Sony Totoki COO: "A big problem of SIE is they don't have a deep understanding of how their work is being translated to growth

gokurho

gokurho

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Actually, I am the chairperson [of SIE]. It's been about four months, and I am trying to demonstrate leadership and trying to have as many meetings as possible with the management team. I also visit studios and everyone is working really hard to fulfill their responsibility to try to optimize the business, and I understand that. But overall growth and sustainable profitability or increasing margin, how will that translate to these goals? I don't think people understand that deeply. I think that is the problem of the organization. So as far as I'm concerned, I try to understand what is happening in the company, in the industry, and also in the perspective of the analysts, and try to explain in a transparent manner so that people can recognize and notice these issues so that we can have a harmonized approach going forward. That is a very general comment since I became the chairperson. There are concrete points which I will not go into today.



"Now, about visiting the studios, and I've had meetings with the leaders there, the studios. People who work in the studios have very high motivation. They're very highly motivated. They're very good people. And they're very creative people. They have great creative minds. And they also have knowledge about live streaming. However, having. said that, when it comes to the business itself, I think there is room for improvement. And that's got to do about how to use the money or about the schedule of development or how to fulfill one's accountability towards development, et cetera. Those are my frank impressions. So I will continue to engage in dialogue with the people so that we can find the right way to proceed.
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They don't understand why they are growing? Name recognition, history of solid quality franchises from first party, sleek console designs, perception of premium experience...

I mean, do you guys need to hire me?

The real question is, does Takashi know? He doesn't seem to go on to explain why.
 
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SJRB said:
What the hell does that even mean?
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They are working inefficiently.

A good example would be Spider Man 2 discussed in the leak. They were internally discussing how they tripled the budget but dont really even know why. So this guy is saying studios have a poor sense of how their spending is translating to growth and profit.
 
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Full quote thanks to Gematsu:


"Actually, I am the chairperson [of SIE]. It's been about four months, and I am trying to demonstrate leadership and trying to have as many meetings as possible with the management team. I also visit studios and everyone is working really hard to fulfill their responsibility to try to optimize the business, and I understand that. But overall growth and sustainable profitability or increasing margin, how will that translate to these goals? I don't think people understand that deeply. I think that is the problem of the organization. So as far as I'm concerned, I try to understand what is happening in the company, in the industry, and also in the perspective of the analysts, and try to explain in a transparent manner so that people can recognize and notice these issues so that we can have a harmonized approach going forward. That is a very general comment since I became the chairperson. There are concrete points which I will not go into today.

"Now, about visiting the studios, and I've had meetings with the leaders there, the studios. People who work in the studios have very high motivation. They're very highly motivated. They're very good people. And they're very creative people. They have great creative minds. And they also have knowledge about live streaming. However, having said that, when it comes to the business itself, I think there is room for improvement. And that's got to do about how to use the money or about the schedule of development or how to fulfill one's accountability towards development, et cetera. Those are my frank impressions. So I will continue to engage in dialogue with the people so that we can find the right way to proceed."
 
But overall growth and sustainable profitability or increasing margin, how will that translate to these goals? I don't think people understand that deeply. I think that is the problem of the organization
Click to expand...

Sounds like this guy is looking to do some restructuring / consolidation.
 
Punished Miku said:
They are working inefficiently.

A good example would be Spider Man 2 discussed in the leak. They were internally discussing how they tripled the budget but dont really even know why. So this guy is saying studios have a poor sense of how their spending is translating to growth and profit.
Click to expand...

The numbers for Spider-Man 2 were jaw dropping. The game is great but it's not at all worth that much more than what it took them to make the first game. There may be some serious bloat in some of these studios.
 
Elios83 said:
Full quote thanks to Gematsu:


"Actually, I am the chairperson [of SIE]. It's been about four months, and I am trying to demonstrate leadership and trying to have as many meetings as possible with the management team. I also visit studios and everyone is working really hard to fulfill their responsibility to try to optimize the business, and I understand that. But overall growth and sustainable profitability or increasing margin, how will that translate to these goals? I don't think people understand that deeply. I think that is the problem of the organization. So as far as I'm concerned, I try to understand what is happening in the company, in the industry, and also in the perspective of the analysts, and try to explain in a transparent manner so that people can recognize and notice these issues so that we can have a harmonized approach going forward. That is a very general comment since I became the chairperson. There are concrete points which I will not go into today.

"Now, about visiting the studios, and I've had meetings with the leaders there, the studios. People who work in the studios have very high motivation. They're very highly motivated. They're very good people. And they're very creative people. They have great creative minds. And they also have knowledge about live streaming. However, having said that, when it comes to the business itself, I think there is room for improvement. And that's got to do about how to use the money or about the schedule of development or how to fulfill one's accountability towards development, et cetera. Those are my frank impressions. So I will continue to engage in dialogue with the people so that we can find the right way to proceed."
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Nice, thanks for posting. I needed a full quote because the Takashi guy from the OP is a total clown that usually loves misquoting Sony.
 
SJRB said:
What the hell does that even mean?
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It means that profit margins are low even when they're having record sales/revenues.
Hardware is sold at a loss when they're forced to do promotions, development of AAA games is slow and hugely expensive.
Basically you can expect them to double down on gaas and PC releases to make growth achievable and the rest sustainable.
 
Thatassy Muchosucky?

Yep, Thatassy Muchosucky.

You know it's him if it's something negative to report about Sony in Bloomberg. You don't have to look, you guess and you're always right before reading the name. Like clockwork, he's always THE ONE. 😄
 
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Varteras said:
The numbers for Spider-Man 2 were jaw dropping. The game is great but it's not at all worth that much more than what it took them to make the first game. There may be some serious bloat in some of these studios.
Click to expand...

Those US based PlayStation studios could hire people again based on their skill set instead of their identity. Just an idea.
 
"And that's got to do about how to use the money or about the schedule of development or how to fulfill one's accountability towards development, et cetera. "

They need to reined in the cost of these projects. Spiderman 2 did not need to cost that much for a 25 hour game. With 300 million dollars that is rockstar level open world game or a big budget AAA western rpg that takes 100+ hours to finish. Ghost of Tsushima had just under a 100 million budget iirmc. That should be the benchmark for these lite rpg mix action open world games.
I love sony interactive for their storytelling, characters and just exploring the world.
I dont need some game of the generation level game all the fucking time. If you go big all the time all it takes is one bomb or 'not meeting expectations' to pivot to shit we collectively dont really care about.
 
Elios83 said:
Full quote thanks to Gematsu:


"Actually, I am the chairperson [of SIE]. It's been about four months, and I am trying to demonstrate leadership and trying to have as many meetings as possible with the management team. I also visit studios and everyone is working really hard to fulfill their responsibility to try to optimize the business, and I understand that. But overall growth and sustainable profitability or increasing margin, how will that translate to these goals? I don't think people understand that deeply. I think that is the problem of the organization. So as far as I'm concerned, I try to understand what is happening in the company, in the industry, and also in the perspective of the analysts, and try to explain in a transparent manner so that people can recognize and notice these issues so that we can have a harmonized approach going forward. That is a very general comment since I became the chairperson. There are concrete points which I will not go into today.

"Now, about visiting the studios, and I've had meetings with the leaders there, the studios. People who work in the studios have very high motivation. They're very highly motivated. They're very good people. And they're very creative people. They have great creative minds. And they also have knowledge about live streaming. However, having said that, when it comes to the business itself, I think there is room for improvement. And that's got to do about how to use the money or about the schedule of development or how to fulfill one's accountability towards development, et cetera. Those are my frank impressions. So I will continue to engage in dialogue with the people so that we can find the right way to proceed."
Click to expand...
Sounds reasonable, level-headed and drama-free.

That's how an efficient business operates. Always trying to find ways to be more effective and not shying away from problems even if the division is making tons of money.

Unlike some other companies, you know.
 
kruis said:
Those US based PlayStation studios could hire people again based on their skill set instead of their identity. Just an idea.
Click to expand...
Oh right, mismanagement on the order of tens of millions of dollars because they hired fewer white men and not something like chaos transitioning to WFH during covid.
 
What's likely is studios will probably need to cut costs by 10% across the board and studios that aren't actively profitable will get shuttered.

More games will come to PC and the hardware/peripheral business will need to come to maturity.

Totoki has to be careful not to break the golden goose with too deep of cuts and I think he realizes that to an extent, but the individual studios probably need to be judged upon their own profitability metrics more so than they were under Jim Ryan who largely allowed studios to float because overall the company was profitable.

Media Molecule is on the chopping block and potentially Bend Studio, London Studio, and ironically Firesprite.

People can keep complaining about Naughty Dog doing remakes and remasters, but these games are high in profit margin and return on investment.

Look at CDPR who is remaking The Witcher 1, Sony Santa Monica should be doing the same with God of War 1-3, and maybe they are.

You look at linkedin and it's clear that most Sony studios are in a hiring freeze and maybe cuts will come or maybe they won't, but no one is signing up to take paycuts, so in many ways you have to cycle people out to reduce cost slowly over time. These studios are in super expensive locations mostly too.

Naughty Dog is down 1% in headcount over the last 6 months. That's not bad given the cancelled a major project. Deeper cuts may have been pushed off due to the remakes/remasters.

Insomniac is down 2%.

Santa Monica is up 5%... Probably as I said because remaking God of War 1 and Cory's project.

Firesprite is down 10%

Bend Studio is up 3%

Sucker Punch is up 5% which makes sense since the team that made Ghost 1 is way too small.

Media Molecule is down 14%

Firewalk is up 1%, which is a little alarming but maybe Concord is close to being finished

Haven is up 5%, which makes sense, cheaper location and they're ramping up on Fairgames.

Will Sony buy Arrowhead Studios? Maybe maybe not. It's a no brainer, but at the same time, they aren't going to make another game for 6+ years. These are the decisions Sony has to make. They dropped 1.5 billion on Epic Games which was probably a mistake. They haven't gotten a return from Bungie yet. Gaming is starting to slow down a bit and costs continue to rise.

This is why I don't think Eric Lempel is the guy and if he was he'd almost certainly be a puppet.
 
ShaiKhulud1989 said:
Sounds reasonable, level-headed and drama-free.

That's how an efficient business operates. Always trying to find ways to be more effective and not shying away from problems even if the division is making tons of money.

Unlike some other companies, you know.
Click to expand...
The question is tho, how is he going to make his opinions on how the business should be run into reality?

I think a lot of people wouldn't like the answers.
 
Get this guy away from SIE ASAP he is a walking disaster with no clue from everything he says. The exact sort of dipshit corporate Sony has put in so many divisions and created disaster
 
those massive 300 million budget games need to be on all platforms including mobile phones. Nothing else will translate into money if its going to be on a single platform.
 
Astray said:
The question is tho, how is he going to make his opinions on how the business should be run into reality?

I think a lot of people wouldn't like the answers.
Click to expand...

He's going to ask the leadership to find cost savings, hopefully cost savings that don't disrupt the development of games and studio culture.

At the end of the day, he doesn't know gaming, he's a CFO, he's just a finance guy, but this is a big nod that the next CEO of SIE will probably be a finance person like Lin Tao.

Personally, I think they can get their margins by expanding rather than contracting. They need to leverage their position in gaming and think they've been slow to do so.

Just like we haven't seen Bloodborne, Demon's Souls, GT7, or MLB The Show on PC... these are potentially really high-margin initiatives that haven't really been explored. They've focused on a really narrow sliver of the type of games to port over, yes their most popular ones, but not necessarily the ones that best fit the PC market.
 
Mibu no ookami said:
Just like we haven't seen Bloodborne, Demon's Souls, GT7, or MLB The Show on PC... these are potentially really high-margin initiatives that haven't really been explored. They've focused on a really narrow sliver of the type of games to port over, yes their most popular ones, but not necessarily the ones that best fit the PC market.
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MLB The Show is basically free money for Sony, Sports games has so much asset reuse it's fucking crazy.
 
Astray said:
MLB The Show is basically free money for Sony, Sports games has so much asset reuse it's fucking crazy.
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So why does Sony put it on Switch and Xbox but not PC. I'd love to know the reasoning.

I think Sony's PC strategy so far has been really poor.

Personally, I'd have put Demon's Souls on PC before Rift Apart or Sack Boy Adventure. I feel like that would have been a better use of money.
 
Elios83 said:
It means that profit margins are low even when they're having record sales/revenues.
Hardware is sold at a loss when they're forced to do promotions, development of AAA games is slow and hugely expensive.
Basically you can expect them to double down on gaas and PC releases to make growth achievable and the rest sustainable.
Click to expand...
So, pretty much what they've been saying for the past few years and what has been discussed to death on here.
 
Astray said:
Too unadventurous imo.

Also the more they release on Steam the more entrenched the resistance will be to whenever they release their own storefront.
Click to expand...

They just released Helldivers 2... how was the resistance doing there?

I think the games I mentioned would have had success on Steam.
 
SJRB said:
What the hell does that even mean?
Click to expand...
Companies aim for maximum growth because of an effect called "economies of scale".

Economies of scale mean: The bigger you are, the cheaper you can produce. Which means you can either undercut competition in terms of pricing or you can be more profitable than your competition at the same price.

My guess is SIE is just doing more of everything, including spending more money. They're number one but their production costs are among the highest in the industry. Which is the opposite of what growth should do to your business.
 
Yeah what a shitshow. Everything points out that this guy is taking over in May and will destroy budget and studios with layoffs. The gold days of incredible aaa sp games of Sony is over. We will have 1 or 2 every 2 years. Next 12 months with nothing and only 1 aaa sp game last 12 months show the "great" scenario we have ahead.

That's why i sold my ps5 in 2022 and will wait for their few great games on PC. It doesn't make to own a console that releases 1 or 2 relevant sp aaa per year.
 
Mibu no ookami said:
They just released Helldivers 2... how was the resistance doing there?

I think the games I mentioned would have had success on Steam.
Click to expand...

Do you think the early success of Helldivers will make them reevaluate their PC offerings and embolden their live service ambitions? I mean, that has been, by far, their greatest success story on Steam. A modest multiplayer game made by a smaller studio just beat the shit out of Sony's big tentpole franchises. Though it took 8 years to make, I can't imagine it had anywhere near the budget of something like God of War. I would imagine that might also be used as an example of where Sony can find success without the need for a constant churn of blockbuster cinematic narratives.
 
kruis said:
Those US based PlayStation studios could hire people again based on their skill set instead of their identity. Just an idea.
Click to expand...

Didn't the spider man team hired a few "diversy professionals " to critique they inclusivity? Yeah as if a few individuals can speak for us, quacks they are
 
Mibu no ookami said:
They just released Helldivers 2... how was the resistance doing there?

I think the games I mentioned would have had success on Steam.
Click to expand...
What I mean is whenever they start releasing games outside steam, they will meet resistance from PC players that want them to keep things on one store place ala EGS.

The PC ports = console death is not entirely accurate imo.
 
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Fake said:
How western refuse this is the main problem.
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No competition on consoles now, therefore work harder.

I predict it's not happening. They will lay people off, raise prices, reduce project scope and frequency and work even more leisurely.

That's not being inflammatory, that's just looking at the future and basing it off what is happing now and the way the trends have been going.
 
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