Sam Machkovech
Sony sold 4.5 million PlayStation 5 consoles worldwide by the end of 2020, the company revealed in a earnings report on Wednesday. The number is broadly comparable to the 4.5 million PS4 consoles sold in the system’s launch quarter in 2013. But potential PS5 customers should not expect the production rate to increase, Sony said, despite widespread retail sales that led to substantial second-hand increases.
“It is difficult for us to increase PS5 production amid a shortage of semiconductors and other components,” said Sony CFO Hiroki Totoki during a briefing accompanying the results. “We are unable to fully meet the high level of customer demand [but] we continue to do everything in our power to send as many units as possible to customers who are waiting for a PS5. “
Overall, Sony’s gaming and network services division saw profits for the Christmas quarter increase by almost 50% year on year. The company now predicts the best fiscal year performance for the gaming division in the company’s history, largely thanks to an increase in PlayStation Plus subscriptions (which now reach 47.4 million). A total of 87 percent of PS5 owners so far subscribe to PlayStation Plus, Sony said, making these subscriptions critical to the company’s profits in the future.
“Strategic price points”
Despite record-breaking performance, Sony said its gaming profits were hurt by a “loss resulting from strategic price points for PS5 hardware that were set below manufacturing costs”. This is not unusual for the new consoles, which are often released at a loss to help create a wider audience for software and services like PlayStation Plus and PlayStation Now.
But PS5-specific “strategic” pricing may also reflect the hen game of console prices that Microsoft and Sony played over 2020. Both companies waited longer than usual to publicly reveal their console pricing plans. , with Microsoft finally breaking the seal on 9 September. Sony announced the $ 499 PS5 a week later (alongside a $ 399 Digital Edition), the aggressive $ 299 price tag for the Xbox Series S may have played a role in Sony’s decision to lose a “price” strategic”.
In any case, Sony may eventually start making a direct profit on PS5 hardware sales as internal component costs decrease and internal redesign simplifies the manufacturing process. In today’s earnings report, the company notes that it is now seeing “higher profit margins on PlayStation 4 hardware”.
Digital killed the game disc star
Sony also revealed that nearly 63 percent of its sales of “complete games” in 2020 came from digital downloads, rather than games sold on retail discs. This is a significant increase in the 43% share of digital sales in Sony’s 2018 fiscal year (ending March 2019) and the 55% share in fiscal 2019 (ending March 2020). The increase reflects a longstanding trend towards moving away from disc-based games across the industry, and it is a trend that can only accelerate now that about a quarter of all PS5 systems do not even have a disc drive, based on first hardware allocations.
Sony’s gaming division also apparently continues to benefit from the effects of the global pandemic, the company said. “Thanks to the continued demand to stay home and the launch of the PS5, we have reached a very high level of user involvement,” said the company. “The total play time of the PlayStation user in December was approximately 30% higher than in the same month of the previous fiscal year.”
Demand for the old PlayStation 4 fell to just 1.4 million units in the holiday quarter, compared with 6 million a year ago. That console has sold a total of 114.9 million units worldwide, ahead of the original PlayStation, but still well below the 155 million units traded for the PS2.
Microsoft did not disclose unit sales for the Xbox Series X / S, but said in a earnings report last week that Xbox hardware revenue increased 86% year over year in the holiday quarter.