When Sony Corp started developing its next games console, it couldn’t have known that the release would coincide with the worst viral pandemic in a century. And if executives had, they would have struggled to understand the implications.
But Covid-19 is here now, and the PlayStation 5 isn’t. Yet.
Sony reiterated a previous timeline Aug 4 for releasing the newest version of its popular games machine by the holiday season – which generally means the December Christmas period. That's none too soon, because the current model needs replacing to capitalise on a time of extraordinary demand.
Since the start of the crisis in February, the Japanese company and rival Nintendo Co have learned that people being cooped up at home is good for the games business. Nintendo’s Switch, a hybrid handheld-console released in 2017, has done so well that the company sold out. The firm reports earnings later this week.
Revenue from Sony’s game and networking services division climbed 32% in the June quarter from a year earlier, making it the largest contributor to growth for the period, according to the company’s earnings announcement. The unit’s operating income jumped 68%, accounting for more than half the corporate total.
More importantly for the long-term future of the business, subscribers to the PlayStation Plus service climbed 24% to 45 million – an indication that Sony can expect an even steadier stream of monthly revenue from loyal customers.
Sure, that sounds obvious now, but with the global economy plummeting and tens of millions of people losing their jobs, it would have been reasonable to assume that purses would be tightened and gaming would be lower on the shopping list.
Other parts of Sony have suffered: Music, pictures, electronics, and sensors all declined for the period. Its financial-services division is the only other to post growth.
What’s more, Sony is expecting negligible sales expansion overall for the full year and a 27% drop in operating profit. Games and financials are the only bright spots. It could take up to three years for Sony’s motion-picture division to recover, the company said.
As a result, Sony’s major hope for the year rests on a division whose most-anticipated product hasn’t even gone into production. Nor has the release date been finalised. And yet, the PS5 could be the greatest beneficiary from this prolonged global lockdown, as long as it can get to market on time.
For Sony executives and shareholders eagerly awaiting a Santa treat, Christmas just can’t come soon enough.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Tim Culpan is a Bloomberg Opinion columnist covering technology. He previously covered technology for Bloomberg News. – Bloomberg
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