Talk about a backflip.
Last week, Sony killed its plans to port existing PlayStation Studio exclusive games (Ghost of Yotei, Saros) onto other platforms. This wasn’t some corporate thought bubble either; Sony purchased a studio, Nixxes Software, dedicated to creating high quality PC ports.
They were all-in on the strategy, and analysts agreed.
Epyllion’s Matthew Ball and Circana’s Mat Piscatella have both chimed in on this in the past. The logic is pretty straightforward. They’ve said that for major gaming productions totalling into the hundreds of millions to have any hope of recouping their costs, they need to get in front of as many eyeballs as possible. That means an end to the console wars, and the rise of cross-platform gaming.
This rationale is also powering Xbox’s thinking, as it continues to focus on Game Pass as opposed to its devices. Though with its new leadership still finding its footing, this position may change. Funnily enough, Ball was announced as Xbox’s new Chief Strategy Officer this week.
The fundamental fact remains: if you want your game played by as many people as possible, it needs to be as device-agnostic as possible. So what’s actually changed? Zooming out gives us a bit of an answer, and it’s not great.
Get the best of Startup Daily straight to your inbox
Want to know the latest in startup news? Subscribe to our daily news and analysis coverage on what’s happening to ANZ startups, investors and the broader ecosystem. And best of all, it’s FREE!
By continuing, you agree to our Terms & Conditions and Privacy Policy.
This decision was preceded by not one, but two PlayStation price rises in the space of a year. It now costs closer to $1000 AUD for Sony’s console, and there’s still a significant portion of PlayStation 4 owners out there who are yet to upgrade.
What makes this interesting is that Sony’s consoles have historically been a loss leader. They make their money from videogame sales and ancillary services tied to the devices. Yet, while this figure isn’t public, there is obviously a cap on how much they are willing to lose on each sale.
Each price rise coincides with an explainer of market conditions from Sony: they’ve primarily cited the rise of shipping costs and other broader inputs outside of their control.
One point they are worried about, however — which analysts have been drilling them on — is the impact of AI on their business. But not in a way that you would expect.
AI factors
In the background of all of this, the same components that are used for gaming consoles are the building blocks of data centres. And they are springing up everywhere, in response to the immense compute power required to fuel AI’s ongoing growth. During its latest investor call, dancing around the issue so as not to spook its investors, Sony has said that it has supply for this coming financial year.
After Ghost of Tsushima made it onto PC, many hoped Ghost of Yotei would follow. Source: Sucker Punch.
But as data centres pop up on every street corner, whether it will be able to say that again next year should be in doubt.
Valve has also been pretty candid here. This is one of the main reasons the Steam Machine — a device initially announced for Q1 this year — is yet to see the light of day, with no further updates on when exactly it may come out. Instead we got… a controller. It’s telling that the one item they did release does not use any memory or RAM.
The logic follows: if the cost of the console can only go up from here, you can’t really add new features, and you need to create a bargaining chip that encourages your customers to actually buy the device. The only lever you have left to pull is exclusivity.
This, however, is just one interpretation of events. Despite analyst observations, the strategy to dual release on Playstation and PC may have just underperformed. Recent data from Newzoo suggests that releasing the PC port a year after the original significantly weakened demand for the ported game.
And there is also real merit in Sony following Nintendo’s approach, given it is a gaming company that continues to defy all market realities. Its devices continue to fly off the shelf, selling over 19 million units by March 2026, despite only playing host to a handful of first-party games. Nintendo isn’t immune to the RAM shortage, but appears to be managing it better than its rivals. Though it too is increasing the cost of its devices.
There was a fun bit of irony buried in that Sony investor call. Straight after the company quickly glossed over how memory shortages affected its console business, it launched into a spill about how it’s leveraging AI to accelerate game production. What good are faster games if you have nothing to play them on?
What are your thoughts on console exclusives? Are there just too many games to even bother with them these days? Or do you own a PS5, and now feel a bit vindicated in your earlier purchase? Let me know in the comments below.
Sign up for his newsletter here.
