Sony this week released its revenue report for the third quarter of 2019, which outlined the sales and revenues generated from every segment of the company and delivered updated predictions for the rest of the fiscal year. The report revealed that sales of the PlayStation 4 console had dropped by 25 percent in the past year. This past holiday season actually saw the lowest amount of sales for the console since its launch period in 2013. Now, on the surface, this may seem worrying, but there are many reasons to explain just why the console has lost momentum.Continue Scrolling To Keep ReadingClick the button below to start this article in quick view.
Before breaking down why the PS4 has decreased in sales, it’s important to remember that it’s still selling a crazy amount of consoles. 6.1 million consoles were sold in the past quarter and, while still down from the 8.1 million this time last year, it’s still not a number to take lightly. Total revenue for the PlayStation division had dropped by around 20 percent, but that still equates to around $1.5 billion generated in a single quarter. While the numbers are less than they used to be, they are not signs of failure. Gaming is a fickle market and can be determined by loads of factors and one of the simplest reasons to explain the decrease in sales this quarter may just be that a lot of the tent-pole game releases that were supposed to happen ended up getting delayed (looking at you, DOOM Eternal). Sony had been planning to use these games to generate revenue for the quarter, but now they will just go toward future quarters instead. Another good explanation for the decrease in sales is that people already have their PS4s. Gaming consoles exist in a cyclical market and most sales are for one-time purchases. This means that most customers only buy one PS4 and, after doing so, are not typically motivated to buy any more. The PS4 was a record-breaking success, currently the second-highest selling gaming console of all time, with almost 110 million individual units sold since its launch. So, while it may not be selling as much as it used to, this is not a sign that people are starting to move away from Sony. In fact, just the opposite is true. PlayStation Plus subscriptions continued to increase this past quarter, proving that there is still a strong sense of brand loyalty to the company and its console.
Revenue booms and busts are typical in a cyclical market. The trick to staying profitable comes in making sure that newer models of the product are ready to be released just as the older models start to lose their ability to sell. This way, as one sun sets, another begins to rise. Sony, always an intelligent company, has planned for the fall of the PS4 and has scheduled the release of the next in the PlayStation line, the PS5, to occur at the end of this year. Marketing for the PS5 has already begun in earnest, with news about what the console will deliver slowly trickling out over the last few months. It’s clear that the company is beginning to move its sights, and its efforts, toward the future generation. In fact, The Last of Us Part II and Ghosts of Tsushima are really the only big-name exclusive titles left on the PS4 slate.
This strategy can be a double-edged sword, however, because it can deter purchases of the PS4. As with any other piece of technology, like iPhones or computers, customers will be less willing to purchase current models if there is a hint that a newer model will soon be released. The decline of this past quarter may be partially due to the fact that interested first-time buyers may have put off buying PS4s last year in order to purchase a PS5 this holiday season.
Moving forward, the biggest issue Sony will have to face is the next year of the console wars. The release of the Xbox Series X will also occur at the end of this year, most likely around the same time as the PS5. Sony will then have to convince all the millions of people who purchased a PS4 to stick with them in the next generation and not defect to Xbox.  While it is impossible to say just how the PlayStation 5 will handle in the upcoming battle, the information released in this report gives no reason to suspect Sony should be worried.