as thrilled about the live service push as many fans are. I'd imagine that creates some issues when it comes to motivation and creativity. 

Speaking of The Last of Us Factions: that title has had a rough journey as far as we can tell. With the renown of both the original game, the HBO series and developer Naughty Dog and the already well-beloved Last of Us multiplayer as a basis it's the game with the best chance to catch on and become a success. 

Originally developed as a standard multiplayer mode for The Last of Us Part II Naughty Dog decided to spin it off into its own title. That way, they could support their vision for both The Last of Us Part II and this new, bigger, Factions multiplayer. Yet, whatever little drips of news we've gotten from the title and the studio over the last year or so have painted the picture of a troubled development.

In May of this year, Jason Schreier reported that after an internal review by Bungie, the game was sent back to the oven. Bungie, as the mentioned in-house live-service expert, did not like what they saw. They questioned the ability of the title to keep players engaged. Now, nearly 6 months later, the team has been scaled back yet again with 25 contractors being let go from the project. The part of the report that says that the game has been 'iced', oftentimes a precursor to actual cancellation, has been called into question but whatever is at the heart of the matter here: these are not good signs. It's not like these people left because the game is close to coming out. 

Sony's difficult choice

This all puts Sony in a difficult position. Sony has bet big on live-service games at a time when the popularity of these types of games is starting to wane. Many live-service games tanking, to the point that basically completed games are being cancelled before release. Where Fortnite is not turning a profit. 

Continuing this live service push now comes at a higher risk than a few years ago with the market becoming saturated. Are they going to stay the course with this live-service initiative or are they going to try and course correct? Can they even? I don't know what games they are working on exactly and how far these projects are along. I can't say if there is any sense in, perhaps, trying to rework some projects into more traditional multiplayer titles. They wouldn't have to write everything of that title's development that way. If it's possible, that is. 

Will Sony be able to make some of these games a hit and get that revenue stream they need? Or will they, perhaps under Jim Ryan's successor, course correct back to more single-player titles? Who knows but what I do now is that things are not looking peachy for Sony right now.