Sony Group has announced an investment of approximately $2.13 billion (300 billion yen) into research and development within its gaming sector for the fiscal year ending in March 2024, highlighting the corporation’s aggressive drive towards the metaverse industry.
The expenditure, which constitutes roughly 40% of Sony’s total R&D budget, outstrips its allocation towards electronics and semiconductors. Sony Group plans a company-wide investment of 760 billion yen in R&D in the fiscal year, marking a 3% year-on-year increase.
Aiming to capitalize on the metaverse, Sony’s substantial investment represents a strategic pivot towards subscription-based business models, such as live service games. It predicts the market for add-on style games will reach $19 billion by 2026, potentially eclipsing the PlayStation hardware market for the first time.
Although still playing catch-up in the realm of live service games, Sony is not a newcomer to the metaverse landscape. Last year, the corporation invested approximately $1 billion in the real-time 3D software firm Epic Games Inc and announced plans to expand its metaverse presence using its gaming and music expertise.
Sony’s investment strategy was further reinforced by its $3.7 billion acquisition of the U.S. game studio Bungie in 2022, targeting Bungie’s expertise in live game development. By the fiscal year ending March 2026, Sony plans to have 12 live service game titles in its portfolio, up from just one in 2021.
As part of its metaverse push, Sony plans to utilize resources from the nine overseas game studios it has either acquired or invested in during the past two years to bolster its extended reality development. This aligns with its goal of delivering immersive gaming experiences that leverage extended reality technologies and integrate the physical and digital worlds.
According to Sony Group president Hiroki Totoki, “We will continue to make strategic investments going forward, prioritizing intellectual property.”
Sony is also exploring the potential applications of the technology it develops for its game business in other sectors. One such venture is developing in-vehicle content for an electric car in partnership with Honda.
This investment is part of a broader trend among Japanese electronics firms of boosting R&D expenses, particularly in high-growth fields. The cumulative R&D expenses of Japan’s top eight electronics companies are set to reach a record high for the third consecutive year, increasing 5% year-on-year to 2.28 trillion yen for the year ending March 2024.
