Sony Expects PS5 Hardware to Initially Impact Earnings Negatively But Games Will Grow Profits

During the second part of Sony’s quarterly financial conference call for investors and analysts, chief financial officer Hiroki Totoki talked about the PS5’s contribution to earnings.

We hear that Sony expects PS5 hardware to contribute negatively to earnings (basically implicitly confirming that the hardware is sold at a loss) for the time being. That being said, Totoki-san added that market penetration for the console will encourage customers to purchase games. As a result, the PS5’s ecosystem as a business will be “activated” and grow profits.

To a further question, Totoki-san answered that Sony is seeing “very strong PS5 customer demand and reputation” and the strength of the software lineup “is there” so the company believes that in next year the customer base can be expanded even more. In the mid to long-term, the service will be reinforced and recurring revenue will be increased.

The point isn’t so much the single year, but what kind of expansion can be achieved over the mid to long-term.

Totoki-san also mentioned that having a stake in third-party publishers isn’t required, but Sony wants to have access to as much high-quality content as possible for PlayStation so that it can be delivered to the platform’s customers.

If you’re interested in Sony’s quarterly financial performance and in an update on PS4 shipments, you can read our dedicated article.