Tuesday, August 9, 2022

Sony warns of weaker PlayStation operations as game sales wobble

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Sony has lowered its annual profit forecast and warns of weaker PlayStation game sales. The prediction comes as Sony unveiled it shipped 2.4 million PlayStation 5 consoles in the quarter, just 4 percent more than the 2.3 million shipped in the same period last year. PS5 lifetime shipments have now reached 21.7 million.

While hardware sales have increased slightly year over year, software sales are down 26 percent. In a conversation with investors, Sony blamed the game for a lack of major PlayStation titles this year compared to 2021 and less time spent playing games in general – bolstered by monthly active PlayStation Network users falling 3 percent to 102 million. Sony has its exclusive Gran Turismo 7 and Horizon Forbidden West titles earlier this year, but Elden Ring arrived across multiple platforms simultaneously and stole the spotlight.

Reuters reports Sony has now slashed its annual profit forecast for its gaming business by 16 percent, as it expects game sales to fall again next quarter, in addition to costs related to the recent $3.7 billion acquisition of Bungie.

Sony recently completed its acquisition of Bungie.
Image: Bungie

Sony’s PlayStation game sales are the latest sign that the gaming industry is slowing down after a major boost during the early stages of the pandemic. Microsoft doesn’t disclose its own Xbox hardware shipments, but the company saw Xbox hardware revenue fall 11 percent in the quarter, in addition to a 6 percent drop in Xbox content and services revenue and a 7 percent drop. in total game revenue. While Microsoft had a strong fiscal year for Xbox revenue, the company also warns that revenue from gaming and Xbox content and services will both fall next quarter.

Sony previously forecast 18 million PlayStation 5 shipments for fiscal year 2022, and the company has yet to revise those estimates. “The supply was not sufficient… the demand has not fallen. We really need to meet the demand, that’s the most important thing to do,” Sony CFO Hiroki Totoki said in a conversation with investors today.

PlayStation game sales may pick up later this year.
Photo illustration by Grayson Blackmon / The Verge

Sony is now hoping hardware delivery will improve later this year, as it believes it’s mainly supply chain disruptions affecting PS5 deliveries, rather than a lack of components. Sony will have to significantly improve its PS5 deliveries to meet its annual projection of 18 million. It should average more than 5 million PS5 shipments per quarter for the remainder of the fiscal year, a target that is more than double this quarter’s shipments.

New game releases should also help software sales, with the highly anticipated God of War Ragnarok scheduled for launch on November 9 and The Last of Us Part I repeat on Sept.

While PlayStation game sales have declined overall, 79 percent of PlayStation game sales in the quarter were digital, up 11 percent year-on-year. PlayStation game sales have moved towards digital in recent years, boosted by the pandemic and a digital-only version of the PS5. Still, nearly 80 percent digital is a major shift if it continues through the rest of 2022.

Sony’s new PlayStation Plus Extra and Premium tiers launched in the US last month, but we won’t know their full impact until next quarter. PlayStation Plus subscribers are currently 47.3 million, up from 46.3 million at the same point last year, but down from 48 million in fiscal Q3 2021. Monthly active PlayStation Network users reached 102 million in the past quarter, down 105 million year over year.

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