Sony Interactive Entertainment Sept. 16 disclosed the launch date and pricing for its next-edition PlayStation 5 video game console. The PS5 launches Nov. 12 priced at $500 for a unit capable of playing 4K UHD Blu-ray and standard Blu-ray Disc content. A digital-only PS5 without disc capacity will sell for $400. Sony disclosed the details in a special webcast.
The pricing and release date comes after rival Microsoft said it would release the new-edition Xbox Series X and Series S on Nov. 10 priced at $500 and $300, respectively.
The PS5 will feature 4K-compatible games playable on a 4K UHD TV, play so-called “ray tracing,” that offers true-to-life shadows and reflections on certain Sony games; support for 120fps and 120Hz games; HDR resolution; and future-proofed for 8K resolution.
On the day it is scheduled to reveal pricing and related details on the new PlayStation 5 video game console, Sony Interactive Entertainment is pushing back against media reports suggesting the company scaled back production numbers due to software chip issues.
“While we do not release details related to manufacturing, the information provided by Bloomberg is false,” Sony said in a statement to Gameindustry.biz. “We have not changed the production number for PlayStation 5 since the start of mass production.”
Bloomberg, citing sources, had reported that due to a 50% drop in system-on-chip production, Sony had dropped PS5 unit production at launch to 11 million from 15 million. Analysts say that even with the unit decline, the PS5 would feature the most product available at launch for any PS gaming system.
Ahead of a Sept. 16 pricing unveil for the next-generation PlayStation 5 video game console, Sony Interactive Entertainment has reportedly cut production for the year by four million units to 11 million, citing software chip issues.
As first reported by Bloomberg, which cited sources familiar with the situation, production for the new console was being hampered by a 50% reduction in available custom-designed system-on-chips (SOC) that help drive the unit. Coupled with manufacturing delays due to the coronavirus pandemic, production of 11 million PS5 units would still surpass previous first-year PS production runs.
“If Sony can really ship 11 million for this fiscal year, we do not think the shortfall will be critical,” Kazunori Ito, analyst with Morningstar Investment Management Asia, told CNBC.
The news, which saw Sony Corp. shares dip slightly, comes as PS battles Microsoft’s Xbox with new gaming systems in time for the 2020 winter holidays. Microsoft earlier this month announced that the Xbox Series X and Xbox Series S consoles would launch Nov. 10, priced at $499 and $299, respectively. In a first, the software giant will market financing options for the consoles, beginning at $24.99 monthly.
After a near two-year slump as gamers awaited the arrival of new consoles and/or migrated to online gaming, the video game market has exploded during the pandemic. Driven by house-bound gamers and consumers, monthly industry sales ballooned more than 70% in April, according to The NPD Group — with accessory sales hitting an all-time high in August.
Nintendo, whose Switch gaming device has dominated the market in the absence of new Xbox and PS units, saw operating profit skyrocket 400% for the fiscal quarter from April to June 2020.
Sony Corp. May 13 disclosed that its flagship PlayStation 5 video game console is still on schedule to debut in time for the winter holidays — despite manufacturing delays caused by the coronavirus pandemic. PS5, along with Microsoft’s Xbox Series X, are expected to revive a lagging video game market. Sony also disclosed that the PS4 has sold 110 million units since launching in 2013.
“Although factors such as employees working from home and restrictions on international travel have presented some challenges in regards to part of the testing process and the qualification of production lines, development is progressing with the launch of the console scheduled for the 2020 holiday season,” Sony said in a statement.
That’s a good thing as sales of PS4 dropped to 1.5 million units in the fourth quarter (ended March 31). That was down 43% from sales of 2.6 million units in the previous-year period. For the year, hardware sales dropped 24% to 13.6 million units, compared with 17.8 million in the prior year.
PS4 packaged-media game sales totaled $190.2 million in the quarter, down 39% from $309 million in the previous-year period. Indeed, Sony sold $1 billion in game discs for the fiscal 2019 year. Digital game sales topped $9.3 billion. Total game revenue in the fiscal year surpassed $18.4 billion.
Veronica Rogers will oversee global business operations as the new SVP of business operations for Sony Interactive Entertainment, the company responsible for the PlayStation brand and family of products.
She will report to president and CEO Jim Ryan and will lead Sony Interactive Entertainment’s go-to-market organization globally. Rogers will help drive business growth, lead strategic initiatives, and evolve the culture of business operations from its previously regionalized structure into a single global system.
“Veronica brings a wealth of experience leading global sales organizations, managing strategic partnerships, developing innovative business models, and building world class teams,” said Ryan in a statement. “She will play a crucial role in scaling the business and I’m thrilled she has brought her expertise to the PlayStation family.”
Rogers will be responsible for global alignment in sales operations, both physical and digital, as well as lead PlayStation subscription services. She has nearly 20 years of experience leading business development, strategic planning, and sales operations at large global organizations including Microsoft and Dell Technologies.
“The PlayStation brand is one of the most beloved in the world and I am excited to join a company that has such a passionate community, legendary history, and an amazing leadership team,” said Rogers in a statement. “My experience leading global sales organizations will help excel the PlayStation business and deliver the best gaming experiences to fans across the world.”
Sony Interactive Entertainment (SIE) is responsible for the PlayStation brand and family of products and services. The 25-year-old PlayStation brand includes PlayStation 4, PlayStation VR, PlayStation Vita, PlayStation 3, PlayStation Store, PlayStation Plus, PlayStation Video, PlayStation Music, PlayStation Now, PlayStation Vue, and PlayStation software titles from SIE Worldwide Studios. The PlayStation 5 game system, which includes a UHD Blu-ray player, is scheduled to debut in the upcoming holiday season.
Sony Interactive Entertainment announced in a blog post that it would be shutting down its PlayStation Vue live TV streaming service on Jan. 30, 2020.
“Unfortunately, the highly competitive pay-TV industry, with expensive content and network deals, has been slower to change than we expected,” read the blog from deputy president John Kodera. “Because of this, we have decided to remain focused on our core gaming business.”
“PlayStation fans can continue to access movie and TV content through the PlayStation Store on PS4 and via our partnerships with top entertainment apps,” read the blog. “With 100 million PlayStation 4s in the market today, our community continues to grow and thrive. We will continue to deliver the best entertainment experiences across the network, along with other key gaming services, including PlayStation Now and PlayStation Plus.
“We are very proud of what PlayStation Vue was able to accomplish. We had ambitious goals for how our service could change how people watch TV, showcasing PlayStation’s ability to innovate in a brand-new category within the Pay TV industry. We want to thank all of our customers, some of whom have been with us since PlayStation Vue’s launch in 2015.”
Sony reportedly had been looking for a buyer for the service, with roughly half a million subscribers and plans starting at around $50 a month.
Sony Interactive Entertainment has entered into an agreement to acquire Insomniac Games, a leading game developer and long-time partner of SIE, in its entirety.
Upon completion of the acquisition, Insomniac Games will join the global development operation of Sony Interactive Entertainment Worldwide Studios, the 14th studio to join the SIE WWS family.
Based in Burbank, Calif., and Durham, N.C., Insomniac Games is the award-winning studio behind many top PlayStation franchises, including “Spryo the Dragon,” “Ratchet & Clank” and “Resistance.” Most recently, Insomniac Games, in partnership with SIE and Marvel Games, launched Marvel’s Spider-Man, one of 2018’s top-selling PlayStation 4 games.
Financial terms of the transaction were not disclosed. The day-to-day operations of Insomniac Games after the acquisition are expected to be run by the current management team in conjunction with SIE WWS San Mateo Studio.
Sony Interactive Entertainment appears to be taking a page from Sony Pictures, focusing internal efforts on proven content and wow-factor graphics, among other features.
The Wall Street Journalreports that Sony’s unnamed fifth-generation video game console — reportedly set to launch in late 2020 — will cater to established game publishers featuring graphics-heavy features.
The strategy is not dissimilar to Sony Pictures focusing on proven franchises such as “Spider-Man,” “Ghostbusters” and “Jumanji.”
“Details when making games have become more important than ever,” Kenichiro Yoshida, CEO of Sony Corp., reportedly said at a recent company briefing.
Expectations are high for PlayStation, whose PS4 console continues to generate significant sales, including projected 17+ million units in 2019 — five years after launching.
The PlayStation brand, including hardware, software and subscriptions, generated more than $21 billion in revenue — and $3 billion operating profit — in Sony’s most-recent fiscal year.
By comparison, Sony Pictures generated about $9.2 billion in revenue, which trailed televisions and speakers ($10.1 billion) and topped smartphones at $4.6 billion.
The new PlayStation comes as the gaming industry grapples with changing technology and distribution to consumers — notably cloud-based online gaming.
Google plans to launch its Stadia platform in November while Apple readies Apple Arcade — both services circumventing traditional game consoles such as PS4, Xbox One and Nintendo Switch.
According to WSJ, Sony contends online gaming doesn’t allow hardcore gamers the ability to engage in graphics-heavy content, audio and 8K resolution, among other features, due to spotty broadband connections and other tech challenges.
“[This] clearly demonstrates why it makes sense to have a next-generation console,” Yoshida said.
As trade shows go, Electronic Entertainment Expo (E3) 2019 in Los Angeles featured the usual blizzard of new-release announcements and industry scuttlebutt about the future of gaming consoles on land (hardware) and in the cloud.
Sony’s gaming unit, Sony Interactive Entertainment, skipped the event entirely, leaving much of the floor to rival Microsoft.
And it took full advantage.
“John Wick” franchise front-man Keanu Reeves created the most non-industry buzz early when he made a surprise visit to Microsoft’s pre-show presentation for the April 16, 2020 launch of Cyberpunk 2077 (also available on PlayStation 4 and PC), which features the actor as a rebellious punk rocker in a dystopian California where pretty much anything goes.
During the presentation, an attendee yelled out, “You’re breathtaking!,” to which the actor returned the compliment, adding that everyone in attendance was “breathtaking.”
The comment soon went viral, tracking more than 2.1 million views on Twitter and elsewhere.
But to industry old-schoolers, a future of online gaming and subscription streaming supplanting $60 discs is breathtaking for the wrong reasons.
While Microsoft disclosed that Xbox One replacement — dubbed Project Scarlett — is still slated for launch for the 2020 winter holidays and would include an optical disc drive, the company remains laser-focused on streaming.
In October, it promises to preview the xCloud platform, which it claims affords Xbox One users the ability to stream games.
With advances in technology and changing consumer habits, global tech companies such as Google, Apple and Amazon are eyeing gaming.
This has rattled some investors, who heretofore marveled at gaming’s ability to stave off digital distribution in favor of high-margin packaged media played in venerable hardware consoles.
Yet, The NPD Group said that by the end of Q3 2018, 86% of gaming content was sold digitally across console, portable, PC, and mobile.
“There is a palpable level of concern that the traditional $60 upfront price for video games [on disc] is looking a bit long-in-the-tooth given changes in how people now choose to consume music and television, with all-you-can-consume subscriptions becoming the dominant forces in those markets,” Wedbush Securities media analyst Michael Pachter wrote in June 14 note.
The analyst agrees that secular change within gaming is happening and will expose the industry to increasingly wider audiences demanding diversity (i.e. lower costs) in distribution.
Pachter said that while subscriptions to music and TV/movie streaming services “make some sense” given the long-tail of the content and the large quantity of consumption, he contends that a shift from an a-la-carte business model to subscription is unlikely to become popular except with hardcore gamers.
“We think concerns about pricing are overdone,” he wrote. “The average gamer plays three to four games per year on console or PC and another five to six games on mobile, compared to typical consumption of over 1,000 TV shows, at least that many songs, and dozens of films each year.
“We are skeptical that a Netflix-like service will emerge with thousands of choices at a low monthly price and think investor concerns about the erosion of the current business model are unfounded.”
In another blow to packaged-media retail, Sony Interactive Entertainment is taking steps to stop retailers such as GameStop, Amazon and Best Buy from selling digital codes to its video games.
The move would hinder consumers from bypassing the credit card payment option at Sony’s PlayStation Network and purchasing codes to PS4 titles at physical and online retail.
“We can confirm that as of April 1, Sony will no longer offer full games through SIE’s Global Digital at Retail program,” the company told The Verge in a statement. “This decision was made in order to continue to align key businesses globally. To support full games and premium editions, SIE will introduce increased denominations at select retailers.”
The move will reportedly not affect pending releases of Days Gone and Mortal Kombat 11.
Sony said the new policy would not affect downloadable content, add-ons, virtual currency, gift cards and season passes. The publisher will also continue to offer third-party PSN credit options at select retailers.
Sony’s action mirrors efforts by Disney to stop Redbox from selling digital codes to its movies. That move resulted in litigation with a federal judge last summer granting Disney’s request for a preliminary injunction against Redbox.
That injunction only applies to newer “combo pack” releases with a revised disclaimer on the package. Redbox said it would continue selling digital codes to earlier Disney releases such as Frozen and older “Star Wars” movies.