PlayStation has huge digital Q3 as hardware and physical sales slow

Sony’s financial results are in for the critical three month period up to the 31st of December and PlayStation has posted some huge numbers. With the big trends being, predictably, a rise of PSN revenue and PlayStation Plus subscribers, which come at the expense of physical game sales. Meanwhile the mature platform has seen hardware sales slow as it enters its 6th year on sale.

First the digital rise: PSN revenue for Q3 2018 rocketed up to ¥353.9bn (£2.47bn) from ¥234.9bn (£1.63bn) for Q3 2017. PlayStation Plus subscribers continued to rise steadily, up to 36.3m, up 2m from Q2 2018 and up 4.8m year-on-year.

Meanwhile physical software sales fell in a measured manner: down from ¥66.4bn (£462.8m) to ¥56.4bn (£392.9m). And hardware sales revenue dropped YoY from ¥270.6m (£1.89bn) to ¥223.4m (£1.56bn). That equated to a, not to be sniffed at, 8.1m PS4 units sold, though that was down from 9m units in Q3 2017.

Sony helpfully provides a full game software digital download ratio. And even for the key gift-buying season this rose from 28 per cent in Q3 2017 to 37 per cent in Q3 2018. That shows the real rate of digital shift for full games, having removed the huge revenue attached to ongoing purchases, such as DLC and microtransactions.

Sales as a whole were up ten per cent year-on-year to ¥790.6bn (£5.51bn). CFO Hiroki Totoki commented “operating income decreased 12.3 billion yen year-on-year to 73.1 billion yen… The decrease was primarily due to aggressive promotional activities we undertook to sell PS4 hardware in an effort to further expand our user base.”

He also commented on the potential impact of the transition to a new generation of hardware: “Although we need to be conscious of potential volatility in profitability due to the console cycle going forward, we are working to mitigate that volatility by leveraging the more-than 91.6 million unit cumulative install base of PS4 to benefit from the new business model created by network services and add-on content sales.”

With the PlayStation 5 almost certain to be backward compatible with the current generation of hardware, there should be far less turmoil over the transition from one generation to the next. As with so many transitions in the past, Sony is in a great position going into the switchover, and while positions of the top players have often changed, thee games industry today looks less likely than ever to deliver a major upset to the current status quo.