In order to keep up with surging demand, Sony will ramp up PS5 production to levels that have never been achieved before. Jim Ryan, President and CEO of Sony Interactive Entertainment, spoke to investors about the successes and struggles of the company.
Sony said it sold 2 million PS5 consoles last quarter, bringing the total to 19.3 million. The company sold 3.1 million fewer PS5 units than PS4 consoles at the same point in their lifetimes, which is a significant decline from the prior quarter.
Sony is having sales problems not because of a dip in demand but because of supply shortages caused by the coronaviruses. Sony claims that 80,000 PS5 units can be sold in 82 minutes, whereas the same number of PS4s would sell for nine days. Only 28% of consumers wanted a PS4 on its first anniversary, whereas 45% were interested in the PS5 at the one-year mark.
In the fourth year of release, Sony believes it can increase supply enough for the PS5 to overtake the PS4 in sales. The company will use multiple suppliers for greater agility in unstable market conditions to mitigate supply shortages caused by the Pandemic and avoid potential issues withlogistics and parts inventory.
Ryan said that Sony is planning for heavy further increases in console production, taking us to production levels that we have never achieved before.
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Although Sony isn't selling as many consoles, the company is benefiting from increased game monetization. In-game spending on the PS5 has increased by 15% over the PS4. The sale of full games has declined by 21%, while the sale of game add-ons has increased by 247%. There is a spike in subscription revenue.
The PS4 has broken late life cycle records as the PS5 struggles to find its footing. In the second year of the PS4 there were more users than in the second year of the PS3. The success should be viewed with an asterisk because of the limited availability of the PS5 over those 24 months.
Sony wants half of its game releases to be on PC and mobile by the year 2025. Around a quarter of the company's releases were on those two platforms this year. The company is already seeing benefits from expanding beyond its own platform: sales for games like God of War have led to a forecast of $300 million in PC sales versus $80 million last year.
By expanding to PC and mobile, and also to live services, we have the opportunity to move from being present in a very narrow segment of the overall gaming software market to being present everywhere.
Expansion into other media, the PS Plus revamp, and the PSVR 2 headset are some of the efforts to bring more people to the PS.
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