It will be a long read guys ;)
Informations before we start :
If we follow the same path for PS5, we would add $10 for the cost of assembly with a total of $460 and then $55 for the additional expenses
--> PS5 total cost would be around $515
--> PS5 DE total cost would be around $487 ($515 minus $28 for optical drive)
Now look at the table below, for each quarter, there are some colors (think traffic light) :
(except few ones)
You can also see that during Q3 FY13 (PS4 release), PlayStation saw ¥12.4bn Profit and the next quarter, ¥10.7bn Loss
For FY2020, Sony expects ¥2500bn Revenue and ¥240bn Op. Profit
Disclaimer : If you add up Q1+Q2+Q3+Q4 Revenue fo FY2020, you won't have ¥2500bn Revenue but ¥2464bn, I probably underestimated my Q2 Revenue forecast
I will focus this analysis on Profits, but will talk about Revenue a bit too when it's relevant.
I will also explain quarters from previous years to put these into context and to explain why I chose my estimates !
Of course, I will skip Q1 Results because we already had these results some time ago.
Q2 FY20 (July-Sept) :
Q2 FY18 had ¥90.6bn Profit, biggest profit ever for PlayStation during Q2
It had Fortnite + Spider-Man and major releases like Tomb Raider (and annual sports titles)
Q2 FY19 reached ¥65bn Profit with a weaker line up and without first party games
It had Control, MH Iceborne, Man of Medan and Borderlands 3 (+ annual sports titles)
Q2 FY20 will have TLOU Part II spillovers + Ghost of Tsushima success + HZD on PC
+ major releases like Tony Hawk and Avengers (+ annual sports titles)
+ strong F2P (Fortnite, Warzone) and the launch of Hyper Scape
Here is a list of games released during Q2 in previous years
Red titles = first-party titles or major releases
I also expect bigger Revenue from PS Store year-on-year due to :
Previous quarter (Q1 FY20) saw +$100M Revenue year on year and I expect the same this Q2 FY20 due to strong PS+ line up in July/Aug.
And I said strong PS+ line-up because they had record user engagement on social media during their announcements (NBA 2K20/Tomb Raider and MW2 Remastered/Fall Guys), PS+ subs will likely go up quarter-on-quarter and obviously year-on-year.
Here is a table where you can see my Revenue forecast for Q2, it will be, without a doubt, bigger than last year
I expect Software and Services to represent 83% of total PlayStation Revenue during this quarter, where margins are better and therefore better profits (vs Hardware revenue)
If Q2 FY19 without first-party games, without Warzone, with a weaker Fortnite (than this year) and an equivalent slate of third-party releases, reached ¥65bn Profits.
Well Q2 FY20 with all the above-mentioned reasons, makes me think Profits will be better this year.
That would give +¥9bn (+$95M) in Profits year-on-year for a growth in Software/Services Revenue of ¥55.1bn ($540M)
So an operating margin of 16.33% which would be realistic given first-party releases this quarter (Ghost/TLOU2)
For the total results of Q2 FY20, ¥473bn Revenue and ¥74bn Profits would give an operating margin of 15.6%
It was 16.5% in Q2 FY18 (thanks to huge Spider-Man success) and 14.3% in Q2 FY19, still a good operating margin but less than Q2 FY18 due to the lack of first party titles (which are highly profitable)
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Now, we have Q1 results (from their financial results that you can find in this thread) + we have just done Q2 forecast
I remind that Sony expect ¥240bn Profits this fiscal year.
Q1 Profits saw ¥124bn and Q2 Profits would reach ¥74bn = ¥198bn Profits
So at this point, Sony expects only ¥42bn ($393M) Profits for Q3 and Q4 combined
I repost the same table to avoid you to scroll up/down to see the numbers !
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Now Q3 FY20 (Oct-Dec) :
We will start with Q3 FY13 (PS4 release), surprisingly Sony had ¥12.4bn Profit thanks to PS4 release
The amount of games & PS+ subs sold managed to offset the loss for each PS4
Profit also came from cost reductions (PS3)
Q3 FY17 had ¥85.4bn Profit, biggest profit ever for PlayStation during Q3
Explained by big increase for sales on PS Store (+43% year on year) with the release of Fortnite Battle Royale + increase in software units sales + GT Sport release
Combined with huge PS4 sales + big increase in Services revenue (+35%, to reach $600m for that quarter)
Q3 FY18 had ¥73.1bn Profit, decrease but still the 3rd biggest Profit ever for PlayStation during Q3
The decrease is explained by PS4 lower sales (8.1m this Q3 vs 9.0m in Q3 FY17) and promotional prices during Holiday season.
Despite really bigger spends on Store (+52% to reach $3.13B, 2nd biggest spending ever during a quarter on Store behind record Q1 FY20) + bigger revenue from Services (+$100M year-on-year) + Spider-Man keep selling
Q3 FY19 had ¥53.5bn Profit, big decrease due to no Spider-Man and Death Stranding not having the effect Sony expected (as stated in their financials) + big decrease in PS4 sales revenue (6.0m units this Q3 vs 8.1m previous year) and a weaker line up of third party games (compared to AC Odyssey/RDR2/Black Ops 4/Battlefield 5 in 2018)
Q3 FY20 will have one of the strongest Q3 line-up this generation combined with the huge install base of PS4 and PS5 backward compatibility
FIFA is now a Q3 release, unlike previous years
Crash 4 will likely perform very well on PS4 and is bigger than 2019's releases like GR Breakpoint / The Outer Worlds / NFS Heat / Death Stranding
+ likely strong performance of Watch Dogs Legion and AC Valhalla
+ one of the biggest release of the year, Cyberpunk 2077 which will probably make a good part of its initial sales on PS4 (like The Witcher 3)
+ COD 2020 release
Here is a list of games released during Q3 in previous years
Red titles = first-party titles or major releases
For Q3 FY20 estimate, we know that PS5 will have Miles Morales at launch
A game that will be highly profitable, being a first party game
We will assume a $399 for PS5 DE/$449 for PS5 and that it will sell as good as PS4, so 4.5m units
We will now do 2 hypotheses, one with PS5 costing $487/$515 to Sony like I said at the start of the OP and one with PS5 costing $472/$500
Afterwards, another 2 hypotheses with PS5 costing $487/$515 to Sony but one with $449/499 retail price, the other with $499/549
The optical drive would cost about $28 in this hypothesis
Hypothesis 1 : $487/$515 cost for Sony with a retail price of $399/$449
So it would be a $66 net loss for each PS5 sold and $88 loss for each PS5 DE
We will assume that 20% of PS5 sold are PS5 DE so 80% is PS5 Standard (and then 40%/60% for the high range)
20%/80% : (3.6m PS5 x $66) + (0.9m PS5 DE x $87) = $238M + $79M = 317M loss
40%/60% : 178M + 157M = 335M loss
Hypothesis 2 : $472/$500 cost for Sony with a retail price of $399/$449
So it would be a $51 net loss for each PS5 sold and $73 loss for each PS5 DE
We will assume that 20% of PS5 sold are PS5 DE so 80% is PS5 Standard (and then 40%/60% for the high range)
20%/80% : (3.6m PS5 x $51) + (0.9m PS5 DE x $73) = $184M + $66M = 250M loss
40%.60% : 138M + 131M = 269M loss
Hypothesis 3 : $487/$515 cost for Sony but with a retail price of $449/$499
So it would be a $16 net loss for each PS5 sold and $38 loss for each PS5 DE
We will assume that 20% of PS5 sold are PS5 DE so 80% is PS5 Standard (and then 40%/60% for the high range)
20%/80% : (3.6m PS5 x $16) + (0.9m PS5 DE x $38) = $57.6M + $34M = 92M loss
40%.60% : 43M + 34M = 77M loss
Hypothesis 4 : $487/$515 cost for Sony but with a retail price of $499/$549
So Sony would gain $34 for each PS5 sold and $12 for each PS5 DE sold
We will assume that 20% of PS5 sold are PS5 DE so 80% is PS5 Standard (and then 40%/60% for the high range)
20%/80% : (3.6m PS5 x $34) + (0.9m PS5 DE x $12) = $122M + $11M = $133M profits
40%.60% : 92M + 11M = 103M profits
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Before I continue, just take a look at the Network Revenue (FY13/18/19 + my estimates for FY20)
Like before, Red means biggest number but for any quarter, Orange is 2nd biggest and Green is 3rd biggest
With only ¥50bn Network Revenue in Q3 FY13 (PS4 release), Sony managed to have ¥12.4bn Profit during that quarter
And now, during Q3 FY18/19, there are more than ¥390bn Network Revenue, coming from PS Store and PS+/Now
It's almost 8x the Revenue of Q3 FY13
I estimated ¥435bn Network Revenue for Q3 FY20 which would be 8.7x Q3 FY13 Network Revenue
That would also be the 2nd biggest Network Revenue during any quarter
(4-5m PS+ subs in Q3 FY13 vs probably 47m+ PS+/Now subs in Q3 FY20)
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I repost the same table to avoid you to scroll up/down to see the numbers !
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Even with a weak Q3 (like Q3 FY19), Sony still posted ¥53.5bn Profit ($491M)
This Q3 FY20 has a lot more of major third party releases + highly profitable and probably successful first party (Miles Morales) compared to last Q3 (FY19) and next-gen releases should boost spending on PS Store compared to last Q3
Even if Hardware Revenue will increase the overall Revenue from the entire PlayStation division,
(I expect biggest Revenue ever during any quarter for any platform holder with about ¥865bn/$8.08B)
Software & Services Revenue should increase too year-on-year thanks to bigger line-up of third party releases + first-party release + next-gen boost
If we sum up :
All guesses pointed to a better Revenue for this Q3 than Q3 FY19 but also better profits ! (so minimum ¥53.5bn like Q3FY19)
My forecast would have been ¥70-75bn Profits (if there wasn't any loss due to the launch of a new console)
But I remind you that Sony expects only ¥42bn ($393M) Profits for Q3 and Q4 combined
If we take into account an expected loss of about $317-335M (¥34-36bn) due to PS5 launch (for $399/$449 retail price)
My forecast of ¥70bn Profits would go down to about ¥34-36bn Profits for Q3 FY20
In the table, I forecast ¥29bn Profits to not exceed the ¥240bn Profits Sony forecasted for the fiscal year !
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I repost the same table to avoid you to scroll up/down to see the numbers !
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Now Q4 FY20 (Jan-Mar 2021) :
Q4 FY13 (Jan-Mar 2014) saw ¥10.7bn Loss despite huge PS4 sales (3.0 units) with about 5.7m PS+ subs
That loss shows how weak was PS3 software wise and how low PlayStation Network spendings were
Take a look at the table below to see the Network Revenue during Q4 FY13 (only ¥70bn)
And compare that Network Revenue to PSN nowadays (5x higher now)
Q4 FY18 (Jan-Mar 2019) posted ¥63.9bn Profit, biggest profit ever for PlayStation during Q4
Explained by Fortnite and big releases (AC7, KH3, RE2 Remake, Far Cry New Dawn, Anthem, Sekiro, The Division 2, Metro Exodus) + Apex Legends release
Q4 FY19 (Jan-Mar 2020) posted ¥46.2bn Profit, 2nd biggest profit ever for PlayStation during Q4
Explained by Fortnite/Apex + Warzone release + big Q3 releases keep selling (MW/Jedi Fallen Order) + some major releases despite being weaker (DBZ Kakarot, Nioh 2, KH3 Re Mind, Dreams, Doom Eternal, MW2 Remastered)
But especially major spending on Store due to lockdowns (almost flat from Q4 FY18 despite way weaker line-up of games)
Q4 FY20 (Jan-March 2021)
With a probably big 1st party game planned for that quarter + PSN stronger than ever (Store + Services) + strong PS4 game sales + PS5 games sales, unlike Q4 FY13, Q4 FY20 will be likely profitable (a forecast of ¥35-45bn Profits would have been realistic)
We will assume 3.0m PS5 units sold with the same loss than Hypothesis 1
That would give $211-223M loss (¥22.6-23.9bn)
Overall, Q4 Profits would be ¥11-21bn ($103-196M)
--> In the table, I put ¥13bn for Q4 Profits forecast
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In conclusion, I think I showed why, in my opinion, Operating Profit forecast from Sony definitely hints to a price at less than $499.
You can't have the biggest Revenue ever during any quarter (Q3 FY20), of course inflated by Hardware revenue boost but also with Software & Services Revenue this high (as previously explained/shown) and having not this much profits, especially when you have a major first party planned for launch !
You can't have a record breaking Q1 FY20 with more than ¥124bn Profits ($1.152B) and forecast "only" ¥240bn for the the entire fiscal year when you will post some great profits during Q2 following TLOU Part II/Ghost success, as well as HZD PC release
Q2+Q3+Q4 FY19 Profits reached ¥164.6bn ($1.52B)
Q2+Q3+Q4 FY20 Profits would be ¥116bn ($1.08B) with a better/bigger line-up of first party games, third party games and stronger F2P ?
The only explanation for only ¥240bn (2.24B) Profits is because Sony expect some loss with PS5 launch, and the loss will come from Hardware.
A price under $499 would explain why they expect only ¥240bn ($2.24B) Profits and not ¥300bn+ ($2.80B+)
Informations before we start :
- Q1 = April-June / Q2 = July-Sept / Q3 = Oct-Dec / Q4 = Jan-March
- PS5 = PS5 standard / PS5 DE = PS5 Digital Edition
- PS4 sold 4.5m units during Q3 FY13 (Oct-Dec) and 3.1m during Q4 FY13 (Jan-March 2014)
- PS4 BOM according to research firm IHS was $372, and higher at $381 once per-unit cost of assembly included
- PS4 was sold at $399 and was sold at a loss at first, probably between $40-60, easily offset by the purchase of a game & PS+
- We assume here that WSJ (Wall Street Journal), Nikkei and Bloomberg are right with their various reports about PS5
If we follow the same path for PS5, we would add $10 for the cost of assembly with a total of $460 and then $55 for the additional expenses
--> PS5 total cost would be around $515
--> PS5 DE total cost would be around $487 ($515 minus $28 for optical drive)
Now look at the table below, for each quarter, there are some colors (think traffic light) :
- Red : Biggest number ever for that quarter
- Orange : 2nd biggest number ever for that quarter
- Green : 3rd biggest number ever for that quarter
- Blue is my own predictions for this current fiscal year
(except few ones)
You can also see that during Q3 FY13 (PS4 release), PlayStation saw ¥12.4bn Profit and the next quarter, ¥10.7bn Loss
For FY2020, Sony expects ¥2500bn Revenue and ¥240bn Op. Profit
Disclaimer : If you add up Q1+Q2+Q3+Q4 Revenue fo FY2020, you won't have ¥2500bn Revenue but ¥2464bn, I probably underestimated my Q2 Revenue forecast
I will focus this analysis on Profits, but will talk about Revenue a bit too when it's relevant.
I will also explain quarters from previous years to put these into context and to explain why I chose my estimates !
Of course, I will skip Q1 Results because we already had these results some time ago.
Q2 FY20 (July-Sept) :
Q2 FY18 had ¥90.6bn Profit, biggest profit ever for PlayStation during Q2
It had Fortnite + Spider-Man and major releases like Tomb Raider (and annual sports titles)
Q2 FY19 reached ¥65bn Profit with a weaker line up and without first party games
It had Control, MH Iceborne, Man of Medan and Borderlands 3 (+ annual sports titles)
Q2 FY20 will have TLOU Part II spillovers + Ghost of Tsushima success + HZD on PC
+ major releases like Tony Hawk and Avengers (+ annual sports titles)
+ strong F2P (Fortnite, Warzone) and the launch of Hyper Scape
Here is a list of games released during Q2 in previous years
Red titles = first-party titles or major releases
I also expect bigger Revenue from PS Store year-on-year due to :
- Digital growth (compared to last year)
- COVID (from countries with still partial lockdown, people who buys more digital now because they changed their habits)
- Bigger F2P spendings (Warzone was not there last year for example, Fortnite is stronger than last year [Epic expect bigger Revenue this year])
- Less people on vacation this summer combined with huge back-catalog available for cheap on PS Store with regular sales
Previous quarter (Q1 FY20) saw +$100M Revenue year on year and I expect the same this Q2 FY20 due to strong PS+ line up in July/Aug.
And I said strong PS+ line-up because they had record user engagement on social media during their announcements (NBA 2K20/Tomb Raider and MW2 Remastered/Fall Guys), PS+ subs will likely go up quarter-on-quarter and obviously year-on-year.
Here is a table where you can see my Revenue forecast for Q2, it will be, without a doubt, bigger than last year
I expect Software and Services to represent 83% of total PlayStation Revenue during this quarter, where margins are better and therefore better profits (vs Hardware revenue)
If Q2 FY19 without first-party games, without Warzone, with a weaker Fortnite (than this year) and an equivalent slate of third-party releases, reached ¥65bn Profits.
Well Q2 FY20 with all the above-mentioned reasons, makes me think Profits will be better this year.
That would give +¥9bn (+$95M) in Profits year-on-year for a growth in Software/Services Revenue of ¥55.1bn ($540M)
So an operating margin of 16.33% which would be realistic given first-party releases this quarter (Ghost/TLOU2)
For the total results of Q2 FY20, ¥473bn Revenue and ¥74bn Profits would give an operating margin of 15.6%
It was 16.5% in Q2 FY18 (thanks to huge Spider-Man success) and 14.3% in Q2 FY19, still a good operating margin but less than Q2 FY18 due to the lack of first party titles (which are highly profitable)
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Now, we have Q1 results (from their financial results that you can find in this thread) + we have just done Q2 forecast
I remind that Sony expect ¥240bn Profits this fiscal year.
Q1 Profits saw ¥124bn and Q2 Profits would reach ¥74bn = ¥198bn Profits
So at this point, Sony expects only ¥42bn ($393M) Profits for Q3 and Q4 combined
I repost the same table to avoid you to scroll up/down to see the numbers !
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Now Q3 FY20 (Oct-Dec) :
We will start with Q3 FY13 (PS4 release), surprisingly Sony had ¥12.4bn Profit thanks to PS4 release
The amount of games & PS+ subs sold managed to offset the loss for each PS4
Profit also came from cost reductions (PS3)
Q3 FY17 had ¥85.4bn Profit, biggest profit ever for PlayStation during Q3
Explained by big increase for sales on PS Store (+43% year on year) with the release of Fortnite Battle Royale + increase in software units sales + GT Sport release
Combined with huge PS4 sales + big increase in Services revenue (+35%, to reach $600m for that quarter)
Q3 FY18 had ¥73.1bn Profit, decrease but still the 3rd biggest Profit ever for PlayStation during Q3
The decrease is explained by PS4 lower sales (8.1m this Q3 vs 9.0m in Q3 FY17) and promotional prices during Holiday season.
Despite really bigger spends on Store (+52% to reach $3.13B, 2nd biggest spending ever during a quarter on Store behind record Q1 FY20) + bigger revenue from Services (+$100M year-on-year) + Spider-Man keep selling
Q3 FY19 had ¥53.5bn Profit, big decrease due to no Spider-Man and Death Stranding not having the effect Sony expected (as stated in their financials) + big decrease in PS4 sales revenue (6.0m units this Q3 vs 8.1m previous year) and a weaker line up of third party games (compared to AC Odyssey/RDR2/Black Ops 4/Battlefield 5 in 2018)
Q3 FY20 will have one of the strongest Q3 line-up this generation combined with the huge install base of PS4 and PS5 backward compatibility
FIFA is now a Q3 release, unlike previous years
Crash 4 will likely perform very well on PS4 and is bigger than 2019's releases like GR Breakpoint / The Outer Worlds / NFS Heat / Death Stranding
+ likely strong performance of Watch Dogs Legion and AC Valhalla
+ one of the biggest release of the year, Cyberpunk 2077 which will probably make a good part of its initial sales on PS4 (like The Witcher 3)
+ COD 2020 release
Here is a list of games released during Q3 in previous years
Red titles = first-party titles or major releases
For Q3 FY20 estimate, we know that PS5 will have Miles Morales at launch
A game that will be highly profitable, being a first party game
We will assume a $399 for PS5 DE/$449 for PS5 and that it will sell as good as PS4, so 4.5m units
We will now do 2 hypotheses, one with PS5 costing $487/$515 to Sony like I said at the start of the OP and one with PS5 costing $472/$500
Afterwards, another 2 hypotheses with PS5 costing $487/$515 to Sony but one with $449/499 retail price, the other with $499/549
The optical drive would cost about $28 in this hypothesis
Hypothesis 1 : $487/$515 cost for Sony with a retail price of $399/$449
So it would be a $66 net loss for each PS5 sold and $88 loss for each PS5 DE
We will assume that 20% of PS5 sold are PS5 DE so 80% is PS5 Standard (and then 40%/60% for the high range)
20%/80% : (3.6m PS5 x $66) + (0.9m PS5 DE x $87) = $238M + $79M = 317M loss
40%/60% : 178M + 157M = 335M loss
Hypothesis 2 : $472/$500 cost for Sony with a retail price of $399/$449
So it would be a $51 net loss for each PS5 sold and $73 loss for each PS5 DE
We will assume that 20% of PS5 sold are PS5 DE so 80% is PS5 Standard (and then 40%/60% for the high range)
20%/80% : (3.6m PS5 x $51) + (0.9m PS5 DE x $73) = $184M + $66M = 250M loss
40%.60% : 138M + 131M = 269M loss
Hypothesis 3 : $487/$515 cost for Sony but with a retail price of $449/$499
So it would be a $16 net loss for each PS5 sold and $38 loss for each PS5 DE
We will assume that 20% of PS5 sold are PS5 DE so 80% is PS5 Standard (and then 40%/60% for the high range)
20%/80% : (3.6m PS5 x $16) + (0.9m PS5 DE x $38) = $57.6M + $34M = 92M loss
40%.60% : 43M + 34M = 77M loss
Hypothesis 4 : $487/$515 cost for Sony but with a retail price of $499/$549
So Sony would gain $34 for each PS5 sold and $12 for each PS5 DE sold
We will assume that 20% of PS5 sold are PS5 DE so 80% is PS5 Standard (and then 40%/60% for the high range)
20%/80% : (3.6m PS5 x $34) + (0.9m PS5 DE x $12) = $122M + $11M = $133M profits
40%.60% : 92M + 11M = 103M profits
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Before I continue, just take a look at the Network Revenue (FY13/18/19 + my estimates for FY20)
Like before, Red means biggest number but for any quarter, Orange is 2nd biggest and Green is 3rd biggest
With only ¥50bn Network Revenue in Q3 FY13 (PS4 release), Sony managed to have ¥12.4bn Profit during that quarter
And now, during Q3 FY18/19, there are more than ¥390bn Network Revenue, coming from PS Store and PS+/Now
It's almost 8x the Revenue of Q3 FY13
I estimated ¥435bn Network Revenue for Q3 FY20 which would be 8.7x Q3 FY13 Network Revenue
That would also be the 2nd biggest Network Revenue during any quarter
(4-5m PS+ subs in Q3 FY13 vs probably 47m+ PS+/Now subs in Q3 FY20)
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I repost the same table to avoid you to scroll up/down to see the numbers !
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Even with a weak Q3 (like Q3 FY19), Sony still posted ¥53.5bn Profit ($491M)
This Q3 FY20 has a lot more of major third party releases + highly profitable and probably successful first party (Miles Morales) compared to last Q3 (FY19) and next-gen releases should boost spending on PS Store compared to last Q3
Even if Hardware Revenue will increase the overall Revenue from the entire PlayStation division,
(I expect biggest Revenue ever during any quarter for any platform holder with about ¥865bn/$8.08B)
Software & Services Revenue should increase too year-on-year thanks to bigger line-up of third party releases + first-party release + next-gen boost
If we sum up :
- Big releases planned for Q2 went to Q3 (FIFA/Cyberpunk)
- Bigger releases planned this Q3 (for Sony and publishers)
- Bigger Revenue from Software year-on-year due to bigger line up overall
- Bigger Revenue from Services year-on-year
- Those Network Revenue (PS Store + Services) are 8x higher than the same quarter in 2013
All guesses pointed to a better Revenue for this Q3 than Q3 FY19 but also better profits ! (so minimum ¥53.5bn like Q3FY19)
My forecast would have been ¥70-75bn Profits (if there wasn't any loss due to the launch of a new console)
But I remind you that Sony expects only ¥42bn ($393M) Profits for Q3 and Q4 combined
If we take into account an expected loss of about $317-335M (¥34-36bn) due to PS5 launch (for $399/$449 retail price)
My forecast of ¥70bn Profits would go down to about ¥34-36bn Profits for Q3 FY20
In the table, I forecast ¥29bn Profits to not exceed the ¥240bn Profits Sony forecasted for the fiscal year !
--------------------------------------------------------------------
I repost the same table to avoid you to scroll up/down to see the numbers !
--------------------------------------------------------------------
Now Q4 FY20 (Jan-Mar 2021) :
Q4 FY13 (Jan-Mar 2014) saw ¥10.7bn Loss despite huge PS4 sales (3.0 units) with about 5.7m PS+ subs
That loss shows how weak was PS3 software wise and how low PlayStation Network spendings were
Take a look at the table below to see the Network Revenue during Q4 FY13 (only ¥70bn)
And compare that Network Revenue to PSN nowadays (5x higher now)
Q4 FY18 (Jan-Mar 2019) posted ¥63.9bn Profit, biggest profit ever for PlayStation during Q4
Explained by Fortnite and big releases (AC7, KH3, RE2 Remake, Far Cry New Dawn, Anthem, Sekiro, The Division 2, Metro Exodus) + Apex Legends release
Q4 FY19 (Jan-Mar 2020) posted ¥46.2bn Profit, 2nd biggest profit ever for PlayStation during Q4
Explained by Fortnite/Apex + Warzone release + big Q3 releases keep selling (MW/Jedi Fallen Order) + some major releases despite being weaker (DBZ Kakarot, Nioh 2, KH3 Re Mind, Dreams, Doom Eternal, MW2 Remastered)
But especially major spending on Store due to lockdowns (almost flat from Q4 FY18 despite way weaker line-up of games)
Q4 FY20 (Jan-March 2021)
With a probably big 1st party game planned for that quarter + PSN stronger than ever (Store + Services) + strong PS4 game sales + PS5 games sales, unlike Q4 FY13, Q4 FY20 will be likely profitable (a forecast of ¥35-45bn Profits would have been realistic)
We will assume 3.0m PS5 units sold with the same loss than Hypothesis 1
That would give $211-223M loss (¥22.6-23.9bn)
Overall, Q4 Profits would be ¥11-21bn ($103-196M)
--> In the table, I put ¥13bn for Q4 Profits forecast
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In conclusion, I think I showed why, in my opinion, Operating Profit forecast from Sony definitely hints to a price at less than $499.
You can't have the biggest Revenue ever during any quarter (Q3 FY20), of course inflated by Hardware revenue boost but also with Software & Services Revenue this high (as previously explained/shown) and having not this much profits, especially when you have a major first party planned for launch !
You can't have a record breaking Q1 FY20 with more than ¥124bn Profits ($1.152B) and forecast "only" ¥240bn for the the entire fiscal year when you will post some great profits during Q2 following TLOU Part II/Ghost success, as well as HZD PC release
Q2+Q3+Q4 FY19 Profits reached ¥164.6bn ($1.52B)
Q2+Q3+Q4 FY20 Profits would be ¥116bn ($1.08B) with a better/bigger line-up of first party games, third party games and stronger F2P ?
The only explanation for only ¥240bn (2.24B) Profits is because Sony expect some loss with PS5 launch, and the loss will come from Hardware.
A price under $499 would explain why they expect only ¥240bn ($2.24B) Profits and not ¥300bn+ ($2.80B+)
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