During Sony Corporation’s quarterly investor conference call Chief Financial Officer (and future CEO) Kenichiro Yoshida talked about the state of the PlayStation Business.
We hear that while the current console cycle has reached the profitability peak, bringing forth the necessity to stabilize the earnings base, but there are several differences in the business structure compared to previous cycles.
First of all, the subscription service PlayStation Plus is contributing to profitability with its recurring revenue mitigating the “waves of the cycle.” On top of that, after buying games users can purchase downloadable add-on content and in-game currency, and Sony can expect revenue from this as well. This also has mitigated the issues involved in the traditional console cycle.
The PlayStation gaming business saw positive sales, profits, and a large positive impact of foreign exchange during the first three quarters (from March to December 2017). In the fourth quarter (From January to March 2018) investment for PS4 software will be on par with the previous year, but sales have been increasing and production cost reduction for the PS4 have pushed profit upwards compared to last year. On the other hand, the fourth quarter last year had large game releases that aren’t present this year, and this is expected to push the profit downward year-on-year.
Earlier in the call, during his prepared remarks, Yoshida-san reiterated that PlayStation Plus had 31.5 million paid subscribers as of December 31st, and mentioned that between October and December 2017 sales on the PlayStation Network increased by a whopping 41% year-on-year and exceeded 300 billion yen ($2.73 billion) for the first time in the business’ history.
If you want to read more about Sony’s quarterly financial results and an update on PS4 shipments, you can check out our dedicated article.