Sony has a 20% drop in game sales: fewer people buy PlayStation 4 and pay less in fritupley

During the Christmas quarter, the Japanese company sold consoles and games for ¥632.1 billion ($5.7 billion). This is at the level of Sony’s earnings three years ago, when it received ¥617.7 billion in the third fiscal quarter of 2016.

The current drop in revenue is explained by three factors:

1) Declining sales of PlayStation 4 consolesIn October-December 2019, 6.1 million consoles were sold.

This is less than in the same period in 2014. But this is an expected situation. The console is seven years old. A new generation was announced last year. There could not have been a fall. Plus, it wasn’t sharp, we can’t talk about a collapse in sales: if you look at the diagram given by Daniel Ahmad, the sales curve gradually drops to this value.

2) Reduced sales of third-party titlesFirst of all, we are talking about a reduction in sales of free-play games, as well as a loss in exchange rates from software.

As noted in the company’s statement, if we do not take into account these factors, software sales have not changed over the past year.

3) Exchange lossesThey are associated with a decrease in the average price of the PlayStation 4 in retail in terms of yen and due to fluctuations in the value of currencies and Christmas sales.

Following the revenue, operating profit also fell. In the third fiscal quarter, it amounted to 53.5 billion rubles ($487 million). This is 27% less than a year earlier.

Sony explains the drop in profits primarily by falling below the planned level of sales of games from third-party publishers. However, in the same place, the company notes that the situation could have been worse if not for the revenue growth from the PlayStation Now cloud service.

The financial year, which will end for Sony in March, the company is going to meet a 3% drop in gaming revenue compared to last year. Not the worst result, considering that the company will release a new console next year.