TOKYO – Japanese players are losing control, as Sony Interactive Entertainment has prioritized consumers in the United States and other countries in its PlayStation 5 marketing strategy.
The PS5 has been in short supply in Japan since its launch in November, frustrating many domestic fans. Sony has not increased local device delivery even for the holiday shopping season, the hottest time for video consoles.
Even more irritating for Japanese players is that Sony has stopped selling all PS4 models except one.
The supply crisis was highlighted on January 1, when Tokyo’s famous electronics store Yodobashi Camera placed PS5 units on store shelves, despite growing concerns about the increase in coronavirus cases in Japan. The pandemic forced stores to make the popular game console available mainly through an online lottery. The industry has adopted the online lottery formula to avoid large crowds in stores and reduce purchases to resell at high profits.
Japanese players were surprised by a report in early January saying that Sony had stopped sales of most PS4 models in Japan, with Twittersphere exploding with the news. “It was sooner than expected,” said a tweet. “I need to buy the PS5 now,” said another.
The PS5 is still sold out at many Japanese retailers.
In fact, Sony stopped domestic shipments of three PS4 models, as well as a version of the PS4Pro premium in late April 2020. In September, the company stopped shipping all PS4 models to retailers in Japan, except one.
Sony is expected to take similar steps to eliminate PS4 in foreign markets, but declined to offer details.
Sales of new game consoles generally increase for several years before peaking. Annual sales for the PS4, which launched in 2013 and accumulated global sales of more than 100 million units, peaked at 20 million units in fiscal 2016.
Even after the PS4 hit the market, Sony continued to sell the PS3 until 2017 to ease the pain of updating for users. The company took the same approach to eliminate PS4.
PS4 peripherals and games will remain on the shelves so that Sony can continue to reap the lucrative revenue stream. The company’s gaming business is now a big winner, thanks to the recurring online gaming fees paid by 46 million subscribers.
The decision to reduce PS4 supply before the launch of the PS5 aims to encourage an upgrade to the new model, especially among PS4Pro users. This power play makes sense for Sony management, as the PS5 console is compatible with most PS4 games – a big change compared to the transition from PS3 to PS4, which did not support previous games.
But PS5 sales in Japan have been weak, with only about 266,000 units sold in the first eight weeks, according to Japanese gaming magazine Famitsu. That’s about half of PS4 in the same period and less than 60% of PS3, whose initial sales also suffered from a lack of supply. Notably, PS5 sales have hardly increased during the Christmas and New Year shopping season.
But this is intentional, as Sony focuses on the North American market, where almost 2 million units have already left the shelves, according to VGChartz, a game information website. The company is facing stiff competition from the region’s new Microsoft Xbox consoles, making a large PS5 supply there imperative. According to VGChartz, about 1.5 million new Xboxes have already been sold in North America.
The latest Xbox also has a solid presence in Europe, where 700,000 consoles have been purchased since its launch last November, compared with 1.6 million for the PS5.
In contrast, Sony is not feeling the heat in Japan. Despite relatively modest sales of the PS5 at home, sales of rival Xbox consoles have not been much better, with only 30,000 units sold so far, according to Famitsu. That is, Sony does not have to worry about the conquest of Xbox in the Japanese market.
Microsoft is also struggling to ensure a steady supply of consoles due to a shortage of graphics and processing chips that is affecting most of the world. Executive vice president of games, Phil Spencer, recently asked the head of Advanced Micro Devices – the US chip maker that supplies the Xbox and PS5 – to keep up with demand. “I was on the phone last week with [CEO] Lisa Su at AMD [asking] how are we going to get more? “said Spencer, according to CNN.
AMD apparently can’t keep up, as demand for chips used in home entertainment is growing due to the pandemic.
Both the PS5 and Xbox depend on chips provided by AMD, such as the central processing unit Ryzen shown here.
Sony expects to sell more than 7.6 million PS5 consoles globally by the end of March, breaking the PS4 sales record in the first year. The target seems within reach given that 4.5 million units have already been acquired, according to VGChartz.
Robust sales have also been forecasted for Japan, as consumers spend more time at home. But the lack of supply is irritating some Japanese players. Many lost their passion for PS5, while others switched to PC games.
This shows that Sony’s strategy of pushing people to the PS5, aggressively eliminating the PS4, can backfire at home.
Still, the company looks unperturbed, launching another PS5 drive abroad in India on January 1 – a sign that is hardly encouraging for frustrated Japanese players and perhaps signaling a significant loss of prestige and confidence at home.