During the Questions & Answers session of his presentation at Sony’s Investor Relations Day, Sony Interactive Entertainment president Jim Ryan provided more insight.
Below you can read a summary of what Ryan explained in response to several questions from analysts and media.
- The rate of growth in PS5 monthly active users exceeds what was seen at the beginning of the PS4 cycle. This is ahead of Sony’s expectations and the company expects to continue to outperform PS4 in the future. This is due to the “excellent features” of the PS5 that encourage consumer engagement like never before and to the quality of the games at launch. The strength of the games lineup of PS5 will continue in FY2021 and beyond. Sony is very optimistic on the engagement front for PS5 and that normally leads to strong monetization.
- Sony has seen very rapid growth in free-to-play games.
- As a measure of success, Sony looks at the sales performance of its first-party titles and their critical reception. Every metric related to the games at the start of the PS5 cycle is “very, very strong.”
- Both Horizon Zero Dawn and Predator: Hunting Grounds on PC were profitable and had a very successful publishing debut.
- The first mobile games based on iconic SIE IP will come this fiscal year (before March 2021) but Sony doesn’t anticipate significant profit from them. Yet, as the company learns from that experience and increases the number of mobile titles, the profit contribution from both PC and mobile should “steadily become important.”
- Sony believes that in the future, the “very great majority” of its revenue and profitability will still come from activities related to gaming, but they see the synergistic benefits of activities like movies and TV. Those should actually bring an actually meaningful financial contribution to Sony’s results.
- Sony has configured its services focusing primarily on PlayStation Plus, which now has 48 million subscribers. PlayStation Now focuses on a slightly narrower audience. Taking the two together the subscriber game is in excess of 50 million subscribers, which Ryan believes compares very favorably with any competitor.
- The Digital Edition of PS5 appeals to digitally savvy gamers at ease with purchasing digital content. The gap in Game Spend in favor of the digital edition of the console is slightly greater than Sony anticipated. This is encouraging according to Ryan.
- The standard edition of PS5 still represents the majority of the console’s hardware sales. That proportion should not change greatly in this fiscal year (before April 2022) but as time passes and we move further into the cycle, there should be a slight increase of the share of the digital edition, but not significant.
- Speaking of the next-generation PlayStation VR, it puts many learnings from the original PSVR into practical use. Those learnings include the specifications of the product and customers will notice that the new one will have a much simpler setup in terms of cables and connectors. Many learnings will also be applied in the making of VR experiences. Game developers have learned a lot over the course of the cycle of the first PlayStation VR. Sony is already starting to see that these learnings are being put to very good use with upcoming next-gen VR games.
- The ratio of PS Plus subscribers compared to the combined installed base of PS4 and PS4 is less than 50%, but looking at engagement and spend trends, there has to be an opportunity to encourage more people who spend a lot of time and money on PlayStation platforms to subscribe to PlayStation Plus. It’s a meaningful business opportunity in the medium term.
- Sony wants to invest in the process of game development. We’ll certainly see increases in the amount of money spent making PlayStation Games at Playstation Studios. That is seen as part of the process of building something big and powerful.
- Following the launch of PlayStation 5 in China a week ago, the market reception was “absolutely extraordinary.” This means that Sony is optimistic about being able to do better in the country compared to past attempts. The company recognizes that a very different strategy is required in China compared to the rest of the world. They need to be cognisant of the free-to-play market, the mobile market, and the huge amount of domestic content produced by local developers. This time around Sony will be much more focused on partnerships with local companies and developers to provide locally-developed content as well as playing to SIE’s own strengths in brand marketing and publishing of first-party games.
- China is a complicated and difficult market due to a number of regulatory risks experienced over the past four or five years by Sony. Those could happen again and there may be new problems that have not yet been experienced that could be a challenge. That being said, if SIE does this right, the country could represent a “very meaningful business opportunity.”
If you’d like to hear more, you can also enjoy further insight on the PlayStation business from yesterday’s Corporate Strategy Meeting.