I’ve written extensively about a transformation that’s been happening at PlayStation where a division that was once responsible for just one console every few years is now one of the biggest pillars of Sony. One key reason for it is that PlayStation is shifting from just a hardware vendor – though this year alone, they’ve released more hardware than ever before, PS4 slim, PS4 Pro, and PS VR – to a company that’s rich with services. They include PlayStation Now, which gives you the ability to stream PS3 games on numerous devices, including PS4, PC, and countless 4K TVs and PlayStation Vue, Sony’s vision of what the future of TV looks like. And one key advantage that services have over hardware is the recurring revenue they produce. Where with a PS4 purchase, you only once plunk down $299 or $399 once and purchase a handful of games a year, with PS Now or PS Vue, you’re continuously generating revenue for Sony and investors are beginning to take note of that.
According To Masako Kuwuhara, senior analyst for Moody’s:
The company’s strategy of focusing on strengthening its recurring revenue, such as network and subscription revenue supports the more cyclical aspects of the Game & Network Services segment and will contribute towards stabilizing earnings and cash flows over the medium and longer term.
Now don’t take this as a sign that Sony will stop manufacturing hardware, but they have finally recognized that, while hardware is a good business to be in, software and services can be even better, if not a good business to have alongside. The two become even better when they work together from the ground up, a la the strategy Apple has always put to use. But even Apple is expanding its services beyond their own fleet of hardware like Apple Music which is available on iOS and Android and if it brings more people back to their hardware, then great, but if not, they’re still able to capture revenue from that customer who might otherwise not use their service.
With this in mind, it makes more sense than ever if rumors around Sony Pictures coming under the watchful eye of Andrew House and PlayStation became a reality. Sony has a long way to go before they’re able to become a big player like Apple, Netflix, and others in the services realm but just during the past two years and thanks to initiatives under the PlayStation division, they’ve made leaps and bounds. Just look at services like Ultra to see how Sony at the same time can do some really terrible stuff when it comes to software/services, giving more credence to why PlayStation and their tone/vision is going to be so important to their future.
From here, what else would you like to see Sony tackle with software and services?