Forget PS4; Sony Itself May Fail if PlayStation Now Falters
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With so much riding on its subscription service, the PS4 maker has much more than a console on its mind. Sony itself may fail if PlayStation Now falters.
Sony this week will ship The Order: 1886 for PS4, a new franchise with incredible visuals but whose gameplay was just “decent” based on our hands-on time with it a few weeks ago. Still, The Order: 1886 has gamers worldwide interested either because they can finally get their hands on Sony’s new first-party franchise (PS4 owners) or because they want to see if it lives up to the hype (Xbox One owners). But The Order isn’t Sony’s most important release. Instead, it’s the company’s subscription service PlayStation Now. If The Order struggles it’ll be unfortunate for the PS4. But Sony itself may fail if PlayStation Now falters.
Sony’s financial troubles have been well documented, though the culprit has largely been its mobile-phone division. In fact, when announcing its forecast $2.1 billion loss for this fiscal year, Sony attributed the massive number to a write-down of its smartphone business. The result: Sony said in October that it won’t pay shareholders an annual dividend for the first time in 53 years.
Earlier this month Sony painted a somewhat rosier picture, though still a frightful one. Now, Sony is forecasting a preliminary full-year net loss of 170 billion yen, 60 billion less than its previous forecast loss of 230 billion yen. What helped Sony close the gap? Its PlayStation unit, of course. Leave it to gamers to save the day, right?
Gamers have gobbled up the PS4 at a ridiculous pace since the console’s launch just over a year ago. To date, the PS4 vs Xbox One argument is going in Sony’s favor by at least a 3-to-1 margin worldwide. On the surface that seems to be a good news story, as the PlayStation 4 has been a rousing success. To an extent that’s true. But read between the lines, and the pressure for the PlayStation unit to save Sony itself may cause the gaming unit to take some desperate — and perhaps ill-conceived — measures.
While revising its forecast loss, Sony announced it was raising its annual outlook for the game and network division by 5 billion yen. In short, Kazuo Hirai, Sony’s current CEO and former SCEA head, threw down the gauntlet for his former colleagues in the PlayStation unit. The implication was “make PlayStation Now a dominant success, or you’ll be blamed in part for our company’s financial failure.”
Make no mistake, PlayStation Now is an incredible concept and has the potential to illuminate the path toward how we all experience video games in the future. The PS4 is great as a dedicated hardware system, but the sales potential for PlayStation Now puts the 18 million sold PS4s to shame.
That deal announced at CES this year that Samsung Smart TVs are getting the PlayStation Now service? That’s just the beginning. With GPU and CPU processes done in the cloud, PlayStation Now lets literally anyone with a broadband Internet connection and an HDTV play a AAA “console” game. This week we might all see The Order: 1886 sell through some PS4 consoles. Next year, we might see Sony make more money on PS Now so people can play games like The Order on any such enabled HDTV they want.
It’s long been known that consoles are a loss leader. Hardware manufacturers make money over time due to licensing fees and software sales. The PS4 has been an anomaly in that regard, as it’s reportedly already making money for Sony just 15 months in. But again, that’s the anomaly. Sony won’t likely capture lightning in a bottle again. The company needs PlayStation Now to succeed, because Sony’s very fate may lie in the balance.
Sony already sold its PC business, and it’s reportedly thinking about getting out of the TV and smartphone businesses too. That basically leaves Sony Pictures, its imaging (cameras and lenses) unit and its gaming (PlayStation, PSN) division to carry the load. And based on the extra pressure Sony’s revised forecast put on the gaming division, it’s clear where the company’s putting its chips.
So what happens if PS Now falters? If The Order: 1886 struggles, the PS4 will still endure. But if PlayStation Now struggles, Sony could find itself in a much bigger mess. Its PC business is gone, its smartphone business is on the block, and its movie unit is continuing to rebuild after last year’s holiday hack. That leaves imaging and gaming, and Sony’s made a big bet that PlayStation will save the day. But can it really do that?
PlayStation Now has the potential, but it doesn’t seem ready to carry that burden. Current-gen games aren’t available for streaming yet, and there hasn’t been an official timetable for that functionality to go live. Our bet: E3 will have a whole host of announcements, and Kaz Hirai himself will make an encore appearance.
With so much pressure riding on the PlayStation unit, Sony’s CEO needs to show not only his faith in the division but to put the pressure on in person to deliver. Whether that compels the PlayStation group to make some desperate decisions remains to be seen, but when the success or absolute failure of a company rides on a single business unit, the chances are high that we’ll see at least one misstep in the next four months.
Sony this week will ship The Order: 1886 for PS4, a new franchise with incredible visuals but whose gameplay was just “decent” based on our hands-on time with it a few weeks ago. Still, The Order: 1886 has gamers worldwide interested either because they can finally get their hands on Sony’s new first-party franchise (PS4 owners) or because they want to see if it lives up to the hype (Xbox One owners). But The Order isn’t Sony’s most important release. Instead, it’s the company’s subscription service PlayStation Now. If The Order struggles it’ll be unfortunate for the PS4. But Sony itself may fail if PlayStation Now falters.
Sony’s financial troubles have been well documented, though the culprit has largely been its mobile-phone division. In fact, when announcing its forecast $2.1 billion loss for this fiscal year, Sony attributed the massive number to a write-down of its smartphone business. The result: Sony said in October that it won’t pay shareholders an annual dividend for the first time in 53 years.
Earlier this month Sony painted a somewhat rosier picture, though still a frightful one. Now, Sony is forecasting a preliminary full-year net loss of 170 billion yen, 60 billion less than its previous forecast loss of 230 billion yen. What helped Sony close the gap? Its PlayStation unit, of course. Leave it to gamers to save the day, right?
Gamers have gobbled up the PS4 at a ridiculous pace since the console’s launch just over a year ago. To date, the PS4 vs Xbox One argument is going in Sony’s favor by at least a 3-to-1 margin worldwide. On the surface that seems to be a good news story, as the PlayStation 4 has been a rousing success. To an extent that’s true. But read between the lines, and the pressure for the PlayStation unit to save Sony itself may cause the gaming unit to take some desperate — and perhaps ill-conceived — measures.
While revising its forecast loss, Sony announced it was raising its annual outlook for the game and network division by 5 billion yen. In short, Kazuo Hirai, Sony’s current CEO and former SCEA head, threw down the gauntlet for his former colleagues in the PlayStation unit. The implication was “make PlayStation Now a dominant success, or you’ll be blamed in part for our company’s financial failure.”
Make no mistake, PlayStation Now is an incredible concept and has the potential to illuminate the path toward how we all experience video games in the future. The PS4 is great as a dedicated hardware system, but the sales potential for PlayStation Now puts the 18 million sold PS4s to shame.
That deal announced at CES this year that Samsung Smart TVs are getting the PlayStation Now service? That’s just the beginning. With GPU and CPU processes done in the cloud, PlayStation Now lets literally anyone with a broadband Internet connection and an HDTV play a AAA “console” game. This week we might all see The Order: 1886 sell through some PS4 consoles. Next year, we might see Sony make more money on PS Now so people can play games like The Order on any such enabled HDTV they want.
It’s long been known that consoles are a loss leader. Hardware manufacturers make money over time due to licensing fees and software sales. The PS4 has been an anomaly in that regard, as it’s reportedly already making money for Sony just 15 months in. But again, that’s the anomaly. Sony won’t likely capture lightning in a bottle again. The company needs PlayStation Now to succeed, because Sony’s very fate may lie in the balance.
Sony already sold its PC business, and it’s reportedly thinking about getting out of the TV and smartphone businesses too. That basically leaves Sony Pictures, its imaging (cameras and lenses) unit and its gaming (PlayStation, PSN) division to carry the load. And based on the extra pressure Sony’s revised forecast put on the gaming division, it’s clear where the company’s putting its chips.
So what happens if PS Now falters? If The Order: 1886 struggles, the PS4 will still endure. But if PlayStation Now struggles, Sony could find itself in a much bigger mess. Its PC business is gone, its smartphone business is on the block, and its movie unit is continuing to rebuild after last year’s holiday hack. That leaves imaging and gaming, and Sony’s made a big bet that PlayStation will save the day. But can it really do that?
PlayStation Now has the potential, but it doesn’t seem ready to carry that burden. Current-gen games aren’t available for streaming yet, and there hasn’t been an official timetable for that functionality to go live. Our bet: E3 will have a whole host of announcements, and Kaz Hirai himself will make an encore appearance.
With so much pressure riding on the PlayStation unit, Sony’s CEO needs to show not only his faith in the division but to put the pressure on in person to deliver. Whether that compels the PlayStation group to make some desperate decisions remains to be seen, but when the success or absolute failure of a company rides on a single business unit, the chances are high that we’ll see at least one misstep in the next four months.
Comments
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Bit of a stretch to say they're counting on Now when they raised expectations from cameras by ten(?) times that two weeks ago.
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Now can be better if they make some crazy games and stop all this damn releasing of games. I won't get ps now when i could just turn on my 3 and play the joints
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If this is the last generation of PlayStation I Will ? myself.
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Its wack as ? so far. A bunch of games no one wanna play.
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not checking for ps now, waste of money when I got a huge backlog
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If this is the last generation of PlayStation I Will ? myself.
It won't be. They will either sell the PS division off or sell everything else off and solely sell the PS. Either way, if the PS is successful, there is no way the brand would die. -
This will be the last generation of Playstation.
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People said a gaming company could never fall again after Sega, but here we are at the precipice once more watching as one of our gaming icons teeters on the brink of oblivion.
Unreal. -
I never thought I'd see the day where Sony would be banking on the PlayStation to save them. They really are ? right now.
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People said a gaming company could never fall again after Sega, but here we are at the precipice once more watching as one of our gaming icons teeters on the brink of oblivion.
Unreal.
They kinda aren't a gaming company, but the way things are going for them they might be. -
MrSoutCity wrote: »Its wack as ? so far. A bunch of games no one wanna play.
Not only that, but my issue with PS Now is and really with watching movies on PS4 is that everything has to be streamed. With PS Now, to make it even worse the prices are ridiculous for renting and you can't even keep the games. So why should I even invest time in wanting to deal with PS Now? -
Why are people not understanding this? This is not the Sega situation. The Playstation brand is not really in any danger. Sony is. Sony is much larger than Playstation. Playstation as a brand is profitable and will survive even if Sony has to sell it off. Hell, they were able to sell of that Vios brand, and that was arguably part of the reason they are in their financial quagmire.
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Exactly Sony itself is not strictly a gaming company..they are a conglomerate with many subsidiaries...At one point sony didn't even want to get into the video gaming business so its kind of ironic that video games is the element that's keeping them afloat
Me myself I see no use in a PS now subscription
I've been collecting games since playstation one in 94...i got all the classics...and their new line up of games is straight garbage
I think imma stick to Xbox 1..they have some dope looking game coming up in the pipeline like Adrift,battletoads,scalebound,halo 5 etc...
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This industry only has room for 3 major players. if anyone drops out a new player will get in, maybe if something unforeseen happens and sony drops out APPLE will get in or maybe sega will make a comeback.
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Why do you knuckleheads talk about this stuff like you're experts on the business?
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Why do you knuckleheads talk about this stuff like you're experts on the business?
Well, I do have an mba and from my analysis this industry cannot support lots of big players 3 is about it -
Haha! GTFOH!
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Nintendo still winning
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People said a gaming company could never fall again after Sega, but here we are at the precipice once more watching as one of our gaming icons teeters on the brink of oblivion.
Unreal.
Every time I was in London me and my lady would drive past the huge Sega headquarters that's located there. Each month it would get emptier and emptier and eventually the big ass Sonic was removed from the outside. Felt like my childhood died a little every time I drove by it. -
Yea. Then maybe my posts in The Arcade will hold some weight. -
No but maybe you will be able to talk about something, anything and make a little bit of real world sense. from all the info i had read the video game console market is contracting (PEOPLE are buying less consoles each generation) and the cost for making top games is increasing the return is not as good for the investment on making the console or even the games so why would a 4th major player jump in this market???? they would not.
the only people with the money to risk would be a super rich corp like apple but even they i think would rather one of the 3 majors fall the ? off before making that move. -
judging by your grammar, you don't have a degree.
I wasn't ? on the points you made. I just find it funny how you all talk about this ? like you're stating facts. -
judging by your grammar, you don't have a degree.
I wasn't ? on the points you made. I just find it funny how you all talk about this ? like you're stating facts.
I actually have 2 master degrees i gives no ? about grammar, i have a business degree and a science degree. the mastery of grammar has never put a dime in my pocket being able to know when and how to send money has
Grammar on a hip-hop site lol get the ? out of here
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@Sion , thoughts?
