This week sees the release of Final Fantasy 7 Rebirth as a PlayStation 5 exclusive. It’s a lavish but bloated release that expands the middle section of a 27-year-old role-playing game into a giant open-world adventure in its own right, complete with minigames for every conceivable activity from parade-marching to mushroom-picking.
Also this week: Sony’s PlayStation business announced plans to lay off 900 people, or 8% of its workforce, despite strong sales of PS5 and record revenue during its last quarter. Included in the cuts are layoffs at three of Sony’s most successful studios: Naughty Dog, Insomniac Games, and Guerrilla Games.
There’s no direct connection between these two events, beyond the fact that Sony will have partly bankrolled Final Fantasy 7 Rebirth in order to secure its exclusivity to PS5 for a while. Rebirth is developed and published by Square Enix, which has yet to announce layoffs on the scale of Sony, or Microsoft, or Epic, or any of the dozens of other video game companies caught up in an industry-wide crisis. Hopefully its workers can avoid that fate.
However, Final Fantasy 7 Rebirth is emblematic of a kind of game that the industry has leaned on particularly heavily over the past decade or so, particularly in the console gaming space — and the Sony layoffs are another sign that this breed of “AAA” mega-game is no longer sustainable.
As budgets have swollen, the big publishers’ tolerance for risk has lowered, which has resulted in them pushing all their chips onto supposedly safe bets: big games in the biggest franchises, stuffed with features and homogenized in design in an attempt to get them to appeal to the broadest possible audience.
Rebirth is a particularly striking example of the modern AAA game because it has such a clearly split personality. On the one hand, it’s a quirky, characterful, and dramatic RPG, with a propulsive narrative driven by nostalgia for the original game. It leans hard into fan service and has a very specific, very Final Fantasy flavor. On the other hand, it pads out its enormous running time with many generic design elements — open-world exploration, side questing, collectibles, card games — that seem to have little to do with its core identity, and that push it closer to other big, mainstream successes such as The Witcher 3 or The Legend of Zelda: Breath of the Wild.
For games like this, it seems, size is everything. They are the embodiment of the maxim “too big to fail,” writ large in video game design. Rebirth could have been a streamlined, 40-hour action-RPG focused on delivering its big story beats instead of a 100-hour everything-game, but that would not have met the expectations of its audience — or so publishers like Square Enix believe. Sony’s Spider-Man 2, by Insomniac Games, is another recent example of a blockbuster with a focused story that’s then been laden with obvious padding.
These increasingly indistinguishable AAA monsters have long been the focus of angst about the death of creativity in mainstream gaming, even as they have sold like gangbusters. But it seems the cracks are starting to show in this genre from a business perspective, too. In a note leaked last year, Xbox head Phil Spencer explained with great clarity how production scale had become an end in itself for the big publishers, a tool used to defend their position in the market. Spencer argued this was strangling the publishers’ ability to innovate, and companies like EA and Activision Blizzard were getting left behind by independent studios in the creation of new hits like Fortnite, Roblox, and Minecraft. (The biggest game of 2024 so far? Palworld, made by Japanese indie Pocketpair.)
It’s important to note that there is a wide range of factors behind the current contraction in the game industry: a reaction to overinvestment during gaming’s COVID-19 pandemic boom, generally tough economic conditions, and a stagnation of growth within the game market itself. Sony is as exposed to these factors as any other game company. But there are signs that AAA game production woes are central to its troubles.
Sony has long been a big investor in polished, AAA gaming experiences with high production values; these games have become synonymous with the PlayStation brand. And the outward signs are that these games are still successful. Spider-Man 2 has sold 10 million copies, as well as continuing to burnish PlayStation’s in-house studios’ reputation for quality.
But, according to a recent Insomniac data breach, Spider-Man 2 cost an incredible $315 million to develop, with an expected return on investment (ROI) of 35% — not the most thrilling margin. (Its predecessor, the lighter-on-its-feet Spider-Man: Miles Morales, had a reported ROI of 122%.) According to emails included in the hack, the studio was already coming under pressure from Sony to cut costs. The cost of high-end video game development is rising at an almost intolerable rate: Tekken producer Katsuhiro Harada recently noted that development costs are 10 times what they were in the 1990s, and two to three times what they were just one console generation ago, during the production of Tekken 7.
There’s an even bigger existential threat to AAA games than their cost, though, and it’s how long they take to make: five years at minimum, but increasingly, much longer. Rocksteady Studios saw a nine-year gap between the release of Batman: Arkham Knight and Suicide Squad: Kill the Justice League, which must have made the latter’s underperformance even more galling. Yoshinori Kitase, the producer of the Final Fantasy 7 remake project, recently estimated that it would take 20 years to remake 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 latter half” of its life cycle.
While Sony’s studio layoffs clearly targeted its overinvestment in virtual reality (including the closure of London Studio), they also targeted its core AAA production studios — because, to paraphrase COO and president Hiroki Totoki (who will take over from current PlayStation CEO Jim Ryan in April), those studios are making games too slowly and too expensively.
On the publication of Sony’s most recent financial report, Totoki noted that PlayStation was facing an entire calendar and financial year without any major releases from its first-party studios, which would have a negative impact on both software and hardware sales. “When it comes to the business, I think there is room for improvement,” he said of the PlayStation studios. “And that’s to do with how to use money, the schedule of development and how to fulfill one’s accountability towards development — those are my frank impressions.”
To put it another way — Sony executives, facing the calculation that they could only get one to one and a half games per console generation out of their big studios, presumably thought: Why bother? Time to swing the ax. (Never mind that it was their own fixation on scale that got them there in the first place.)
But, in terms of pure calculation, they are right. The games are just too big. Something has to give. Every recent breakout success story in gaming — from Baldur’s Gate 3 to Palworld, and including Sony’s own Helldivers 2, made by a modest team of around 100 people — has been a midsized production driving toward a very specific idea which has the potential find a broader audience, rather than a $200 million-plus behemoth aimed at being all things to all players.
There’s a future in which we could still have Final Fantasy 7 Rebirth, but it’s a smaller project, with a smaller horizon and a lower budget, made more quickly by fewer people, and taking less time to play. Perhaps it wouldn’t be quite so spectacular to look at. Would that really be such a bad thing? And how many more people have to lose their jobs before everyone in gaming — from the CEOs all the way down to the players — realizes that it’s time to leave this kind of game behind us?
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