With PlayStation 5 launch, Sony requires a high score
Sony launches its PlayStation 5 console next week angling for a mega-hit, and with japan firm increasingly reliant on the lucrative gaming sector there is little room for error.
The PlayStation 5 will enter a head-to-head battle with rival Microsoft's new Xbox, released two days earlier, with both hoping to fully capture the marketplace in the run-up to Christmas.
However the showdown has considerably higher stakes for Sony.
Because the PS1 launched in 1994, gaming is among the most biggest segment of Sony's business, making the lion's share of profit and in regards to a third of sales -- a lot more than electronics products or music.
In comparison, gaming made up less than ten percent of Microsoft's sales for the entire year ending in June 2020.
Sony sold doubly many PS4s as Microsoft did Xbox Ones, and analysts say it has learned lessons from the disappointing roll-out of the PS3.
"We have seen in previous generations that at launch there are two major factors which will impact a generation's success -- the first ever to launch and the least expensive," said Morris Garrard, an analyst at Futuresource Consulting.
He cited the "relative failure" of the PS3, which went on sale a year after the Xbox 360 and at an increased price.
The PS5 will set you back $500, just like the Xbox Series X, while a version without a disk reader costs $400.
That's more than the $300 price for Microsoft's less powerful Xbox Series S, which also has no disk reader.
Sony's margin on the consoles will be slim -- possibly even loss-making -- analysts say, and the firm is relying on sales of games, services and online subscriptions to turn a profit.
Up to now, demand looks strong, and Sony has reportedly boosted production targets.
But meeting those will rely upon suppliers, particularly TSMC, the Taiwanese firm that manufactures the PS5's processor and graphics-processing unit.
It is already under great pressure as a key producer of chips for 5G-compatible smartphones.
"Whatever Sony produces, it'll sell," said Yasuo Imanaka, an analyst at Rakuten Securities, who thinks PS5 could exceed the record 157 million PS2 units sold because the 2000 launch.
But "everything depends on what TSMC can supply", he told AFP.
To stand out against the Xbox, Sony will be counting on its games line-up, including exclusive titles that Sony Interactive Entertainment president Jim Ryan says will "make or break" PS5.
Among its trump cards is "Spider-Man: Miles Morales", which is released with the brand new console. Its predecessor is one of the top selling PS4 titles.
The game originated by the American studio Insomniac Games, which Sony bought this past year for $229 million.
The purchase brought the quantity of studios Sony owns to 14, and represents a favorite strategy of bringing increasingly expensive game development in-house.
Microsoft has made its forays, buying ZeniMax in September for an archive $7.5 billion.
Regardless of the costs, Amir Anvarzadeh, a strategist at Asymmetric Advisors, said the trend is practical given the risk of diminishing returns for console manufacturers on games made by third-party developers.
Platform manufacturers charge games publishers a cut for each and every game sold for use on the device -- and almost 70 percent of games sold for the PlayStation result from third-party developers.
But Sony and others are under pressure from publishers to slash that fee.
"If the royalty fees go down, they're in a lot of trouble because they would have to sell doubly much hardware" in order to avoid a hit with their important thing, Anvarzadeh said.
There are also fewer incentives now for studios to build up exclusive games, especially given the growing popularity of "cross-play", where gamers play one game together on different devices.
Along with bringing game development in-house, Microsoft includes a subscription service that is broader than Sony's and provides users access to a huge selection of Xbox and PC games.
Garrard said Sony continues to have several strong cards up its sleeve with regards to PS5, and its "content portfolio, strength of consumer internet sites and development of immersive tech... will all aid in encouraging consumer uptake of the hardware".
But he warned its give attention to consoles risks being too fixated on short-term goals.
Together with its subscription model, Microsoft is investing heavily in streaming, often known as cloud gaming -- a technique Garrard said "appears to be aimed at long-term dominance".
Source: japantoday.com
