Sony, Microsoft “Ramping Down” Game Production

In the wake of the decision to shut down noted RTS developer Ensemble Studios, Alex St. John has predicted that both Microsoft and Sony will close even more internal studios as they struggle to become profitable.

St. John, the CEO of developer/publisher WildTangent, told GamesIndustry he believed that Microsoft and Sony were entering a “recovery phase” after years of absorbing punishing losses in their competition to dominate the market, and that as a result, they would be much less willing to take on the risk and expense of in-house game development.

“You will clearly see Sony and Microsoft ramping down their investment in those platforms,” he said. “What’s interesting to note is that Microsoft [Game] Studios: the number of titles they’re producing is in decline. So they’re investing a lot less in the Xbox, and Sony is doing the same, because they’re in a cost recovery phase.”

“They’ve spent billions trying to be profitable, and the consoles have enough developers making games for them that they do not have to take the risk on investing in games for their own platform in order to drive the market for them,” he added.

Microsoft’s Shane Kim had earlier said the decision to shutter Ensemble was purely a financial one, and in a leaked email, Microsoft Game Studios head Phil Spencer said, “It became clear to us that closing the studio and redeploying those resources to other more scalable venture is the right thing for our business at this time.”

While he may have a point, many people feel St. John’s credibility as a prognosticator is somewhat suspect: Earlier in the year, he predicted that the current generation of consoles would also be the last. “I am going to predict to you that the PS3, the Wii and the Xbox are the last generation of consoles that you either see or that anybody regards as successful in the market,” he told the Casual Connection conference in July, comments he later repeated in an interview with the Telegraph. Instead, he said that the future lies with laptop-style gaming that could offer a portable gaming experience on par with any console system.