Sony installs a PlayStation mobile game unit in a push beyond consoles

Mobile gaming revenue accounts for more than half of the mobile gaming market. Sony is looking to diversify beyond consoles with its new dedicated PlayStation mobile gaming division.

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Sony has set up a dedicated PlayStation mobile gaming unit in a major push to diversify beyond consoles.

The Japanese gaming giant launched the mobile division of PlayStation Studios on Monday and said it will be run separately from the console business.

Sony also said on Monday that it had acquired Helsinki and Berlin-based mobile game developer Savage Game Studios.

The move comes after a difficult second quarter for Sony’s gaming division, and the company’s downgrade of its full-year earnings forecast for the business as the Covid-induced boom, during which people stuck at home playing video games, she begins to fade.

Sony also continues to face supply chain issues and is unable to meet demand for its flagship PlayStation 5 console.

Sony has dominated the console market for several years, thanks to PlayStation. But the company is now looking to diversify. This year, the Japanese gaming giant said it plans to release about 50% of games on PC and mobile devices by 2025, up from a quarter now.

“For that to happen, Sony needs to make big bets on mobile gaming,” Serkan Toto, CEO of Tokyo-based gaming industry consultancy Kantan Games, told CNBC.

And the opportunity is great. Consoles account for about 27% of the $196.8 billion gaming market, while mobile accounts for more than half of revenue, according to Newzoo.

Sony’s mobile strategy

The purchase of Savage Game Studios continues Sony’s recent acquisition drive as it seeks to drive title development across all platforms.

“PlayStation Studios must continue to expand and diversify our offering beyond consoles, bringing amazing new games to more people than ever before,” said Hermen Hulst, head of PlayStation Studios. “Acquiring the talented team at Savage Game Studios is another strategic step toward that goal.”

Sony said that Savage Game Studios is working on a “new unannounced AAA mobile live service action game”. A “triple A” game is an informal industry classification generally for a blockbuster type of title. A live service game is usually a title where the developers continually update and add content to extend its lifespan and generate revenue over a longer period of time.

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According to Daniel Ahmad, Senior Analyst at Niko Partners.

Sony’s mobile strategy is likely to lean on its huge library of intellectual property (IP), but also focus on developing games specifically for smaller devices, Kantan Games’ Toto said.

“It is very likely that Sony will not only bring existing PlayStation IPs to mobile devices, but also encourage studios to develop new franchises for smart devices from scratch,” said Toto.

Opportunities for success

Sony is the latest console maker to take a big step into mobile gaming. Microsoft’s Xbox gaming unit has also started making early moves on mobile. For the past three years, Nintendo has also focused heavily on the smaller screen game format.

Globally, Sony will compete with companies it has never competed with before, notably Chinese giants Tencent and NetEase, two of the world’s biggest mobile game players.

But Toto said Sony’s chances of success remain high.

“The mobile gaming market is saturated. There are more than 1 million games in the app stores today. But gamers like Sony, even if they are new entrants, can still make it big on firepower alone,” he said. Toto to CNBC.

“There aren’t many companies like Sony, with such a strong brand, a wide range of high-performing studios and a treasure trove of valuable IP.”

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