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EpicRandy on 31 May 2024
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Doctor_MG said:

This actually makes me mad. Sony is making more money than ever yet they still laid off a bunch of employees, including employees at Insomniac who, IMO, are basically keeping the PS5 afloat with first party releases. Take away all insomniac games from the PS5 and you have like half the amount of first party releases.

I'm really tired of companies doing this. Higher than ever profit and revenue but they still justify cost cutting measures as if they are essential. It's just greed at this point.

Not that I'm a fan of everything that they do, but this is the one area I respect Nintendo in more than any other videogame publisher.

But that's the issue Sony is Not making more money than before, they're only making more revenue than ever before but those are sustained with more expenses than ever before.

Now their profit margins are just under 7% (2022, 2023) which is way lower than 2021 12.4%. 2018,2019,2020 was even better than this. In other words, $100 invested in PlayStation yielded $112+ and has done similar or better for the better part of the last decade. now it's down to $107 and the outlook, if nothing is done, may even be lower. Now Sony has many other industries than just gaming. What do you do as an investor if you expect 7% ROI with PlayStation but 10% with Sony Picture (hypothetical, to illustrate a point), obviously you invest more in Sony Picture at the expense of PlayStation.

This would not be an issue right now, the current context has been a long time coming and actors were more or less taking this into account. But then COVID hit and made investor thinks PlayStation (and all actors in gaming) could yield a crazy amount short/mid/long term like 20% or even more. After all, with everyone at home playing video games certainly, they would retain a lot of new players and outrace the rise of dev cost with player base growth. Investment flooded in from all actors, acquisitions were made, new projects were launched, and new studios were popping up every other week, salary was increasing. And then, it was just a dud. Investors invested $b on a current yield of 12% expecting to strike gold and that it would raise 20%+ and now they face only 7% and with no expectation that it would be any better in the future. As previously mentioned 7% is still profit but when you can just turn around and invest your money in another division that yields 10% you just do so and the alternative is that the gaming division proves it can still outperform others on yield but it cannot while still being overinflated from the 2020-2021 craze.

So yes, this is maddening for sure but, at least it's understandable, and no it's not that actors are at their peak and wanting more, it's that companies took a nose dive and are trying to get things under control.

Nintendo on the other hand, didn't fall for 2020-2021 craze, has maintained way better ROI and unlike Sony/MS they cannot just decide to invest in another more fruitful division.