Sony’s multiplatform future – and its discovery effects?

[The GameDiscoverCo game discovery newsletter is written by ‘how people find your game’ expert & company founder Simon Carless, and is a regular look at how people discover and buy video games in the 2020s.]

Welcome back, knowledgenauts, to the lunar module that is GameDiscoverCo 5 craft. This week, we’ll be observing the PC & console game discovery stratus from far above, and making some specific observations on the weather for your very own games…

Sony’s expansion plans: where PlayStation’s going

Some of you maybe spotted a Sony ‘Game & Network Services Segment’ presentation [.PDF, streaming video] by SIE’s president Jim Ryan last week. And it’s… kinda a big deal – because it very much shows PlayStation’s corporate strategy for the next few years.

We definitely recommend you watch the whole thing – or at least skim the slides – if you’d like to get a lot of dense data on where Sony sees its market going. But here’s the high points:

• Sony is concentrating on ‘live service’ transformation of its own game catalog: a great deal of the presentation focused on how Sony can do better with ‘live service’, recurring revenue games. IDC’s data (left, above) suggests that almost all of the growth up to 2025 will be in DLC/IAP ‘add-on’ revenue on console, and Sony knows it’s ‘behind the 8-ball’ on these type of games.
• Taking PlayStation games multi-platform is also a big focus: this mainly means PC, of course, where Sony revealed that they did $80 million USD in FY2021, thanks to games like Horizon: Zero Dawn, Days Gone & God Of War. (And Sony’s planning a massive boost to $300 million in FY 2022 on PC, not including Destiny 2, which it’s about to acquire with Bungie.)
• The shift to IAP/DLC spending is big, even on console: in FY16 Sony says that digital ‘add-on’ revenue was only 5% of total spend in the PlayStation Store on PlayStation 4. But it in FY21, it’s over 25% – powered by games decidedly not owned by Sony like Fortnite, Genshin Impact, Call Of Duty Warzone, Apex Legends & Rocket League. No wonder Sony is moving that way swiftly.
• Hardware supply issues are large and continuing: even Year 3 of PlayStation 5 is forecast to underperform PS4’s third year on sale, due to supply problems – but “Year 4 onwards, PS5 is expected to overtake again.” Especially with current China lockdowns, Sony can’t rely on hardware to bail out the company. (Though PlayStation Direct, scheduled for big growth in FY22 to $1.5 billion, allows the company to sell PS5s direct and cut out the middle man.)

What we thought was particularly notable in Sony’s presentation was how (relatively) little it’s concentrating on PlayStation Plus as a possible revenue source. It merited a single slide out of the forty-two in the presentation.

Why? Well, the company printed the below (IDC Q1 2022) estimates on console by revenue type:

Sure, we think that Sony is somewhat interested in beefing up its PlayStation Plus offering and competing on the ‘subscription’ side of things. Why wouldn’t they be?

But I think the company sees the $9 billion extra ‘digital add-on’ revenue up to CY25 as a) far higher-margin and b) far more attainable, given Sony’s IP, hardware ownership, and the quality of its internal game teams – plus the extra GaaS expertise of the incoming Bungie team.

Whether it’s that easy is another question. But the presentation definitely gave us the impression that ‘pivoting to GaaS/multi-platform with our new first-party games’ is the #1 discovery priority in Sony’s world. Whereas ‘growing Game Pass at all costs’ is definitely the #1 discovery priority in Xbox’s. Which is… interesting, right?

Sure, we think that Sony is somewhat interested in beefing up its PlayStation Plus offering and competing on the ‘subscription’ side of things. Why wouldn’t they be?

But I think the company sees the $9 billion extra ‘digital add-on’ revenue up to CY25 as a) far higher-margin and b) far more attainable, given Sony’s IP, hardware ownership, and the quality of its internal game teams – plus the extra GaaS expertise of the incoming Bungie team.

Whether it’s that easy is another question. But the presentation definitely gave us the impression that ‘pivoting to GaaS/multi-platform with our new first-party games’ is the #1 discovery priority in Sony’s world. Whereas ‘growing Game Pass at all costs’ is definitely the #1 discovery priority in Xbox’s. Which is… interesting, right?

[We’re GameDiscoverCo, an agency based around one simple issue: how do players find, buy and enjoy your premium PC or console game? We run the newsletter you’re reading, and provide consulting services for publishers, funds, and other smart game industry folks.]