Sam Machkovech
Sony has shipped 4.5 million PlayStation 5 consoles worldwide by the end of 2020, the company announced in a earnings report on Wednesday. The number is broadly comparable to the 4.5 million PS4 consoles shipped in the system’s 2013 launch quarter for 2013. But potential PS5 customers may not expect the pace of production to rise, Sony said, despite widespread retail sales leading to big second-hand remarks.
“It’s difficult for us to increase PS5 production amid the shortage of semiconductors and other components,” Sony chief financial officer Hiroki Totoki said during a briefing accompanying the results. “We could not fully satisfy the high demand from customers [but] we continue to do everything in our power to send out as many units as possible to customers waiting on a PS5. ‘
Overall, Sony’s Game and Network Services division increased its holiday quarter year by year by nearly 50 percent. The company now predicts the best financial year performance for the gaming division in company history, thanks to an increase in PlayStation Plus subscribers (which now stands at 47.4 million). A total of 87 percent of PS5 owners subscribe to PlayStation Plus so far, Sony said, adding that these subscriptions will be the key to the company’s profits.
“Strategic price points”
Despite the record-breaking performance, Sony said its profits at stake were hurt by a loss due to strategic price points for PS5 hardware set lower than manufacturing costs. This is not abnormal for new consoles, which often start with a loss to create a larger audience for software and services like PlayStation Plus and PlayStation Now.
But the PS5’s specific ‘strategic’ price may also reflect the console price chicken game that Microsoft and Sony have been playing throughout 2020. Both companies waited longer than usual to release their console pricing plans, and Microsoft finally broke the seal on September 9th. Sony announced the $ 499 PS5 a week later (along with a $ 399 digital edition). The aggressive $ 299 price tag of the Xbox Series S may have played a role in Sony’s decision to lose a “strategic price point”.
In any case, Sony could finally start making a direct profit on PS5 hardware sales as internal component costs fall and internal redesigns streamline the manufacturing process. In today’s earnings report, the company notes that it’s now seeing higher profit margins on PlayStation 4 hardware ‘.
Digital kills game disc
Sony also revealed that nearly 63 percent of its sales ‘full games’ for the calendar year 2020 came via digital downloads rather than games sold on chips in retail. This is a significant increase from the 43 percent share in digital sales in Sony’s 2018 financial year (end of March 2019) and the 55 percent share in the 2019 financial year (end of March 2020). The increase reflects a long-standing trend away from disc-based games in the industry, and it may be a trend that can only accelerate now that about a quarter of all PS5 systems do not even have a disc driver, based on early hardware allocations.
Sony’s gaming division is apparently still benefiting from the aftermath of the global pandemic, the company said. “Thanks to the sustained home demand and the launch of the PS5, we have achieved a very high level of user engagement,” the company said. “The total PlayStation user playing time in December was about 30% higher than the same month of the previous fiscal year.”
Demand for the aging PlayStation 4 for the holiday quarter was up to just 1.4 million units compared to a full 6 million a year ago. The console has now sold a total of 114.9 million units worldwide, ahead of the original PlayStation, but still short of the 155 million units moved for the PS2.
Microsoft did not announce unit sales for the Xbox X / S series, but said in a earnings report last week that Xbox hardware revenue increased 86 percent year-over-year for the holiday quarter.