Sony Interactive Entertainment revealed what’s happening with PlayStation in their financial report.
Let’s hear from Hiroki Totoki, President, Chief Operating Officer and Chief Financial Officer of the Sony Group: “In terms of first-party software, we will continue to focus on producing high-quality works and developing live service games. However, while we have major projects in development, we do not plan to release any new major existing franchise titles such as God of War: Ragnarok and Marvel’s Spider-Man 2 in the next fiscal year. Although the burden of acquisition-related costs will ease next fiscal year, we expect profit from first-party software to decrease slightly from this fiscal year due to the impact of the decline in sales. As a result, operating income for next fiscal year is currently expected to increase slightly from this fiscal year. However, while this is our baseline, we are reviewing measures to further improve profitability in advance of the annual forecast results announcement in May this year.
As for PlayStation 5, which will be entering its fifth year since launch, in part due to entering the second half of the console cycle, we aim to optimize sales with a greater emphasis on profit balance, so we anticipate a gradual decline in unit sales from next fiscal year. We expect third-party software sales to continue to grow gradually due to the expansion of the PlayStation 5 install base and the high level of user engagement. In network services, we expect the number of subscribers to be the same as this fiscal year or slightly lower due to the impact of the price revision we implemented this fiscal year, but we expect sales to gradually increase due to a shift to attractive premium services.
It’s been about four months [since I became chairman of Sony Interactive Entertainment] and I’m trying to show leadership and have as many meetings with the management team as I can. I also visit the studios, and everyone is working really hard to fulfill their responsibilities to try to optimize the business, and I understand that.But overall growth and sustainable profitability or margin expansion – how does that translate into those goals?I don’t think people really understand that.I think that is the problem of the organization.So for me, I try to understand what’s happening in the company, in the industry, and also from the analysts’ perspective, and try to explain it in a transparent way so that people can recognize and notice these issues so that we can have a harmonized approach going forward.That is a very general comment since I became Chairman. There are specific points that I will not go into today.
Now, about the visit to the studios, and I’ve had meetings with the leaders there – the studios.The people who work in the studios are very highly motivated. They’re very highly motivated. They’re very good people. And they’re very creative people. They have great creative minds. And they also have live streaming knowledge. But having said that, when it comes to the business itself, I think there is room for improvement. And that has to do with how the money is spent, or how the development schedule is, or how you’re accountable to development, et cetera. These are my candid impressions. So I will continue to engage in dialogue with people so that we can find the right way forward,” Totoki said.
So he sees a slow decline in console sales, game sales, the big internal developments will not be released in the next fiscal year, so he expects a decline here (as well as in the corresponding profit), acquisition costs will ease, and games from external developers and revenue from network services (PlayStation Plus, PlayStation Store) will see a gradual increase.
On Twitter, we read that Totoki is looking to improve margins with a more aggressive multiplatform plan that includes bringing PlayStation first-party titles to PC. So the year-long delay we heard about earlier is slowly being forgotten: “In the past, we wanted to popularize the console, and the main purpose of 1st party titles was to popularize the PlayStation console. That is true, but there is a synergy. So if you have strong first-party content, not only with our console but also with other platforms like computers, the 1st party can grow with multiplatform and that can help improve operating profit. So that is another thing that we want to work on proactively. Personally, I think there are margin improvement opportunities out there, so I want to be aggressive in improving our margin performance.”
So they’re not giving up on PC!
Sony President Hiroki Totoki says he wants to go aggressive in improving margins by growing 1st party with multi-platform #PlayStation
“In the past, we wanted to popularize console and the 1st party titles' main purpose was to make the console popular. It is true, but there is a… pic.twitter.com/28zwgLrFxb
— Genki✨ (@Genki_JPN) February 14, 2024
