Final Fantasy 7 Rebirth, Sony layoffs and the problems with AAA games

This week the release of Final Fantasy 7 Rebirth as a PlayStation 5 exclusive product. It’s a lavish but bloated release that expands the middle section of a 27-year-old RPG into a massive open-world adventure in its own right, complete with mini-games for every activity imaginable, from parade marching to mushroom picking.

Also this week: Sony’s PlayStation business announced plans to lay off 900 employees, or 8% of its workforce, despite strong PS5 sales and record revenue last quarter. The cuts include layoffs at three of Sony’s most successful studios: Naughty Dog, Insomniac Games and Guerrilla Games.

There is no direct connection between these two events, other than the fact that Sony financed some of it Final Fantasy 7 Rebirth to secure PS5 exclusivity for a while. Rebirth is developed and published by Square Enix, which has yet to announce layoffs on the scale of Sony, Microsoft, Epic or any of the dozens of other video game companies facing an industry-wide crisis. Hopefully the workers can avoid this fate.

However, Final Fantasy 7 Rebirth is emblematic of a type of gaming that the industry has leaned heavily on over the last decade, particularly in console gaming – and the layoffs at Sony are another sign that these types of “AAA” megagames are no more is sustainable.

As budgets have increased, major publishers’ risk tolerance has decreased, leading them to focus all their potential on supposedly safe bets: big games in the biggest franchises, packed with features and homogeneous in design to get them to do so appeal to as wide an audience as possible.

Rebirth is a particularly striking example of modern AAA gaming because it has such a distinctly split personality. On the one hand, it’s a quirky, characterful and dramatic RPG with a driving narrative driven by nostalgia for the original game. It leans heavily on fan service and has a very specific, very Final Fantasy flavor. On the other hand, it complements its enormous running time with a lot of generic design elements – open-world exploration, side quests, collectibles, card games – that seem to have little to do with its core identity and bring it closer to other big mainstream successes like The Witcher 3

or The Legend of Zelda: Breath of the Wild.

For games like this it seems a size Is everything. They embody the maxim “too big to fail,” which is very important in video game design. Rebirth could have been a slim, 40-hour action RPG focused on delivering the big story beats rather than a 100-hour everything game, but that wouldn’t have met the expectations of its audience – or so publishers like Square believe Enix. Sony’s Spider Man 2from Insomniac Games is another recent example of a blockbuster with a focused story that is then given obvious padding.

These increasingly indistinguishable AAA monsters have long been at the center of fears about the death of creativity in mainstream gaming, even as they have sold at breakneck speed. But from a business perspective, the first cracks appear to be appearing in this genre. In a note leaked last year, Xbox boss Phil Spencer explained with great clarity how production scale has become an end in itself for the major publishers, a tool with which they can defend their position in the market. Spencer argued that this stifles publishers’ ability to innovate and leaves companies like EA and Activision Blizzard behind independent studios when it comes to developing new hits Fourteen daysRoblox and Minecraft. (The biggest game of 2024 so far? Palworldmade by Japanese indie Pocketpair.)

It is important to note that there are a variety of factors behind the current decline in the gaming industry: a response to overinvestment during the gaming boom due to the COVID-19 pandemic, generally difficult economic conditions, and a stagnation of growth in the gaming market itself. Sony is just as exposed to these factors as any other game manufacturer. However, there are signs that AAA game production issues are at the heart of the problems.

Sony has long been a major investor in polished AAA gaming experiences with high production values; These games have become synonymous with the PlayStation brand. And the outward signs suggest that these games are still going strong. Spider Man 2 has sold 10 million copiesIn addition, the reputation of the in-house PlayStation studios for quality will be further strengthened.

But according to a recent data breach at Insomniac Spider Man 2 The development cost a whopping $315 million, with an expected return on investment (ROI) of 35% – not exactly the most exciting margin. (His predecessor, the lighter on his feet Spider-Man: Miles Moraleshad a reported ROI of 122%.) According to emails included in the hack, the studio was is already coming under pressure from Sony to reduce costs. The cost of developing high-end video games is rising at an almost unbearable pace: Tekken producer Katsuhiro Harada recently noticed that development costs are ten times higher than in the 1990s and two to three times higher than a console generation ago, during the production of Tekken 7.

However, AAA games pose an even greater existential threat than their cost and the time in which they are made: at least five years, but increasingly much longer. At Rocksteady Studios there were nine years between the release of Batman: Arkham Knight

And Suicide Squad: Kill the Justice Leaguewhat the latter must have done Underperformance even more annoying. Yoshinori Kitase, the producer of the Final Fantasy 7 remake project, recently estimated that it would take 20 years to remake it Final Fantasy 6 to a similar standard. Naughty Dog has yet to release an original game for PlayStation 5 as the console enters what Sony calls the “second half” of its life cycle.

While Sony’s studio layoffs were clearly aimed at over-investment in virtual reality (including the closure of the London studio), they also targeted its core AAA production studios – because, in the words of COO and President Hiroki Totoki (the will succeed current PlayStation CEO Jim Ryan). April) these studios develop games too slowly and too expensively.

When releasing Sony’s latest financial report, Totoki noted that PlayStation faces an entire calendar and fiscal year without major releases from its first-party studios, which would negatively impact software and hardware sales. “When it comes to business, I think there is room for improvement,” he said of PlayStation Studios. “And that has to do with how you handle money, how you plan development and how you fulfill your responsibility towards development – ​​these are my honest impressions.”

In other words, given the math that they could only get one to one and a half games per console generation out of their major studios, Sony executives probably thought: Why bother? Time to swing the axe. (Not to mention that it was her own fixation on scale that got her there in the first place.)

But mathematically they are right. The games are just too big. Something has to give. Every current gaming success story – from Baldur’s Gate 3 To Palworldand including Sony’s own Helldivers 2Produced by a modest team of around 100 people, it was a medium-sized production aimed at a very specific idea with the potential to find a wider audience, rather than a $200 million-plus behemoth riding on it aimed to be everything to all players.

There is a future we could still have Final Fantasy 7 Rebirth, but it’s a smaller project with a smaller horizon and a smaller budget, made faster by fewer people and takes less time to play. Maybe it wouldn’t be quite as spectacular to look at. Would that really be that bad? And how many more people have to lose their jobs before everyone in gaming, from the CEO to the players, realizes that it’s time to leave this kind of gaming behind?