PlayStation games dominate Sony’s R&D spending

Sony is spending more than ever on R&D, especially on PlayStation games.

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Gaming accounts for a large portion of Sony’s annual revenue. The company earned over $ 25 billion on PlayStation last year in FY2020, around 30% of Sony’s annual revenue, and more than any other platform owner in the history of the games industry. This type of revenue influx also requires significant R&D spending to keep games, hardware, and services up to date.

Glancing at Sony recent 20-F annual filing with the SEC, I noticed something interesting. The company says its gaming and networking services are at the top of its R&D spend, alongside its Image Sensors and Services division.

“To strengthen the competitiveness of its products and services, Sony continues to invest in research and development (‘R&D’), particularly in growth areas such as the I&SS and G&NS segments. “ the file reads.

PlayStation games lead Sony's R&D spending 235 |  TweakTown.com

To put this in perspective, I have compiled Sony’s R&D spending over the past 10 years. The results show that Sony typically reinvests around 6% of its annual revenue proportionally in R&D. It’s quite common …EA, for example, devoted 33% of its annual turnover to R&D.

Fiscal 2020 was a banner year for Sony revenues, so it was also a banner year for R&D spending. Sony spent 525.18 billion yen on R&D during the year, of which about 27.5%, or 144.6 billion yen, was on games.

PlayStation games dominate Sony's R&D spending 33 |  TweakTown.com

It’s worth noting that Sony has a plethora of divisions outside of games, but a good chunk of them are partnering with G&NS to help strengthen Sony’s gaming presence.

Sony plans to invest an additional $ 184 million in first-party game development in FY21, and recently acquired Housemarque. Sony’s AI division is work with first-party developers to create next-level gaming experiences using machine learning on the PlayStation 5.

Sony Pictures and Music work with PlayStation Productions Studios in order to bring key video game adaptations to TV shows and movies, such as the upcoming Uncharted movie starring Tom Holland from Spider-Man.

The company also plans to spend $ 18 billion on strategic investments and acquisitions over the next 3 years.

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