In many regards, things are going very well for Sony right now. The PlayStation 5 has sold strongly, generally slightly outpacing the performance of the PS4 at equivalent points in its lifecycle despite cost pressures that have kept its retail prices high.

Its biggest direct competitor, Microsoft, started the generation with a great hardware line-up but has ultimately pivoted away from console exclusive software and become one of the biggest third-party publishers on PlayStation.

Sony has an enviable line-up of studios and premium first-party game franchises, has started to find success with movie and TV adaptations of some of its game IP, and is gradually building up a solid sideline business in PC versions of its blockbuster titles – not to mention that next year GTA 6 will turn up and presumably sell absolute truckloads of PS5s in the process.

It’s not all quite so rosy, of course. With a view to the longer term, for example, it’s not unreasonable to point out that while the console business has stubbornly defied all the predictions of collapse over the past decade or two, it has certainly found itself smacking off a glass ceiling somewhere around the installed base mark achieved by the PS2, and additional growth seems elusive despite rising costs across the board. Still, within the confines of that market reality, Sony has been performing extremely well – with the arguable exception of one specific part of the company, over which hovers a question mark so big that it casts a shadow over a lot of this success.

This strategic enigma is Bungie – or to be more specific, it’s the entire content strategy that was meant to be anchored around the $3.6 billion dollar acquisition of Bungie back in 2022. While this is chickenfeed compared to the money Microsoft was splashing around on gaming acquisitions during the same era, it was an enormous purchase for Sony, and it was meant to kick-start a major change in how the company would make games.

Sony got live services religion, and it got it bad; the company, or at least some influential people within the company, believed that the way to achieve the kind of break-out growth that its success in hardware and premium games was failing to deliver had to come through finding the next Fortnite.

Bungie, with its experience of running the Destiny franchise and supposedly with multiple unannounced live service titles being incubated at that point, would be the lynchpin of that strategy, not only building its own live service games but also providing expertise and guidance to Sony’s other studios as they worked on live service titles based on their own core IPs.

In the years that have followed, that strategy has foundered somewhat – not least because rather than being the jewel in the crown of the live service effort, Sony’s acquisition of Bungie appears to have resulted in constantly having to put out new fires at the company.

I wonder how different Sony’s strategic positioning might sound now if the release dates of Concord and Helldivers 2 had been swapped around

While insight into the internal workings of the relationship is very unreliable given that most people leaking information undoubtedly have an axe to grind, one does speculate that there’s a weird, destructive tug-of-war going on between Bungie’s leadership and their new owners at Sony. What we can say with certainty is that revenues from Destiny 2 fluctuated wildly (as did the quality of the game and players’ sentiments towards it), drawing into question just how much Sony’s other studios might want to take direction on live service strategy from Bungie.

Major layoffs were conducted, raising some even bigger questions about what Sony had paid all that money for, if not for acquiring a wellspring of talent and experience in the form of Bungie’s now-fired employees.

Despite this, however, Sony’s determination that its future lies with live service releases doesn’t seem to have faltered – well, at least not much. The ambitious initial plans for a dozen live service games to launch by early 2026 were scaled back to six a couple of years ago. Depending on how you’re counting (bear in mind that titles like MLB The Show are considered live service, even if they may not be what jumps to mind when you think of this category), it seems pretty likely that this halved forecast will be missed by a fair bit, especially given the ignominious failure and rapid shutdown of one of the few live service games to actually launch, Concord.

There was also a widespread suspicion that the retirement of former Sony Interactive Entertainment boss Jim Ryan a year ago might see the company quietly water down its commitment to live service. Despite this, however, Sony’s messaging continues to suggest a strong focus on this sector. SIE co-CEO Hermen Hulst announced a new live-service oriented studio in the PlayStation Studios group, teamLFG, just this week.

Back in 2022, the Bungie acquisition seemed to make a sort of sense. The climate around live service was extremely positive; this was long before we’d seen gigantic, costly failures like Warner’s catastrophic Suicide Squad: Kill the Justice League, or indeed Sony’s own Concord. Sony lacked expertise in this sector, and the Bungie deal could plug that gap.

It was nonetheless risky – not least because it flew in the face of Sony’s de facto policy of only buying out large studios with which they had built extremely close working relationships on successful titles over several years, despite that policy being central to building up PlayStation Studios in the first place.

Today, the climate is very different around live service games, not least because of the aforementioned failures, but also because of what seems to be a fairly strong turn in consumer sentiment around these kinds of services. Sony, however, still has a multi-billion dollar studio that really only does live services attached to it, and one does have to wonder about the extent to which that creates path dependency.

The new live service studio, teamLFG, is a good example in that it appears to be a direct spin-off from Bungie, so that acquisition is still very much driving Sony’s engagement with this whole market sector.

It’s worth noting, though, that Sony did also have some beginner’s luck in live services, with its first real dip into this water being the excellent and well-received Helldivers 2. In any high-risk gambling, beginner’s luck is a curse, because you’ll end up throwing far more of your money at the casino than the person who had a run of bad luck on their first visit and never caught the bug or tried to chase the winning feeling.

I wonder how different Sony’s strategic positioning might sound now if the release dates of Concord and Helldivers 2 had been swapped around.

Even were it not for the need to do something with Bungie, and the sense that Helldivers 2 shows that this market sector can work for Sony, there’s another logic that might underpin a continuing commitment to live service games – even despite what is now much more widely understood to be a near-suicidal risk profile for launching them. It’s the logic of venture capital, which can often look quite crazy from the perspective of an ordinary investor with a regular risk appetite, but which is all about high risks and high rewards.

Venture capitalists are generally not too interested in solid businesses with sober risk profiles and a decent profit margin. They’re interested in crazy, fast-growing businesses that, while being incredibly likely to flare out and die, will return a hundred-fold, a thousand-fold, or an even higher upside ratio in the unlikely event that they do succeed. The logic of a venture portfolio is that losing a big chunk of money on each of 99 bankrupt companies you back is worthwhile if the 100th company in the pack strikes the jackpot for you and returns your investment a thousand-fold.

Since games don’t really do that – they’re risky, but almost never have upside rewards on that scale – the venture capital model doesn’t work terribly well for them, and that kind of VC activity has been very limited in this space over the years. Live service games, however, turn this on its head. It’s extremely, vanishingly unlikely that your game will be the next Fortnite, but if it is, it will deliver exactly the kind of immense return that venture capital funds are interested in.

This, I think, is a sort of thinking that’s taken root in some quarters within Sony. Who cares if they back dozens of failures, if one of them becomes a new title whose recurring revenue is big enough on its own to be a whole new pillar of the business?

We’ll see in the coming years whether that’s really the approach Sony intends to take – if it’s happy to absorb more and more Concord-style failures (or, perhaps more likely, a bunch of commercially mediocre performers that stick around for a year or two before being shut down, which seems to be the general life cycle of live service games at the moment) in pursuit of that one, elusive, incredible hit.

If so, it’s a strategy which carries an especially extraordinary degree of risk for Sony, because while a venture capital fund can back dozens of losers without anyone really noticing or caring – that’s just part of the business – it’s definitely going to be noticed by Sony’s consumers if PlayStation starts releasing dozens of dud live services games under its banner.

Money is only one of the currencies that needs to be considered in this equation, and it’s arguably the easiest one to gamble with. The prestige and reputation of the platform and the brand is a much more valuable currency, and one that would be a lot harder to earn back once lost.