Today Sony is hosting its Business Segment Meetings, including the presentation for the Games & Network segment of the business, presented by PlayStation executives.
During the Q&A Session, CEO Jim Ryan mentioned that Sony is constantly looking at the pricing of its products and services but he declined to answer a question from an analyst on whether the price of PlayStation Plus could be increased in the future.
Ryan also explained that Sony sees the possibility of significant profit generation for its IPs outside of PlayStation, in fact, this already happens on PC. That being said, for the moment, the focus is on expanding the reach of Sony's IPs and exposing new users to them. He brought up The Last of Us TV series as an example of that. The series has a "hugely positive impact" on video game sales.
We also hear that Sony is confident about being able to manage to double the revenue of first-party games by fiscal year 2025. Ryan is also "very optimistic" that over the life of PlayStation 5 Sony should be able to exceed over 70 million units shipped on top of the recently-announced 38.4 million. The 70 million figure represents the existing PS4 users. Not only does Sony expect to convert a large number of them to the new console, but Ryan also expects to bring in many users who never owned a PS4 or even a PlayStation console at all. This would bring the lifetime sales of the new console beyond 108.4 million. It's worth mentioning that the PS4 has shipped 117.2 million units as of March 2022.
Speaking of cloud gaming, Ryan explained that it will be fundamental to allow the company to exploit the growing trend of mobility in gaming. Sony does have some "fairly interesting and quite aggressive plans" to accelerate its initiatives in the space of the cloud, albeit the executive was not able to provide details today. Those plans will "unfold over the course of the coming months."
Interestingly, the executive also mentioned that Bungie was very strong in North America before the acquisition and now Sony is in the process of amplifying the awareness of the developer's games in other markets like Europe and Asia. Discussions about the expansion to other forms of media for the developer's IP have also already started and are considered as important.
The release schedule of live service games for Bungie is "basically on track" with what was announced before, while titles "move around a little bit in any development or publishing organization." Sony is "confident in the plans that Bungie has to release new games."
During the livestreamed presentation (for which you can find the full slides on Sony's official investor site), we hear that the cumulative sell-in (shipments to retailers) for PS5 is expected to catch up with PS4 in Q2 this fiscal year (between June and September) and start to exceed it in Q3 (between October and December). This has actually already been achieved locally in several markets including Japan.
The production and supply challenges that plagued the console have been solved, and according to Sony, the PS5 is the "strongest platform it has ever built."
Below you can take a look at the sell-through to customers compared between PS4 and PS5.
Here's an interesting graph indicating "brand momentum" (basically brand awareness polled among users) against "brand B" and "brand C" marked by really inconspicuous colors.
The attach rate of PlayStation Plus users for PS5 is at 71% by March 2023 compared to 70% for PS4 by March 2016. 53% of PS5 users have made transaction in the store compared to 31% for PS4, while the daily active users for PS5 are 43% of the total compared to 37% for PS4.
The average spend per PS5 user is $622 compared to $479 in the comparable period since PS4's release. Below you can see a number of comparisons including predictions until February 2024. Sony expects PS5 to surpass PS4 on all metrics by then.
Renewal rates for PlayStation Plus have grown to 78% in the previous fiscal year compared to 75% pre-pandemic. The average revenue per user grew 11% year-on-year in the latest fiscal year.
As of March 2023, PlayStation Plus Premium subscribers are 8 Million (17% of the total), while Extra subscribers are 6.1 million (13% of the total). This means that after the first 10 months since the release of the new tiers, 30% of Playstation Plus subscribers (14.1 million) are on the higher tiers.
Speaking of PlayStation VR2, it has sold just under 600,000 units in its first six weeks, ahead of the original PlayStation VR in the same period. You can see the trend comparison below.
Below you can see the distribution of investment between new IPs and existing IPs including estimates for fiscal year 2025 (between April 2025 and March 2026). The second column is the past fiscal year, which ended in March 2023.
The next graph shows the share of investment for traditional content and live service content for the same fiscal years. Spony expects the investment in live services to surpass that for traditional single-player games by March 2026.
Speaking of PC games, we take a look at the revenue trends and sales. Marvel's Spider-Man Remastered sold 1.5 million units on PC by March 2023, while The Last of Us Part I has sold 368,000 units as of April 23, 2023.
Sony is also working to expand on mobile platforms, and we get a summary of the strategy for mobile games, with multiple project already started.
In the chart below, the third column is the projected ratio of releases between mobile (green), PC (light blue) and PS5 (dark blue) in the fiscal year between April 2025 and March 2026. The second column is the current fiscal year. Sony expects the majority of revenue before fiscal year 2025 to come from sales on consoles and PC.
PlayStation plans to have two or more major releases per year going forward covering every major genre with a mix between single-player and live service games, as you can see below.
Lastly, we hear that Sony sees "huge opportunities" in expanding the player base beyond PS5 to PC and mobile, with the cross-platform release of live service games "at the very core" of that.
That being said, while the company remains committed to achieving growth, in the coming years the company will also focus more on cost saving and profit generation, with a priority of improving the level of return on investment.
