Analyst: Highest-Priced PlayStation Plus Video Game Tier Will Drive Subscriber Growth

Sony Interactive Entertainment’s newly consolidated PlayStation Plus subscription digital video game platform should see an uptick in subscriber growth, thanks in part to the features afforded on the most-expensive ($17.99) monthly ($120 annual) PlayStation Plus Premium Service option, says a Wall Street analyst.

Kota Ezawa, with Citigroup Global Markets, suggests that access to more than double the number of games (340) offered on the $9.99 monthly ($60 annual) PlayStation Plus Essential plan will entice gamers to spend more.

“We think the number of subscribers who will opt for the pricey PS+ Premium package will rise,” Ezawa wrote in a note.

In 2020, the worldwide online gaming market generated about $21.1 billion in revenue, a record 21.9% uptick from 2019, due in large part to the pandemic.

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This week, Sony consolidated its PlayStation Plus and PlayStation Now digital platforms to better compete against Microsoft’s Xbox GamePass and Nintendo’s Switch Online subscription-based digital gaming services.

The rebooted PlayStation Plus enables subs to play PS, PS2, PS3, PS4 and PS5 titles online, while also offering multiplayer functionality at no additional cost. Ezawa says the PlayStation Plus platform offers “greater quality and quantity” of games than its predecessors.

“On the [Premium] contract plan, users can freely play up to 740 titles,” Ezawa wrote.

Sony Combining PlayStation Plus, Now Platforms Into One Video Game Subscription Service

The video game industry’s transition to a subscription-based business model turned another page March 29 when Sony Interactive Entertainment announced it would combine its PlayStation Plus and PlayStation Now services into one platform bowing in June.

Launched in 2010, PlayStation Plus was the first console-based membership service that included a refreshed library of games through PlayStation Plus and streaming service PlayStation Now.

“This June, we’re bringing together Plus and Now in an all-new PlayStation Plus subscription service that provides more choice to customers across three membership tiers [priced from $9.99 monthly] globally,” Jim Ryan, president and CEO of Sony Interactive Entertainment, wrote in a blog post.

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The three membership tiers include:

  • PlayStation Plus Essential ($9.99 monthly): Provides the same benefits that PlayStation Plus members are getting today, such as two monthly downloadable games, exclusive discounts, cloud storage for saved games, online multiplayer access.
  • PlayStation Plus Extra ($14.99): Provides all the benefits from the Essential tier, while adding a catalog of up to 400 of PS4 and PS5 games, including titles from PlayStation Studios catalog and third-party partners. Games in the Extra tier are downloadable for play.
  • PlayStation Plus Deluxe ($17.99): Provides all the benefits from Essential and Extra tiers, plus the addition of 340 additional games, including PS3 games available via cloud streaming, a catalog of classic games available in both streaming and download options from the original PlayStation, PS2 and PSP generations; cloud streaming access for original PlayStation, PS2, PSP and PS4 games offered in the Extra and Premium tiers in markets where PlayStation Now is currently available. Customers can stream games using PS4 and PS5 consoles, and PC.

 

Sony said the tier would also offer time-limited game trials, so customers can try select games before they buy.

“As this is a massive launch effort, we’re rolling out the new PlayStation Plus offering in a phased regional approach,” Ryan wrote. “We’ll begin with an initial launch in several markets in Asia, followed by North America, Europe and the rest of the world where PlayStation Plus is offered. We aim to have most PlayStation Network territories live with our new PlayStation Plus game subscription service by the end of the first half of 2022.”

Sony also plans to expand the cloud streaming benefit to additional markets and will provide more details at a later date.

Sony Acquiring ‘Halo’ Video Game Developer Bungie for $3.6 Billion

Sony Interactive Entertainment Jan. 31 announced it has entered into definitive agreements to acquire independent video game developer Bungie, whose properties include the “Halo” and “Destiny” franchises, for $3.6 billion.

The deal aims to give Sony access to Bungie’s approach to live game services and technology expertise. Bungie will continue to operate independently.

Based in Bellevue, Wash., with more than 900 employees, Bungie is currently focused on the long-term development of Destiny 2, expanding the Destiny universe, and creating entirely new worlds in future IP.

“We’ve had a strong partnership with Bungie since the inception of the ‘Destiny’ franchise, and I couldn’t be more thrilled to officially welcome the studio to the PlayStation family,” Jim Ryan, president and CEO of SIE, said in a statement.

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Ryan said the transaction is an important step in Sony’s strategy to expand the reach of PlayStation system to wider audiences.

“Like Bungie, our community is core to PlayStation’s DNA, and our shared passion for the gamer and building the best place to play will now evolve even further,” he said.

Post-acquisition, Bungie will be an independent subsidiary of Sony Interactive Entertainment and run by its Board of Directors chaired by Pete Parsons and Bungie’s current management team. The transaction is subject to certain closing conditions, including regulatory approvals.

“In SIE, we have found a partner that fully supports us and wants to accelerate our vision of creating meaningful entertainment experiences that span generations, all while valuing the creative independence that is the heartbeat of Bungie,” said CEO Pete Parsons.

The executive believes the deal will unlock more than just new gaming properties.

“Our original universes have immense potential, and, with Sony’s support, we will propel Bungie into becoming a global multi-media entertainment company dedicated to delivering on our creative vision” Parsons said.

PS5 Has Sold More Than 10 Million Units Globally

The PlayStation 5 (PS5) game console has sold through more than 10 million units globally since its Nov. 12, 2020, launch, according to Sony Interactive Entertainment.

The PS5 is the fastest-selling console in the company’s history and continues to outpace sales of its predecessor PlayStation 4 (PS4), according to SIE.

SIE also achieved additional milestones across its portfolio of PlayStation Studios games, including:

  • Marvel’s Spider-Man: Miles Morales from Insomniac Games has sold more than 6.5 million copies since releasing on Nov. 12, 2020.
  • MLB The Show 21 from San Diego Studio is the fastest-selling title in franchise history with more than 2 million copies sold across all platforms. The game has reached more than 4 million players since releasing on April 16, 2021.
  • Returnal from Housemarque  has sold more than 560,000 copies since releasing on April 30, 2021.
  • Ratchet & Clank: Rift Apart from Insomniac Games has sold more than 1.1 million copies since releasing on June 11, 2021.

 

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“I can’t express enough the deep gratitude we feel for our passionate community of PlayStation fans who have embraced PS5, and the world-class development and publishing partners who bring such incredible gaming experiences to our platforms,” Jim Ryan, president and CEO of Sony Interactive Entertainment, said in a statement. “While PS5 has reached more households faster than any of our previous consoles, we still have a lot of work ahead of us as demand for PS5 continues to outstrip supply. I want gamers to know that while we continue to face unique challenges throughout the world that affect our industry and many others, improving inventory levels remains a top priority for SIE.”

Sony Looking to Further Bridge Anime, Movie, Video Game Markets

Sony is seeking to further meld anime, motion picture and video game markets through SVOD subsidiary Crunchyroll; a minority stake in Epic Games, publisher of the Fortnite game franchise; the PlayStation 5 game system; and other ventures.

Speaking on the Feb. 3 third-quarter fiscal call, CFO Hiroki Totoki said consumer interest in anime throughout Japan has increased 150% over the past five years, in addition to 19% worldwide year-over-year. Crunchyroll recently topped 90 million registered users and 4 million paid subscribers across more than 200 countries.

Indeed, anime movie sequel Demon Slayer: Kimetsu no Yaiba the Movie: Mugen Train, entered 2021 as Japan’s biggest box office hit, with more than $346 million in ticket sales through Jan. 5.

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“When the markets are growing, we try to enter such market to create our growth,” Totoki said. “But according to our internal investigation, those game players, the users that enjoy games and animation, it seems that there’s high level of affinity between these two groups.”

Totoki expects to see increased cross-selling opportunities in anime and gaming going forward. Sony’s recent $250 million investment in Epic includes development of movies and music. Epic is set to release its first animated feature film, Gilgamesh, directed by Tomas Lipgot, whose Spanish-language film, The Adopters, was recently acquired by Sony Pictures Television.

“That’s a new kind of entertainment in music and motion pictures for gaming,” Totoki said. “Consumer interest in Japanese anime is increasing rapidly, particularly outside of Japan. And as a company that currently owns both content and DTC streaming service, we have positioned anime as a focus area.”

Separately, Sony said it remains on track to meet a fiscal-year sales goal of more than 7.6 million PS5 units (4.5 million cumulative units sold through December) — despite ongoing console shortages due to a lack of semiconductors. Sony is projecting 14.8 million PS5 unit sales through the next fiscal year.

Total PlayStation user game play in December was about 30% higher than the same month of the previous fiscal year, according to Sony. At the end of December, 87% of PS5 users were subscribers to PlayStation Plus, the subscription platform affording users free access to games, multiplayer gaming, PlayStation Store store, and 100GB of cloud storage, among other features.

First-party PS5 title Marvel’s Spider-Man: Miles Morales, recorded sales of 4.1 million units through December.

“We had more game software titles at the launch of the PS5 than at any previous PlayStation console launch in our history, and those titles have sold well,” Totoki said.

 

CES: Sony Touts Games’ Expanding Movie/Streaming Presence

In the wake of last November’s launch of the next-generation PlayStation 5 video game system, Sony Interactive Entertainment (SIE) used Sony Corp.’s annual (and virtual) CES media presentation to showcase PlayStation’s expanded foray into film and TV with a diversity of stories.

As with much of Hollywood, PlayStation, along with Sony Pictures Entertainment, pushed back most of its new original content releases to 2021 and beyond due to the ongoing coronavirus pandemic.

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In addition to continued development of the “Spider-Man” franchise, two PS properties eyeing both theatrical and episodic TV adaptations in 2021 include Uncharted, featuring Tom Holland (Spider-Man: Homecoming) as a live-action young Nathan Drake and Mark Wahlberg as Victor Sullivan. The film is now set to release on July 16. Separately, Sony Pictures Television and HBO are creating a limited series around the video game The Last of Us for subscription streaming platform HBO Max.

The studio also has a partnership with Hivemind Productions (creator of Netflix’s “The Witcher”) for a live-action adaption of the Final Fantasy XIV series games.

“This is just the beginning of the expansion of our storytelling into new media and even wider audiences,” Jim Ryan, president/CEO of Sony Interactive Entertainment, said in a video clip. “Sony is a creative entertainment company and entertainment has never been more important. Our community are networked like never before and are more diverse than they have ever been. And we celebrate and embrace the differing viewpoints and tastes that make up our community.”

Indeed, Sony Pictures CEO Tony Vinciquerra last month announced that the studio was working on three movies and seven TV shows based on PlayStation games, including the recent actioner Monster Hunter, starring Mila Jovovich and Tony Jaa.

“You’ll be seeing a lot more integration of Sony companies together in the future,” Vinciquerra told CNBC.

Sony PlayStation 5 Bowing Nov. 12 Priced at $500; Digital Edition at $400

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.

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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.

Sony Denies PlayStation 5 Production Issues

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.”

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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.

Sony Cuts PlayStation 5 Console Production, Citing Chip Issues

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.

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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 PS5 Still On for Winter Holiday Launch

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.

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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.

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“At this point in time major [PS5] problems have not arisen in the game software development pipeline for Sony’s own first-party studios or its partners’ studios,” the company said from Tokyo.