Sony Is Doing Great, But Making More PS5s Is Difficult

Illustration for article titled Sony Is Doing Great, But Making More PS5s Is Difficult
Photo: CHARLY TRIBALLEAU / Contributor (Getty Images)

Today, Sony released its financials for the three-month period ending on December 31, 2020. Even with the pandemic and supply issues, it sold 4.5 million PlayStation 5s. The hardware is a big hit! But at this time, making more of them sounds hard.

Let’s break down the numbers. During the previous quarter, which ended on December 31, Sony’s Game and Network Services saw sales jump forty percent to 883.2 billion yen ($8.41 billion) year on year. Operating income increased by 50 percent during the same period to 80.2 billion yen ($763 million). According to Sony, these numbers were powered by game sales (as well as DLC) and PlayStation 5 sales. Also, during the last quarter, Sony sold 103.7 million games, out of which 18.4 million were first-party games.

As previously mentioned, Sony sold 4.5 million PlayStation 5s during this quarter. What’s more, it sold another 1.4 million PS4s (note that in the previous two quarters, Sonly sold 1.9 million and 1.5 million PS4s, respectively), and there were higher profit margins on the last-gen machine. The combination of all this, as well as lots of people at home looking for stuff to do, has been good for the gaming outfit.

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The demand will continue, and Sony expects to sell over 7.6 million PlayStation 5s by March 31. However, the company isn’t able to increase production, which would help meet the overwhelming interest. In today’s briefing, Chief Financial Officer Hiroki Totoki said (via Reuters), “It is difficult for us to increase production of the PS5 amid the shortage of semiconductors and other components.”

It seems like getting a PlayStation 5 will still remain difficult for the foreseeable future.

Originally from Texas, Ashcraft has called Osaka home since 2001. He has authored six books, including most recently, The Japanese Sake Bible.

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DISCUSSION

michaelalwill
michaelalwill

Only Sony knows how many of those 103.7 million game sales were PS5 game sales and what that ratio implies about how much of their inventory is being held by scalpers. But if the situation is as bad as it seems from a would-be buyer’s perspective, hopefully Sony is thinking about how to get the next 7.6 million PS5s in the hands of people who actually intend to buy games and accessories.

If not, they risk creating a whole host of problems for themselves, from developers taking losses via a low true install base, a gap in game sales, and perhaps most worryingly the opportunity for competitors to come in and capitalize on unmet customer demand. It’s a great time for a new game/developer/maybe even platform to capture some attention...