Sony PlayStation Soaring Amid Industry Decline in Consumer Spend
Note: This article is based on content from Variety Intelligence Platform’s special report “2023 Media & Tech Trend Tracker,” available exclusively to subscribers.
Sony Interactive Entertainment in February announced PlayStation Playmakers, a new initiative to partner with names like LeBron James on promoting the console brand.
For anyone else in gaming, this move would come across as a plea for consumers to spend at levels not seen since 2021.
But for Sony, it’s capping off a return to form.
Video gaming was marred by consistent year-over-year drops in consumer content spend, a trend that continued into January. But PlayStation 5 consoles recently overcame a shortage in semiconductor chips, which led to 7.1 million units shipped by Sony in the fourth quarter of 2022, a new record for PS5.
The end result? PlayStation resisted the content sales decline. The 2022 holiday quarter saw revenue from hardware sales more than double year over year, skyrocketing from just under $1.5 billion to more than $3.2 billion.
In turn, total software sales went up more than 30% for the quarter, with a nearly 20% increase in revenue observed for network services as well. Overall, revenue for Sony Group’s Game & Network Services segment increased 53% year-over-year from the 2021 holiday quarter.
The latest earnings season spelled trouble for those strictly in the software business. Top publishers are making cuts as a result, be it EA axing mobile versions of “Apex Legends” and “Battlefield” or Take-Two Interactive announcing layoffs as its publisher Rockstar hunkers down on getting the next “Grand Theft Auto” game out the door.
Activision Blizzard was spared the pain of the consumer spend dip, as October’s “Call of Duty: Modern Warfare II” helped bring in record net bookings, though costs increased due to the company’s $35 million settlement with the Securities and Exchange Commission following its handling of accusations of workplace misconduct.
Those “Call of Duty” sales are a major part of why Xbox owner Microsoft is adamant to cement its $69 billion deal to acquire Activision Blizzard. Combined with lucrative mobile revenue from publisher King, ownership of “Call of Duty” stands to put Xbox on equal footing with PlayStation when it comes to revenue, as Xbox currently sells about half as many systems as PlayStation does.
Microsoft itself has been cutting 10,000 jobs, including those at key teams under Xbox and sister publisher Bethesda. With first-party games at both units undergoing long development cycles and frequent release delays, it’s high time for Xbox to gain any kind of edge it can.
As much as Sony is fighting tooth and nail with global regulators to restrict the Activision Blizzard deal, the success of “The Last of Us” series on HBO has opened PlayStation up to an even wider audience that can experience the original game on PC 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 underscore how critical it is for gaming companies to expand into multiple markets. But if the post-pandemic boom in content spend continues to prove unsustainable, the number of companies with the resources to do so is sure to keep shrinking.
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