Sony Explains Strategy and Investment for PlayStation Business, Driven by PS4 and PlayStation Network

Sony Explains Strategy and Investment for PlayStation Business, Driven by PS4 and PlayStation Network

Sony Computer Entertainment released today some new information about the upcoming strategy for PlayStation 4 and the PlayStation business segment in fiscal year 2015.

First of all, we learn about the achievements attained by the business segment in the past fiscal year, including the strong momentum of PlayStation 4 and PlayStation Plus and the announcement of Project Morpheus.

In particular, the PS4 has been the fastest hardware to grow its installed base to 20 million units, and PlayStation Plus users have doubled since fiscal year 2013.


Then we see three graphs illustrating the changes in operating income for the game division between fiscal year 2014 and fiscal year 2015.

In 2014 income was primarily driven by the growth of the PS4 and PlayStation Plus, but hampered by the decrease in PS3 sales. The second graph shows the difference between the actual result and the forecast published in April last year.

Interestingly, we also learn that the hardware production cost of the PS4 has been reduced. During the presentation CEO Andrew House explained that “very good progress” has been made on that front.


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The third graph showcases the forecasted operating income for the game segment in the current fiscal year (FY 2015).

Sony predicts a further expansion of the PS4 and of the profitability of network services, including PlayStation Plus. A decrease in fixed expenses and temporary costs will also help.

On the other hand, there will be an increase in investment related to the network services (which is much needed, considering recent performance), and a further decrease in sales of PS3 and portable consoles.

Andrew House mentioned during the presentation that the decrease in portable sales is predicted specifically in North America and Europe, while PS Vita quite strong in Japan and Asia.

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The following slide showcases the mid-term strategy for the PlayStation business, which is two-fold.

First of all, Sony plans to retain and expand engaged PlayStation users by continuously enhancing game feature of the PS4, attracting casual users without neglecting core gamers by offering titles catering to both demographics, and getting more customers with cloud TV services and PlayStation Now, and in developing markets.

Secondly, Sony plans to increase the average revenue per paying user by enhancing the value of PlayStation Plus, which will in turn increase subscribers and help retain current ones. On top of that, the house of PlayStation wants to boost revenue from other services like TV, video and music.

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The following slides illustrate the strategy for Fiscal Year 2015, which is declined in four main fields.

Sony aims to solidify the competitive advantage of the PS4 by supporting third party publishers and developers, reducing the production costs of the hardware, adding more features via system software updates, and creating innovative experiences with Project Morpheus.

In addition to that, Sony plans to increase the value of PlayStation plus by expanding multiplayer games further and  adding more original content like the Powers TV series.

Thirdly, the house of PlayStation aims to release more first party exclusive games (Uncharted 4 was brought as an example during the presentation), push the growth of PlayStation Now, expand PlayStation Vue, and enhance the PlayStation Music service.

Lastly, partnerships with top-of-the-line third party services like Netflix and more are supposed to drive further revenue.

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Finally, we get an overview of the investment that Sony intends to make during the current fiscal year, with effects on the future of the business.

The company intends to invest in PlayStation Network, by continuing to work on in architecture, on PlayStation Vue, on original content like Powers, and on Project Morpheus.

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