Sony Continues to Expand PlayStation 5 Footprint, Distance Itself From Rivals

Sony Continues to Expand PlayStation 5 Footprint, Distance Itself From Rivals

The Sony PlayStation ecosystem continues to distance itself from rivals Microsoft Xbox and Nintendo Switch in the competitive video game market.

Sony Interactive Entertainment April 28 said it sold a record 19.1 million PlayStation 5 video game consoles in the fiscal year ended March 31, beating its forecast of 18 million by more than 6%.

Many of those unit sales were to gamers over 45 years of age, the fastest growing consumer base, up nearly 22 million since 2018, according to research group Circana.

By comparison, Sony said it sold 11.5 million PS5 consoles in the previous fiscal year, ended March 31, 2022, as the company was facing supply chain issues brought on by the COVID pandemic. The company’s gaming division annual revenue was 33% higher ($26.6 billion) than the previous fiscal year at $20 billion, coming in as the biggest category by sales. Sony is forecasting 25 million PS5 units sold through March 31, 2024.

Meanwhile, rival Xbox Gaming saw quarterly revenue decrease $133 million or 4% driven by a decline in Xbox hardware sales. Hardware revenue decreased 30% on a strong prior year comparable, driven by lower volume of consoles sold. Xbox content and services revenue increased 3% driven by growth in the subscription-based Xbox Game Pass.

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In terms of hardware sales, Sony has sold about 30 million PS5 consoles  compared to around 18.5 million Xbox Series units.

Xbox Gaming nine-month revenue decreased $800 million or 6% driven by declines in Xbox content and services and Xbox hardware. Xbox content and services revenue decreased 5% driven by a decline in first-party content, offset in part by growth in Xbox Game Pass. Xbox hardware revenue decreased 11% driven by lower volume and price of consoles sold.

Nintendo reported a 26% drop in Switch hardware sales to 1.5 million in the nine-month period ended Dec. 22, 2022, from 1.9 million units in the previous-year period. Software sales dipped 4% to 17.2 million units from 17.9 million during the previous-year period.

Notably, Ampere Analysis said Sony ended 2022 with 45% market share in video games, followed by 27.7% for Nintendo and 27.3% for Microsoft. The percentages were all down by 1.6% and 0.5% for Sony and Nintendo, respectively, while Microsoft saw a 1.8% market share increase.

Sony continues to object to Microsoft’s planned $69 billion acquisition of game publisher Activision Blizzard, claiming the merger would limit Activision’s popular Call of Duty franchise to Xbox platforms, among other concerns. The British Competition and Markets Authority (CMA) regulatory agency last week blocked the proposed sale, citing cloud gaming concerns, a decision both Microsoft and Activision are appealing.

Wedbush Securities media analyst Michael Pachter disagrees with the CMA decision, believing it will be overturned.

“The CMA’s ruling disregards the fact that several cloud-based services have closed over the last two decades, including those offered by Google (Stadia), Time Warner (GameTap) and startups OnLive and Gaikai,” Pachter wrote in a note. “We agree that Activision content is highly unlikely to ever be licensed to cloud gaming services, but disagree that Microsoft’s ownership of Activision would change the outcome for third parties such as Sony.”

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