What's Going On With Sony Group Stock Thursday?

Sony Group Corp SONY is trading higher on Thursday amid reports of the company proposing to ramp up R&D spending in its game business amid a broader R&D push by other Japanese electronics companies. It looks to hone technology in live service games and the metaverse.

It will invest 300 billion yen (about $2.13 billion) into research and development for its game segment for FY24, Nikkei Asia reports. 

Sony eyes 760 billion yen in company-wide R&D during FY23, up 3% on the year. The amount, which will account for around 40% of its total R&D spending, now surpasses spending in electronics and semiconductors.

Sony spent 271.1 billion yen on game R&D last FY22, more than double the 144.5 billion yen in FY20.

Sony's pivot from a focus on hardware to a subscription-based business model is prompting the company to step up R&D. It will now focus on live service games that let customers purchase add-ons for titles streamed online.  

Sony expects the market for add-on style games to reach $19 billion in 2026, surpassing the market for hardware like the PlayStation for the first time.

Sony is relying primarily on sequels to traditional games for software sales. Meanwhile, Microsoft Corp MSFT is keen on acquiring game publishing firm Activision Blizzard, Inc ATVI.

Sony plans to have 12 live service game titles in its portfolio by FY26, up from just one in FY21. 

It plans to allocate 55% of PlayStation 5 game development spending to live service games in FY24 and 60% for FY26.

Sony aims to combine the resources of the nine overseas game studios it has had a stake in during the last two years to aid extended reality development.

It also aims to bring the technology it cultivates in its game business into other fields, like in-vehicle content for the electric car it is developing with Honda Motor Company, Ltd HMC.

Hitachi Ltd HTHIY will increase R&D expenses in the environmental field by 27%, and Mitsubishi Electric Corp MIELY will boost power-saving semiconductor development.

Price Action: SONY shares are trading higher by 2.81% at $93.80 premarket on the last check Thursday.