As is the case with most modern hardware launches, Sony is selling the PlayStation 5 at a loss that’s offset by sales of software, services, and peripherals. However, that’s all set to change in June as the company expects the PS5’s disc-based version to break even, following which the hardware will become profitable.
That’s according to a presentation delivered yesterday by Sony Interactive Entertainment CEO Jim Ryan. When it comes to console economics, Sony believes that the importance of hardware is reducing in the overall business model. In a slide showing SIE’s revenue structure, Ryan revealed that in FY13, 48 percent of SIE’s revenue came from the PS4 console and 52 percent of its revenue came from sales of software, services, and peripherals. However, in FY20, hardware claimed only 20 percent of the revenue pie, leaving SIE to earn 80 percent of its revenue from software, services, and peripherals.
The most recent breakdown of revenue is supported by Sony’s ever-increasing network sales. The company reported yesterday that its network sales increased “almost tenfold” in the last seven years.
In his presentation, Ryan further revealed that game monetization is stronger than ever. Compared to the PS4’s first five months, the PS5 saw a whopping 231 percent increase in add-on spending and a 15 percent decrease in full game spending.
Elsewhere in the presentation, Ryan talked about new growth vectors, confirming that Sony is looking to grow beyond traditional console gaming. The company plans to transform “from PlayStation’s current console-centric ecosystem to a future where large elements of our community extend beyond the console,” Ryan concluded.