PlayStation Fiscal Results and Multi-Platform Commentary

It’s that time again. This morning Sony shared its fiscal results and with it some significant updates on the state of their Games & Network Services segment (IE PlayStation). The results are representative of the final quarter of 2023 which equates to the 3rd fiscal quarter of 2023 for Sony. First let’s break down the details.

• PS5 hardware unit sales in the quarter were 8.2 million units, which fell short of the target to hit our annual shipment target of 25 million units, but was a record high number of quarterly unit sales for PS5, and PS5 cumulative sales have exceeded 50 million units.
• Due to the impact of the increasing popularity of PS5 and third-party free-to-play hit titles, key user engagement metrics increased significantly with monthly active users for all of PlayStation in December reaching a record high of 123 million accounts and total game play time for the quarter increasing 13% year-on-year.
• Based on the results for this quarter, PS5 unit sales for this fiscal year are expected to be around 21 million units.
• Regarding first-party software, the cumulative sales of Marvelʼs Spider-Man 2, which was released last October, exceeded 10 million copies as of February 4, and the Marvelʼs Spider-Man game series has now sold-through over 50 million units including sales from PC.
• The game is our second blockbuster hit in two years following God of War Ragnarök, which was released in the same period last year, and is making a major contribution to profits. Regarding network services, despite the impact of a slight year-on-year decrease in the number of PlayStation Plus subscribers, revenue increased 11% year-on-year, mainly due to the impacts of a further shift to premium services and price revisions.

For the future outlook, Sony President Hiroki Totoki called out several specifics.

• Regarding the PS5 hardware, which will enter its fifth year since launch, partially due to its entering the latter half of the console cycle, we aim to optimize sales with a greater emphasis on the balance with profits, so we anticipate a gradual decline in unit sales from next fiscal year onwards.
• We expect third-party software sales to continue to expand gradually due to the expansion of the PS5 installed base and the high level of user engagement.
• In network services, we expect subscribers to be on par with this fiscal year or slightly less due to the impact of price revisions we implemented in this fiscal year, but we expect sales to gradually expand due to a shift to attractive premium services.
• Regarding first-party software, we aim to continue to focus on producing high-quality works and developing live service games, but, while major projects are currently under development, we do not plan to release any new major existing franchise titles next fiscal year like God of War Ragnarök and Marvelʼs Spider-Man.
• Although the burden of acquisition-related costs will ease next fiscal year, we expect profit from first-party software to decrease slightly from this fiscal year due to the impact of the decrease in sales.
• Based on this, operating income for next fiscal year is currently expected to increase slightly from this fiscal year. However, while this is our base-line, we are reviewing measures for further improvement in profitability in advance of the annual financial results announcement this May.

Most notable is Totoki’s commentary on the strength of releasing multi-platform to drive better margins for PlayStation in the future and how there will be no major first-party releases prior to April of 2025. With regard to more titles going multi-platform, given the decline in outright profitability in the quarter it makes perfect sense, and it’s an aspect that I discussed quite broadly on Cast Co-Op last week during our conversation on Xbox.

Totoki’s full quote is as follows:

In the past, we wanted to popularize console and the 1st party titles’ main purpose was to make the console popular. It is true, but there is a synergy to it. So if you have strong first party content, not only with our console but also other platforms like computers, 1st party can be grown with multiplatform and that can help operating profit to improve. So that is another one we want to proactively work on. I personally think there are opportunities out there for improvement of margins, so I would like to go aggressive in improving our margin performance

With the Xbox Business Update coming tomorrow, it’s certainly a time of change in the industry. But it’s one that’s been coming for a long time now. No matter what, I continue to be incredibly excited for the future of gaming. More games, on more platforms, with more players sounds like a win to me!