From Demon’s Souls Studio to Latest Casualty of the Live-Service Market

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Sony Interactive Entertainment will reportedly close Bluepoint Games in March 2026, resulting in the layoff of approximately 70 employees. This decision reflects internal business reviews and an increasingly challenging market, characterized by high development costs and evolving player preferences. The closure is surprising, considering Bluepoint’s strong reputation for developing exceptional remakes and remastered titles, including Demon’s Souls (a key PlayStation 5 launch title), Shadow of the Colossus, and Uncharted: The Nathan Drake Collection. Sony officially acquired Bluepoint in 2021, during a period when the company was investing in its prestigious internal teams. However, PlayStation’s strategic direction shifted, with a significant emphasis on live-service projects aimed at replicating the success of ongoing, multiplayer game models. In May 2022, Sony announced plans to expand its live service offerings from one active game to twelve by the end of 2026 and acquired studios such as Bungie, Firesprite, Fabrik, Valkyrie Entertainment, Firewalk Studios, Haven Studios, and Neon Koi to support this initiative.

Despite these investments, several planned live-service games have been canceled or remain unreleased. These include a God of War live-service game that Bluepoint Games was developing, Spider-Man: The Great Web by Insomniac Games, and a Twisted Metal live-service game by Lucid Games. Naughty Dog also spent years developing a live-service The Last of Us game, which was eventually scrapped, leading to layoffs at the studio. Haven Studios, led by Jade Raymond, introduced Fairgame three years ago, but the game’s future remains uncertain following Raymond’s departure. Sony Bend, the studio behind Days Gone, had a science fiction live-service project shut down in December 2024. Deviation Games and Final Strike Games, which were also involved in separate live-service projects for Sony, are both expected to close.

Sony London, the studio known for The Getaway, was slated to develop a live-service game in 2022 but was shut down in 2024, with the studio closing soon after. Concord was taken offline after only two weeks, and Firewalk Studios closed soon after. Bluepoint had been working on an online God of War project, but Sony canceled it in early 2025. Since then, the studio has not publicly announced any new projects, contributing to its vulnerability within Sony’s organizational structure. Bluepoint’s closure raises questions about the industry’s current focus on live-service games, particularly as some observers call for a return to the traditional single-player experiences that defined the PlayStation brand. Several factors contribute to the challenges in the video game market. Following the COVID-19 pandemic, hardware spending declined. Consumers have been less inclined to upgrade to pro-model consoles mid-cycle, influenced by aggressive pricing. Additionally, rising game prices have led some consumers to purchase fewer full-priced titles. Publishers have also seen success in keeping players engaged with ongoing “Games as a Service” (GAAS) titles like Fortnite, Genshin Impact, and Destiny 2, potentially reducing their willingness to explore new releases.

Bluepoint’s Closure Signals Transition and Uncertainty in PlayStation’s Live-Service Strategy Amidst Industry Restructuring

Despite these challenges, the gaming industry experienced some successes in 2024. Bluepoint’s closure is part of a broader trend of restructuring, cancellations, and layoffs across international studios, driven by escalating costs, high expectations, and intense market competition. The closure of Bluepoint Games, just a few years after its acquisition, likely signals a transitional phase and uncertainty for PlayStation’s future strategy.

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