Despite revising their sales projections downward from 25 million units to 21 million, Sony still struggles to meet their own sales forecasts for the PlayStation 5 console.
Following the recent appointment of new CEOs to helm Sony Interactive Entertainment, Sony announced a 29% year-over-year decline in PlayStation 5 sales in its latest financial report. The console sold a total of 20.8 million units in fiscal year 2023.
The figure falls slightly short of Sony’s revised estimate of selling 21 million units, which was downgraded from an overly ambitious 25 million units. Additionally, the company anticipates a decline in console sales, marking the first time PlayStation 5 sales have dropped compared to the previous year, Sony now forecasts 18 million units to be sold in fiscal year 2024.
Naturally, Sony monetizes PlayStation users through monthly subscription fees for accessing their own internet connection, and considering the numerous hardware revisions of the PS5 console to make it more affordable to produce, it’s hardly astonishing that they’re still profiting well from the PlayStation brand despite missing sales targets.
Sony witnessed a 17% year-over-year surge in net sales within its Game & Network Services (G&NS) division, encompassing PlayStation, reaching ¥4,267 billion ($27.293 billion USD). Meanwhile, operating income climbed by 16% to ¥290.2 billion ($1.854 billion).
In terms of software sales, which serve as the primary revenue source for these systems, Sony achieved 72.6 million game sales during the fourth quarter. Among these, 12.3 million were first-party titles.
Notably, their digital download ratio surged to 77%, indicating a significant shift towards an all-digital gaming landscape in the future. Additionally, the PlayStation Network reported a staggering 118 million active monthly users.
Regarding their upcoming financial projections, Sony anticipates a slight decrease in net sales, amounting to around ¥67 billion yen ($428.8 million). Nevertheless, they remain confident in their ability to boost operating income by nearly ¥20 billion yen ($127.6 million) concurrently.
In February, Sony declared that the PlayStation 5 had reached the “later half” of its life cycle. While the company’s sales estimates are not unexpected, they do raise a larger question about the growth of the console market.
During the three months ending on March 31st, 2024, a total of 4.5 million PS5 units were sold, marking a decline of 1.8 million from the same period the previous year. This brings Sony’s total tally to 59.2 million PS5 units shipped worldwide.
Comparatively, the last official figures for PlayStation 4 sales totaled 117 million units. The PlayStation 5 has sold considerably fewer units thus far. The only console that appears to be thriving is the Nintendo Switch, thanks to its substantial library of exclusive titles and uncensored games.
This suggests that the traditional home console market isn’t experiencing growth, but rather a decline. The decline is unsurprising, considering that neither the XBOX Series nor Sony PlayStation platforms offer consumers a wide range of “exclusive” titles.
Instead, the first-party games produced or published by both console manufacturers often find their way to the PC market due to the exorbitant budget costs associated with titles like The Last of Us Part 2, Horizon Forbidden West, and Marvel’s Spider-Man 2, each costing over 200 million dollars to develop.
Additionally, these systems are generally too expensive for consumers to purchase compared to the Nintendo handheld, which features decade-old ARM hardware. Furthermore, the global economic downturn means that people simply don’t have the funds to splurge on a $500+ console and purchase $70 video games.
Sony is making headlines in the PC gaming world, but not necessarily for the right reasons. Their surprise success with Helldivers 2 has been remarkable, selling over 12 million copies as of May 5th.
This surpasses Sony’s previous record set by God of War Ragnarok in the same post-release time frame, making it Sony’s most successful PC title to date. As a multiplatform release, Helldivers 2 has significantly boosted Sony’s sales and profits for this quarter.
Considering how Helldivers 2 is now Sony’s fastest selling title of all time, perhaps this explains why they made a controversial attempt to push PC players into transitioning to a PlayStation Network account to continue playing the game.
This tactic was met with significant backlash from consumers, leading to hundreds of thousands of negative reviews. Eventually, Sony backtracked on enforcing the requirement for a PSN account for online play.
However, despite this reversal, the game remains unavailable for purchase in over 170 different countries, particularly those where creating a PSN account is not permitted.
A similar situation applies to Ghost of Tsushima, even though it is primarily a single-player title. It, too, is barred from sale in over 170 countries because it requires a PSN account to access its “Legends” online mode.
Sony’s focus on the PC platform doesn’t seem to prioritize raw game sales. Instead, they appear more interested in consolidating control and influence over the PC audience.
By tethering them to the PlayStation Network and its stricter policy guidelines, Sony aims to exert authority. The prospect of being able to ban or restrict troublesome PC players from accessing multiplayer features in Sony games is appealing, as is the potential to collect their user data.
Sony previously stated that they had no plans to release a first-party “exclusive” title throughout the year of 2024, aligning with similar decisions made by other major publishers. This strategic move appears to be aimed at capitalizing on the anticipated hype surrounding Grand Theft Auto 6 next year.
Rather than rushing into a new generation console, Sony seems to be focusing on a side-grade revision in the form of the PlayStation 5 Pro. It is rumored to feature the same Zen 2 processor as part of its System on Chip (SoC), but with a customized RDNA3-based graphics chip that includes next-generation RT cores, effectively doubling ray tracing throughput.
Once more, improved graphical capabilities hold little significance for console viability when the system lacks exclusive titles. Square Enix, despite favoring Sony’s platform through limited timed exclusivity deals, is encountering challenges.
Recent Final Fantasy releases have not met expectations. This may be attributed to the limited user base of the PlayStation 5 and the inclusion of progressive themes or global censorship in these titles, resulting in Square Enix taking a multiplatform approach for its censored trash moving forward.
Considering Sony’s recent controversial actions facing backlash over imposing censorship on third-party games like Stellar Blade and Tsukihime’s artbook, it’s not difficult to understand why Sony’s system is struggling in the market compared to the resounding success of Nintendo’s handheld.
Sony has been implementing layoffs across several PlayStation studios, including the closure of their entire London outfit. Layoffs have also affected prominent studios like Naughty Dog, who canceled a multiplayer spin-off for The Last of Us. Guerrilla, and Insomniac were also victims.
This could be attributed to their Hollywood-level budgets for their game development, requiring millions of copies to be sold just to break even.
The future of traditional home consoles appears uncertain, as portable devices like Valve’s Steam Deck and Nintendo’s Switch gain popularity. The Switch stands out as the only console produced at a profit, boasting a rich library of exclusive titles and more lenient censorship policies compared to Sony and Microsoft.
After three and a half years, the PlayStation 5 lineup remains scant, comprising primarily of a single tech demo, some VR games, a lackluster remake of Demon’s Souls, and titles yet to be released. Moreover, some of these upcoming titles, like Final Fantasy and Stellar Blade, are certainly destined for PC release eventually.
Now compare those with the Nintendo Switch.
Both Sony and Microsoft are downsizing developers as their home consoles struggle to attract new users. Console “exclusivity” loses its meaning when titles are available or planned for PC release.
Sony’s decision to go a year without a major first-party game release is concerning and signals that conventional gaming has become unsustainable due to escalating costs. ESG funds are going under, leading to widespread closures and layoffs.
“If we don’t introduce innovative ideas, games themselves will become monotonous and boring. Additionally, “grand and elaborate” types of software are complex in content, requiring time, labor, and expenses to produce.
Even if billions of yen are invested and a hit game sells a million copies, it might still be at a loss. In that case, it’s not sustainable as a business. Even a “light, simple, and compact” game can be well-crafted and enjoyable.”
Hiroshi Yamauchi’s insights resonate more profoundly now than ever before.
