SIE President Jim Ryan's Q&A with Investors from Fidelity is now Live

[Gamernyc78]

https://www.reddit.com/r/PS5/new/

SIE President Jim Ryan's Q&A with Investors from Fidelity is now Live​

Discussion
Couple things to point out, this interview was conducted in 2022 and some of the questions were previously redacted. He touches on how SIE looks at potential M&A targets, PSVR 2, Bungie, their 1st-party portfolio, and touches on Xbox and the Gamepass / subscription model.
His comments on SIE's 1st-party portfolio going forward was very reassuring IMO. I think a large contingent of you will find it as well.
Q: You mentioned that you'll be launching 10 new games, and your goal is to double your first party revenue stream within four years. So, out of these 10 games, how much will come from your existing titles?
JR: It's a mixture. I'm not going to go beyond anything that's already been announced, but it would be fair to say that when you look at our IP portfolio and when you think about the biggest names in there, having those games break out from the constraints of the console model is a very significant prospect for us. You can assume that a significant portion of our existing AAA IP will find its way into a live service game. We have partnerships under development with people who we've already worked with and with some new partners, who will bring new IP to PlayStation and there's even one or two things that are completely new that are coming from the ground up. But I think it's the first category that really excites us because those games leverage something that we already know resonates massively with the gaming community. It's an untapped opportunity for us. And if we do it right, the potential upside for SIE will be enormous.
Q: In order to double your first party game revenue, how many of the 10 new games need to be big hits?
JR: It would be naïve for us to assume that all 10 will be massive successes so that is not a necessary condition for us to double first party revenues. That is certainly not what we're assuming. Clearly, the distinction between a hit and not a hit is not a binary one. And don't forget that as we do this, we will continue to publish the games that have served us so well over the years. These first person, graphically beautiful narrative rich games will continue to be the bedrock of our first party publishing business.
(I'm assuming by first person he means single player)
Q: What would be the ideal mix for your first party games going forward? How much will be live games vs traditional first person narrative-driven games?
JR: We will continue to make first person games like we always have, and we expect those to have slightly greater sales and profitability, reflecting our confidence in the long-term installed base of PS5, as well as the fact that those games will make their way to PC. So, we think that the pie from those games will grow, but that growth will be incremental in nature. We think the live service games will build on that foundation and take us to another level.

Q: Bungie has 1,000 employees and 20-30 years of history making games. You're counting on a big contribution from them to help you with these 10 games and help you to allocate capital effectively as well as avoid making mistakes. Is that the strategy?
JR: Yes, it is. I've been talking a lot over the past couple of years with our publishing partners, many of whom are slightly farther down the road than we are in terms of live service publishing. What they all have in common is that they've made a lot of mistakes on that road. And I think one of the benefits of being a fast follower in this space is that if we're intelligent and thoughtful, we can learn from those mistakes. But these partners can be viewed as our competitors and there's a limit to what they will share. Having a premier live service publisher within the group who is extremely keen to collaborate with Sony massively increases our ability to learn and our ability to avoid the mistakes that others have made.

Q: You've made it very clear that there's going to be more acquisitions to come. What is an ideal acquisition target and what are you hoping it will help you achieve?
JR: I think an ideal acquisition target has to help us deliver on our strategies in a way that we're not capable of doing on our own. And when I look at our portfolio of studios and our publishing capabilities, we need help in the areas in which we're not strong at present. We aspire to grow our community, grow engagement with our games, grow the number of people who are playing those games, grow the amount of time people are spending on those games, move across to PC and mobile, and grow the number of people playing with each other. It's in these spaces, where we don't have expertise and presence, we need to build expertise. These are some of the reasons behind the acquisition of Bungie. We have publicly stated ambitions in the area of mobile. That's part of game development that we've not been present in any meaningful extent. So, you can assume that we have an interest in acquiring development knowledge and management expertise there.
Q: Did you look at Activision as a target? Was it too big to buy?
JR: We know Activision extremely well. They are probably one of our principal partners. In terms of deployment of Sony's capital, when you look at 69 billion dollars for Activision compared to 3.6 billion dollars for Bungie, we believe that Bungie can give us way more than a 69 billion acquisition of Activision. And that's before considering the relative value of that particular transaction.

Q: The Game Pass business model appears to have some challenges, and Microsoft appears to be losing a lot of money on it. Because the AAA publishers spend $100 mil or more on developing titles, they are happy to sell it for $70 on PS5. The subscription model is more challenging for them. Given that environment, will Microsoft need to provide minimum revenue guarantees if they want those titles on Game Pass? Or do they need to go out and buy more assets like Activision to put on their platform? Are those the two options for Microsoft when trying to gain critical mass and support from the AAA publishers for Game Pass?
JR: I can say with a very high degree of certainty that Microsoft has tried the first path and it did not work at all. That has driven them to make the large acquisition. I've talked to all the publishers, and they unanimously do not like Game Pass because it is value destructive, not only on an individual title-basis, but also on an industry level. The recent number of subscribers that Microsoft announced on January was 25 million. I am sure everyone has their own views on this, but I personally was expecting a larger number given all the money they have spent. We have close to 50 mil PS Plus subscribers. We believe we have a meaningful subscription service.
Q: What is Sony's metaverse strategy? How big of a role will VR2 play there? Is it for gaming only, or will it be for something broader in terms of applications and markets?
JR: We're approaching metaverse conversations through 2 lenses. First is as a platform holder. We had something called PlayStation Home for the PS3 and that was a very early manifestation of a platform metaverse. It was probably 10- 15 years ahead of its time. The second is from the studio perspective. We have a couple of projects underway that are very exciting for us, in terms of creating some sort of game-type metaverse which can possibly have collaboration with other parts of Sony. Sony's entertainment assets have huge potential in the metaverse area. As for VR2, we see it as having a role down the road, more in the mid-term.
Q: Netflix upended the industry in TV and movie content. They want to give free content at no extra charge. I am curious how you think about Netflix's emerging presence in the gaming space. Is Netflix something you have to think about as a potential competitor?
JR: Just given the nature of Netflix, it is important to watch them carefully. Some of what they're doing, such as leveraging their IP portfolio with game-type applications is quite smart. | contrast that with what the other huge tech companies tried to do and failed. Building a gaming platform is very difficult, but, I think in the long-term, what they're doing is interesting. We need to be careful with them. The business of making games is an extremely expensive one, and at some point, if they're serious about it, and if they aspire to accumulate critical mass, I think that they will have to change their business model. The current model will be challenging.

 

[Johnic]

So basically, acquisitions wise, they don't care about IPs, they need partners in areas they can't "compete" in. Mobile and GaaS. So expect them to not bother securing IPs and instead focus on shitty GaaS and mobile studios.

 

[JAHGamer]

So basically, acquisitions wise, they don't care about IPs, they need partners in areas they can't "compete" in. Mobile and GaaS. So expect them to not bother securing IPs and instead focus on shitty GaaS and mobile studios.

What if Bungie still sees them as competition and is purposely sabotaging SIE 1st party games

I'm kidding but I think Sony is giving them way too much power for a studio they just acquired and is technically still "independent".

 

[anonpuffs]

So basically, acquisitions wise, they don't care about IPs, they need partners in areas they can't "compete" in. Mobile and GaaS. So expect them to not bother securing IPs and instead focus on shitty GaaS and mobile studios.

from a business perspective it kind of makes sense. No one in the industry other than rockstar can make Sony 1st party level of games, and they won't for the foreseeable future due to how much risk is involved (and due to Microsoft being utterly incompetent). So they'd rather spend their resources acquiring new revenue streams than keep investing into something that will provide diminishing returns (gaining greater market share in the console space)

 

[AshHunter216]

Somewhat older interview, so we'll see how things go.

 

[ChorizoPicozo]

Q: Where is the real showcase, Jimbo?

 

[Deleted member 223]

"I'm not going to go beyond anything that's already been announced, but it would be fair to say that when you look at our IP portfolio and when you think about the biggest names in there, having those games break out from the constraints of the console model is a very significant prospect for us."

Growth for the sake of growth. Doubling down. I don't even think hardware sales taking a hit in a hypothetically more competitive future will make this administration rectify policy. Naturally you should not expect any administration invested heavily in a particular vision to rectify before failure - it must fail first and significantly before even considering a review. Even in a catastrophic failure scenario, people don't own up to their mistakes, majority just double down and point to something else as the root cause - hence why they get ultimately fired. Since this policy is one that is a slow poisonous death, it's even worse to address. No leadership, after shitting the bed, will admit that they have embarked on a foolish policy over several years in which hundreds of millions if not billions of dollars in resources were misused. Admitting to so debases their right to the job and reads like a resignation letter.

Hardware devaluation is one of those things that once you embark upon, it never goes back to being the same. It's ideological for these folks in their drive to make a buck. Bad hardware sales performance will always be blamed on anything but these policies if the issue ever comes to that. No one's going to say: "Well, the differentiation of the brand and hardware is weakened and damaged because you've released your key differentiating software on direct competitor's hardware over the course of several years, perhaps even a decade + (by that point) thus diminishing the need for owning your hardware. In the process you made competing hardware more appealing. The damage has been extensive and done over several years and there is little that can be done to rectify the brand damage. This is why you're selling less hardware, which equals to less consumers and less everything.....cause you engaged in the foolish practice of trading more profitable consumers, for less profitable consumers. By the end you finish with less of both, because one feeds the other in a greater and disproportionate manner."

Predictably sad. The counter being: "but that strategy was making money so well before"..... Yes, it rested on several assumptions of the state of the competition in the market and didn't account for these long term brand effects - they were ignored and not taken seriously. "But if we revert back, this money will be gone, so that is not the reason why hardware is underperfoming - it must be this other reason, or that reason...look over there".

Only someone reviewing the PlayStation business with a sound understanding of the competitive equation of this market can confront these fools in earnest, and ignore their babble. Will those persons be in a position of power within Sony to rectify course when the eventual hardware sales decline starts to manifest itself? If they're not there today what makes you think they'll be there say 10 years from now? Bottomline, all platforms worth a damn are tied to hardware, period.

Enough room and space is being created for a Steam console, provided MS crashes and burns with their cloud console. I think Valve is waiting for this opportunity, to be comfortable enough, with safe room to grow, as opposed to butting heads with both MS and Sony at the same time. The opening is also widening for Nintendo to get back to the high-end, if they so chose. Sony and MS are too preoccupied trying to put their dick in every hole imaginable, STD's abound. The Xbox brand is a perfect case study of a hardware downward spiral because its differentiation was weak, and the few strengths it had were devalued by MS themselves. Debasing a console's differentiation strengths will ultimately net you the result of there being less demand for your hardware than competitors hardware - it's not a fast process but a slow process, specially for established players, but it's unmistakably fact.

When a console maker is more preoccupied in putting their key differentiated software in other competing platforms as opposed to growing their hardware market in developing nations and elsewhere as well as eating away at direct competitors hardware (consoles and PC)... well, that doesn't bode well for the long term future of the platform and brand which ultimately rests on the pillars of its hardware. For the time being, divesting from PlayStation is not an option, but once the tea leaves become clearer, specially if a competitor rises to the plate and exploits the weaknesses being created, divesting is a must. It's the Xbox brand downward spiral all over again, except Sony's ship is much bigger, and much harder to self sabotage and sink, thus infinitely much slower. Sony is also more conservative in their idiocy, as opposed to MS that never believed in the console hardware market and is in the space to disrupt the market and create a monopoly for itself. MS will never be an Apple, who understands the need for hardware. It's clearly a corporate culture thing. Contradictions aplenty with their console and Windows tablet business.... market reality necessities. Can't sell Windows to the void. "I'm a software company" (that depends on hardware).

 

[Darth Vader]

having those games break out from the constraints of the console model is a very significant prospect for us. You can assume that a significant portion of our existing AAA IP will find its way into a live service game.

Oops

And don't forget that as we do this, we will continue to publish the games that have served us so well over the years. These first person, graphically beautiful narrative rich games will continue to be the bedrock of our first party publishing business.

Sure, Jan. Show them.

Q: What would be the ideal mix for your first party games going forward? How much will be live games vs traditional first person narrative-driven games?
JR: We will continue to make first person games like we always have, and we expect those to have slightly greater sales and profitability, reflecting our confidence in the long-term installed base of PS5, as well as the fact that those games will make their way to PC. So, we think that the pie from those games will grow, but that growth will be incremental in nature. We think the live service games will build on that foundation and take us to another level.

Big oooof here.

 

[AshHunter216]

Also, I think he meant to say single player, not first person.

 

[Bryank75]

This guy is the biggest buffoon to ever run PlayStation, he doesn't give a shit about the platform or the audience. It's all about the fast bucks over the longterm health.

He doesn't even understand what PlayStation is, he doesn't understand the audience, the expectations and IMPORTANTLY, the threats that are quickly emerging.

He said himself that PC was a direct competitor but then says that putting games on PC is positive.... so, he isn't being competitive then. He is just giving up and trying to make a few bucks on the way out? Seems like it.

Fuck you Jim, Fuck you.

 

[Deleted member 223]

This guy is the biggest buffoon to ever run PlayStation, he doesn't give a shit about the platform or the audience. It's all about the fast bucks over the longterm health.

He doesn't even understand what PlayStation is, he doesn't understand the audience, the expectations and IMPORTANTLY, the threats that are quickly emerging.

He said himself that PC was a direct competitor but then says that putting games on PC is positive.... so, he isn't being competitive then. He is just giving up and trying to make a few bucks on the way out? Seems like it.

Fuck you Jim, Fuck you.

The short version.

To the enlightened (cough full of bullshit cough)...Jim is growing the brand beyond the hardware, so PlayStation is no longer the hardware - PlayStation is its software, and well an ABK, EA, Ubisoft etc. That is his visionary approach, to decouple PlayStation software from the hardware, and become another run of the mill third party pub. Obviously they'll try to keep their hardware platform to milk PS fans until the last coin in their wallets but they will ultimately fail like Xbox... it's just going to take a decade +.... existing and new competitors need to adjust/appear on the scene to exploit those weaknesses etc, and all of this has to play out. Once the hardware starts hemorraging, you'll see a reaction - and unfortunately it probably will be to double down on the illness because that is the culture that is being cultivated and would be the prevalent culture of doing business by then. MS and Phil, from the Xbox grave could then happily say: "Mission accomplished Bill Gates" We ran Sony out of business, not by competing per say, but by having them follow us like chicken - just took a long time for us to figure that out and for it all to play out.

Since Jimmy is in the investors bubble, that nonsense is always well received. These are the groups that were begging Nintendo to go "everywhere" when Nintendo was on the ropes. Bright advice.... to irrelevance that is.

 

[Dr Bass]

Also, I think he meant to say single player, not first person.

Was just going to say this, pretty sure you are right.

It also kinda bothers me he doesn't seem to know the difference.

 

[Deleted member 223]

Was just going to say this, pretty sure you are right.

It also kinda bothers me he doesn't seem to know the difference.

Does he know how to grab a controller? You'll be surprised at the answer.

 

[Johnic]

 

[AshHunter216]

Given that this interview is from early last year, we'll see if anything has changed. This isn't a direct response to what just happened.

 

[Swolf712]

His comments on SIE's 1st-party portfolio going forward was very reassuring IMO. I think a large contingent of you will find it as well.

Have you SEEN the levels of Doomposting that happen around here?

 

[Swolf712]

This guy is the biggest buffoon to ever run PlayStation, he doesn't give a shit about the platform or the audience. It's all about the fast bucks over the longterm health.

He doesn't even understand what PlayStation is, he doesn't understand the audience, the expectations and IMPORTANTLY, the threats that are quickly emerging.

He said himself that PC was a direct competitor but then says that putting games on PC is positive.... so, he isn't being competitive then. He is just giving up and trying to make a few bucks on the way out? Seems like it.

Fuck you Jim, Fuck you.

Emotionally-driven, non-factual take, I'm afraid.

This is far more geared to fight off potential "threats" arising than literally anything I've seen offered in this forum. I'm sorry. The levels of hate for this guy have long since passed rational.

Y'all need to discuss this when you're out of your feelings. And I say this as someone who also doesn't like everything they see here.

 

[flaccidsnake]

Beautiful statements from Jim Ryan. The future of Playstation is super exciting. This is great stuff:

We will continue to make first person games like we always have, and we expect those to have slightly greater sales and profitability, reflecting our confidence in the long-term installed base of PS5, as well as the fact that those games will make their way to PC.

Consoles are a "constraint" on expanding your audience

 

[Johnic]

Beautiful statements from Jim Ryan. The future of Playstation is super exciting. This is great stuff:


Consoles are a "constraint" on expanding your audience

This is just a ridiculous argument. Without those consoles, you wouldn't be here to post nonsese like that. That's what gaming grew on, dedicated hardware. Again, consoles are a base for developers, not PC. It's why you can see high end PCs struggle because of poor optimizations on certain games. Doesn't happen on consoles.

But by all means, let's shift to PC and triple development issues.

 

[Deleted member 223]

Emotionally-driven, non-factual take, I'm afraid.

This is far more geared to fight off potential "threats" arising than literally anything I've seen offered in this forum. I'm sorry. The levels of hate for this guy have long since passed rational.

Y'all need to discuss this when you're out of your feelings. And I say this as someone who also doesn't like everything they see here.

Lmao what threats - definitely not the threats I know you're thinking about? This is all a "growth" pitch to make more money, and it's flawed long term.

Xbox as a threat has subsided, which is why Sony is comfortable directly supporting PC, inline with MS's decision to do so since they no longer compete on who has "true exclusives" and using that as a battering ram against each other while vying for consumer loyalty vis a vis each other. We are in the "lets collude to make more money phase". It's also a myopic view of competition for PlayStation hardware since PC is a direct competitor and also Nintendo to a lesser extent with its hybrid box.

If the threat is the cloud from giants like Amazon or Google.... newsflash Stadia is dead and buried - with Google trying to settle for a Nintendo partnership. Luna is moribund as well. And guess what, the strongest defense against the cloud is a strong and differentiated, built for purpose video game console - it's the strongest defense against all threats, including that of PC, which lost that battle ages ago but has been given free booster shots by Microsoft's intervention in the console market and Sony's idiocy (starting with PS3 and forward). The other defense is having remote server farms of scale to provide service in comparable fashion to Amazon or Google or MS (good luck there). And btw, server farms are, ba dum tiss, hardware.

Facebook (META) as a threat is competing with VR, trying to disrupt the console hardware market (and its main players, Nintendo and PlayStation) through VR hardware and steal the consumers through zero sum that way. That is where PlayStation VR comes in.

Growing beyond the hardware by releasing software as a third party publisher weakens PlayStations hardware software appeal and differentiation - that is not a threat repulsion but a net weakening. Obviously if PlayStation is viewed as ultimately being just a third party publisher, then losing the hardware battle is OK, as ultimately "PlayStation" will be just that, another publisher and thus expanding now to lay the groundwork on other platforms is future-proofing. Good luck to PlayStation being just another ABK/EA/Ubisoft.... its games will be played on someone's else's platform who take hardware building seriously, and reap the benefits of doing so. Platforms rest on hardware, and not the other way around.

Now if the argument is: "making more money = being better funded to be able to address all threats".... that is a different type of argument. In a vacuum it works that way, in reality it does not, more often that not. That excess profit and money is not always invested where it needs to be, specially in a conglomerate like Sony. Moreover if in the process of making more money, you're hurting your hardware by decoupling the software, that is again, not a net positive, despite superficially looking that way. The negatives will manifest themselves with time. Even Xbox's demise has been gradual, from 75-80m to 51m, to about 45mill max at best for Series and poised for further decline. Microsoft has sped up this suicide approach in order of magnitude compared to Sony which is why the results are almost instant and visible. Results will be the same for Sony, just slower, and MS had the misfortune of there being an alternative to Xbox to steal consumers away from Xbox (that being PlayStation). There is still yet for a competitor to appear and position itself in the console market in direct competition with Sony to do to Sony, what PlayStation does to Xbox. Nintendo is thus that possible threat, if they go back to high-end consoles, and Valve as well if they venture into the console market with a proper console (clearly feeling the waters with the Deck). Those are the real threats. Cause no matter how much bullshit is written on the subject - the PlayStation platform is the hardware, once that goes, it's nothing but a pub with a bunch of studios.