Wanted to make a thread to note a few things.
The main point of this thread is to show how Sony, in this case, has seen network sales as the main driver of growth this generation. Of course hardware, physical software and accessories have been extremely strong this generation, but the huge growth in both revenues and profits is pretty much thanks to network sales.
Digital sales have been on an upward trend this generation as consumers find value in digital purchases such as subscription services, digital games and add on content. PlayStation Plus as a value added service has grown from a few million members before the launch of PlayStation 4 to over 31.5 million paying members as of December 31st 2017. This means that approximately 43% of PlayStation 4's sold have a PS Plus account tied to it. PS Plus has been a huge revenue driver for Sony this gen.
However, it's not just PS Plus that has caused the increase in network sales. There are over 70 million active PSN users that are spending on full game downloads and going digital this generation. Some games such as Destiny 2 are seeing over 50% of their sales from digital stores and many are willing to spend on higher priced digital editions that come with a season pass or additional bonuses. Constant sales are driving digital downloads too. In fact, Sony recently noted that the PlayStation Store is the largest distribution channel for PS4 games, bigger than any other distribution channel.
The final point is that publishers this generation have focused on the games as a service model. Whether it's FIFA Ultimate Team, loot boxes in Overwatch, story content for The Witcher 3 or Assassin's Creed Origins, there are plenty of ways to spend on games after you've purchased them. Social gaming also plays a big role here with online multiplayer. All this spending is done through the PlayStation Store. Sony receives a 30% cut of any transaction via the PlayStation Store. This is an extremely high margin segment too which means an increase in PSN revenue means profit will also rise in a similar manner.
Essentially, hardware sales have low margin. Software and Services is where all the actual money (read: profit) comes from these days. Hence why all three platform holders are investing in a robust digital ecosystem. Microsoft and Sony of course being ahead of the game here.
Here is a look at annual revenue generated by PSN. The total for 2017 was $8.4 billion in US Dollars. This should grow to $10 billion in 2018.
This chart shows the above, but by fiscal quarter. I also added in Nintendo digital ecosystem revenue to really show how far ahead of the game PSN is these days. It also shows the opportunity Nintendo has on digital this gen with Switch and its paid online service.
As above, This has led to strong profits. The below shows how Sony has effectively broken the cyclical pattern of its games division. It used to be that there would be a large investment in console hardware upfront (See 1995, 2000 and 2006) followed by a few years of growth and then a dip as software and hardware sales dropped off and investment in the next gen started. With a strong focus on network services, both Sony and Microsoft are seeing continued growth over the entire course of the generation and higher profits. (Bonus points if you can guess when the PS3 launched).
Maybe they can reinvest some of that money in better download speeds and PSN name change now....
The main point of this thread is to show how Sony, in this case, has seen network sales as the main driver of growth this generation. Of course hardware, physical software and accessories have been extremely strong this generation, but the huge growth in both revenues and profits is pretty much thanks to network sales.
Digital sales have been on an upward trend this generation as consumers find value in digital purchases such as subscription services, digital games and add on content. PlayStation Plus as a value added service has grown from a few million members before the launch of PlayStation 4 to over 31.5 million paying members as of December 31st 2017. This means that approximately 43% of PlayStation 4's sold have a PS Plus account tied to it. PS Plus has been a huge revenue driver for Sony this gen.
However, it's not just PS Plus that has caused the increase in network sales. There are over 70 million active PSN users that are spending on full game downloads and going digital this generation. Some games such as Destiny 2 are seeing over 50% of their sales from digital stores and many are willing to spend on higher priced digital editions that come with a season pass or additional bonuses. Constant sales are driving digital downloads too. In fact, Sony recently noted that the PlayStation Store is the largest distribution channel for PS4 games, bigger than any other distribution channel.
The final point is that publishers this generation have focused on the games as a service model. Whether it's FIFA Ultimate Team, loot boxes in Overwatch, story content for The Witcher 3 or Assassin's Creed Origins, there are plenty of ways to spend on games after you've purchased them. Social gaming also plays a big role here with online multiplayer. All this spending is done through the PlayStation Store. Sony receives a 30% cut of any transaction via the PlayStation Store. This is an extremely high margin segment too which means an increase in PSN revenue means profit will also rise in a similar manner.
Essentially, hardware sales have low margin. Software and Services is where all the actual money (read: profit) comes from these days. Hence why all three platform holders are investing in a robust digital ecosystem. Microsoft and Sony of course being ahead of the game here.
Here is a look at annual revenue generated by PSN. The total for 2017 was $8.4 billion in US Dollars. This should grow to $10 billion in 2018.
This chart shows the above, but by fiscal quarter. I also added in Nintendo digital ecosystem revenue to really show how far ahead of the game PSN is these days. It also shows the opportunity Nintendo has on digital this gen with Switch and its paid online service.
As above, This has led to strong profits. The below shows how Sony has effectively broken the cyclical pattern of its games division. It used to be that there would be a large investment in console hardware upfront (See 1995, 2000 and 2006) followed by a few years of growth and then a dip as software and hardware sales dropped off and investment in the next gen started. With a strong focus on network services, both Sony and Microsoft are seeing continued growth over the entire course of the generation and higher profits. (Bonus points if you can guess when the PS3 launched).
Maybe they can reinvest some of that money in better download speeds and PSN name change now....
Last edited:
