Sony Aiming for Smooth Transition to PS5 Thanks to Growing Network Services Revenue and More

During Sony’s financial conference call for investors and analysts, Chief Financial Officer Hiroki Totoki talked about today’s results and the transition to PS5.

During the prepared remarks at the beginning of the call, Totoki-san mentioned that despite this quarter’s decline in sales and profit due to the upcoming generational transition, looking at mid-to-long term results, Sony’s gaming business is steadily growing as evidenced by the growth of network services like PlayStation Plus.

The company expects this growth to continue going forward, and the proportion of network services revenue compared to the total also continues to increase due to the growth in PlayStation Plus subscribers.

Sony aims to leverage this large community and network services revenue stream to effect a smooth transition from the current generation to the next, unlike the past when profitability deteriorated significantly due to the development and marketing costs.

Looking forward to the next-generation launch, Sony plans to control the costs and they’re working on production to prepare the right volume of units for the initial ramp-up.

That being said, since the market is a competitive space, it’s impossible to discuss the price at this point in time. Pricing will influence the promotion and how much Sony is prepared to spend for that.

Since it’s a balancing act, it’s difficult to say anything concrete for now, but Totoki-san talks explained that with “smooth transition” he also means that Sony will definitely choose the optimal approach with the best balance that can be profitable during the console’s lifetime.

Incidentally, we learned that most of the decline in software sales recorded in the quarter was due to free-to-play games, while the performance of other kinds of games (both new and past releases) was essentially flat. In terms of first-party games, Sony actually expected growth, but results didn’t quite match that expectation.

If you’re interested in learning more of Sony’s financial performance alongside an update of PS4’s shipment numbers, you can check out our dedicated article.