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Sony will "rigorously pursue" PS4 sales

Sony will "rigorously pursue" PS4 sales

Tue 27 May 2014 9:54am GMT / 5:54am EDT / 2:54am PDT
HardwarePublishing

"The biggest driver for our network business will be the PlayStation 4" - Kaz Hirai, CEO

Sony CEO Kaz Hirai has emphasised the importance of the PlayStation 4 to the company's future, telling the press that it valued increasing its installed base over profit growth.

That stands in stark contrast to the company's electronics business, where unit sales are no longer as important as profitability. The reason for this candour, Hirai said, was the huge revenue potential that will come with expanding the reach of Sony's network.

"We have to rigorously pursue install-base numbers," Hirai said, according to Reuters. "The biggest driver for our network business will be the PlayStation 4."

Sony revealed that revenue from Sony's network business reached 200 billion (almost $2 billion) for the year ended in March, which represents a 70 per cent year-on-year increase. Sony's network now has 52 million active users, most of which come from PlayStation console owners.

Hirai described the company as being on the verge of fulfilling a longstanding plan to use its hardware as a platform for its myriad content services. Indeed, Hirai dated that vision all the way back to the late Eighties, when Sony founder and chairman Akio Morita established its music and film divisions.

"Now we've got broadband and can send content in the blink of an eye...the technology has finally caught up with the times," he said.

In the last generation, the popularity of Xbox Live was a major boon for Microsoft, but Sony has done a fine job of closing the gap in a relatively short space of time. An example of this is the success of the subscription-based PlayStation Plus service, which counts half of all PS4 owners among its members.

And the next step for Sony will be PlayStation Now, a streaming service that will tap into its huge back-catalogue of games. The service is currently in closed beta, with no fixed launch date.

"The network is becoming increasingly important for our other businesses, too," Hirai said. "Our TVs have video-on-demand and Music Unlimited. PlayStation Now will be launched on Bravia TVs next."

11 Comments

Klaus Preisinger Freelance Writing

1,135 1,171 1.0
Let's see how rigorously Sony will accept price parity between the two consoles.

Posted:4 months ago

#1

Klaus Preisinger Freelance Writing

1,135 1,171 1.0
I'd say that depends. Just the other day, Sony was trumpeting that the PS4 might make them more money than the PS2. In this announcement, Sony mentioned the high adoption rate of PSN+.

It seems Sony is being very confident in the revenue per user being rather good and getting better over the next years. Having a company believe that, might very well be the prelude to a price cut, or aggressive bundles being released. On the other hand you still can't get the PS4 for its suggested retail, since it is still sold out practically everywhere.

Posted:4 months ago

#2

Nelsun Rivera Mixed Media

15 14 0.9
PS4 is not being sold at a loss. Turning things around a will take more than that but I do believe Sony is on the right track. Taking more of a service stance versus total hardware.

Posted:4 months ago

#3

Donald Dalley Freelance writer

52 38 0.7
The other day, I read the the PS4 is already profitable, so that shouldn't worry them or us.

However, their steaming service will only get better if/when the ISPs stop using data caps.That is putting the brakes to this kind of service, so we all should be vigorously campaigning to eliminate these ridiculous data caps. There is no way that I will partake in Now or Netflix with the current payment system.

Posted:4 months ago

#4

Nicholas Pantazis Senior Editor, VGChartz Ltd

1,020 1,467 1.4
Too bad they aren't rigorously pursuing Vita sales.

Posted:4 months ago

#5

Anastasios Hatzis Community Manager

15 40 2.7
Surely the Vita doesn't sell enough units to have a positive or negative effect on their profits at all.
Can you clarify this statement? As far as I understand, a product that doesn't sell enough units can perfectly cause a huge loss (fixed expenses e.g. R&D, or increased inventory costs, or price cuts below manufacturing costs).

Also, business models, cost structures, competition, and other things are too different between PS3 and PS4 for making oversimplified revenue estimations with PS3 numbers. It is also known that the PS3 was not a profitable product for a long time. And as a final note, we don't know since when the PS4 is profitable. I assume that this happened rather recently, not since launch day.

Posted:4 months ago

#6

Greg Wilcox Creator, Destroy All Fanboys!

2,193 1,170 0.5
That title allllllmost makes it seem if any current PS3 owner doesn't upgrade, someone at Sony will "vigorously pursue" them and force them to buy a PS4 at some point... :D

Posted:4 months ago

#7

Paul Jace Merchandiser

939 1,420 1.5
On the other hand you still can't get the PS4 for its suggested retail, since it is still sold out practically everywhere.
I'm not sure where you are located but here in the US the PS4 has been in stock everywhere since atleast March.

Edited 1 times. Last edit by Paul Jace on 28th May 2014 4:50am

Posted:4 months ago

#8

Nicholas Lovell Founder, Gamesbrief

196 198 1.0
The statement that the PS4 is profitable is misleading. Hiram said it was profitable at the hardware unit basis. That means Sony is no longer losing money on every PS4 sold. That does not mean that the PS4 is profitable: it excludes the enormous costs of getting the PS4 to launch. It excludes ongoing marketing costs. It excludes the salaries go all the people working on PS4 whose costs are not included in costs of goods (I.e. Everyone not involved in manufacturing and, perhaps, distribution).

It is deeply disturbing how lazy journalism in the games industry can lead to very misleading opinions.

Posted:4 months ago

#9

Anastasios Hatzis Community Manager

15 40 2.7
Indeed, XBox doesn't have a supply problem because it has a demand problem.

The AMD SoC for both, XBO and PS4, is produced by TSMC. TSMC capacities reportedly are maxed out until end of 2014. It is rumored TSMC is the bottleneck if it comes to manufacturing capacities for PS4. As far as I understand, in 2013 TSMC had the world's largest foundry capacities in the dimension of the next three competitors. So this is probably no easy task for Sony to get additional capacities, unless an existing customer of TSMC will free up capacities.

Posted:4 months ago

#10

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