Sony PlayStation rises amid declining consumer spending in the industry

Note: This article is based on content from the Variety Intelligence Platform Special Report “2023 Media & Tech Trend Tracker”, available exclusively to subscribers.

Sony Interactive Entertainment announced PlayStation Playmakers in February, a new initiative to partner with names like LeBron James in promoting the console brand.

To all other gamers, this move would come across as a plea for consumers to spend money at a level not seen since 2021.

But for Sony, it caps off a return to form.

Video games were marred by consistent year-over-year declines in consumer content spending, a trend that continued into January. But PlayStation 5 consoles recently overcame a shortage of semiconductor chips, leading to Sony shipping 7.1 million units in Q4 2022, a new record for PS5.

The end result? PlayStation resisted the drop in content sales. In the holiday quarter of 2022, hardware sales revenue more than doubled from the previous year, rising from just under $1.5 billion to over $3.2 billion.

In turn, total software sales were up more than 30% for the quarter, with network services also seeing a nearly 20% increase in revenue. Overall, revenue for Sony Group’s Game & Network Services segment was up 53% year-on-year over the 2021 holiday quarter.

The latest earnings season spelled trouble for those who are solely in the software business. As a result, top publishers are cutting, whether it’s EA scrapping mobile versions of “Apex Legends” and “Battlefield” or Take-Two Interactive announcing layoffs as publisher Rockstar scrambles to release the next “Grand Theft Auto” game. to get out.

Activision Blizzard was spared the pain of the dip in consumer spending as “Call of Duty: Modern Warfare II” delivered record net bookings in October, though costs rose due to the company’s settlement with the Securities and Exchange Commission of $ 35 million after the handling of allegations of workplace misconduct.

Those “Call of Duty” sales are a major part of why Xbox owner Microsoft is adamant about strengthening its $69 billion deal to acquire Activision Blizzard. Combined with publisher King’s lucrative mobile revenue, owning “Call of Duty” stands to put Xbox on par with PlayStation when it comes to revenue, as Xbox currently sells about half the number of systems as PlayStation.

Microsoft itself has cut 10,000 jobs, including those at key teams under Xbox and sister publisher Bethesda. With first-party games on both units undergoing long development cycles and frequent release delays, it’s high time for Xbox to get every edge possible.

While Sony is fighting tooth and nail with global regulators to clamp down on the Activision Blizzard deal, the success of “The Last of Us” series on HBO has opened up PlayStation to an even wider audience that can play the original game on PC. experienced at the end of March, due to Sony’s embrace of the PC market in recent years.

If PlayStation succeeds with its push into live services and mobile, it will underline how important it is for gaming companies to expand into multiple markets. But if the post-pandemic boom in content spending continues to unsustainable, the number of companies with the resources to do so will surely continue to shrink.

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