Sony announced its FY2019 Q3 results yesterday for the three months period ending on December 31, 2019, and unlike Microsoft, the company isn’t shying away from revealing hard data about its PlayStation business. Even though Sony only sold 6.1M PlayStation 4 units during the holiday season (down 2M YoY), PS4 cumulative sales have reached 108.9M units, and PS Plus subscribers also reached a record 38.8M subscribers.
“We aim to leverage this large community and network services revenue stream to affect a smooth transition from the current console generation to the next, unlike in the past when profitability deteriorated significantly due to development and marketing costs,” Sony’s CFO Hiroki Totoki explained during its earning calls. When asked to share more about Sony’s plans for a "smooth transition” to next-gen consoles, Totoki said that PlayStation 5 pricing is still up in the air, and hinted that Microsoft’s Xbox Series X should be the main factor of adjustment.
“First, we must absolutely control the labour cost, the personnel cost, it must be controlled,” Totoki said. “And the initial ramp up, how much can we prepare initially, we will work on the production and the sales and we will have to prepare the right volume as we launch this.
“What is not very clear or visible is because we are competing in the space, so it’s very difficult to discuss anything about the price at this point of time, and depending upon the price level, we may have to determine the promotion that we are going to deploy and how much costs we are prepared to pay.
“So it’s a question of balance,” Totoki continued, “and because it’s a balancing act it’s very difficult to say anything concrete at this point of time, but when I said smooth transition, we mean that we will definitely choose the optimal approach and that we will try to have the best balance so that we will be profitable in the life, during the life of this product.”
If Microsoft was first to reveal the design of the next-gen Xbox, the company has yet to reveal the full specs and pricing details for Xbox Series X. The software giant is also rumored to be working on a cheaper “Lockhart” SKU, but the existence of this second device is still unconfirmed.
Back in 2013, Sony’s PlayStation 4 easily took the advantage over Microsoft’s Xbox One which was $100 more expensive with its bundled Kinect, and also slightly less powerful than the PS4. Things apparently got so bad that Microsoft quickly stopped sharing Xbox One sales numbers.
Thanks to its 100+ million PS4 install base and ecosystem lock-in, Sony may still be able to become the market leader during the next console generation, even if Microsoft is able to match the pricing of the PS5. Even though the console wars are still very much a thing, Microsoft is now looking beyond pure console sales and working to bring the Xbox ecosystem to more devices with Project xCloud. "The business isn’t how many consoles you sell. The business is how many players are playing the games that they buy, how they play," Xbox head Phil Spencer explained in an interview with The Verge last year.