Insights from Sony’s Q3 2023 earnings calls reveal that PlayStation plans to improve its profit with a more aggressive release of first-party PC titles.

After Sony revealed the latest sales figures for the PlayStation 5 during the Q3 2023 earnings release, the subsequent earnings call brought forth some interesting insights from Sony executives. Hiroki Totoki, the president and PlayStation chairman of Sony, specifically addressed his observations and aspirations for the gaming division during his tenure as SIE Chairman.

During the call, Totoki discussed his first experience as SIE Chairman and highlighted some of the shortcomings he found. According to Takashi Mochizuki, Totoki stated, “It’s been four months since I became chairman of SIE. A big problem of SIE that I found is they don’t necessarily have a deep understanding of how their work is being translated to growth, generation of sustainable profits, and higher margins for the unit as a whole.”

Hiroki Totoki seems to be planning something unique to boost profits. He wants the company to be “aggressive” in increasing the profit margins of its gaming segment, which he believes may be partially accomplished by putting more of an emphasis on first-party PC games.

Responding to questions about the difference between increased gross income and stagnant profits in the gaming division, and if any plans were in place to strengthen the bottom line, Totoki outlined two primary areas of focus – hardware and first-party games.

Regarding hardware, he highlighted the difficulty in achieving cost reductions during the current console cycle, given the higher costs of components. While he indicated that console prices wouldn’t be reduced, he emphasized the need to explore ways to make the product lines more affordable without relying on substantial discounts.

He said, “How can we, given the situation, put our product lines together to make it affordable, without relying on steep discounts, to reasonably sell them to continue our commercial journey on a sustainable basis? I personally think that’s important, and there is an opportunity in that.”

Speaking next on the subject of first-party games, Totoki shared insights into the evolution of their approach. He acknowledged that in the past, the main goal of first-party titles was to popularize the PlayStation console. However, he introduced a shift in strategy, highlighting the synergies created by strong first-party content.

Totoki stated, “In the past, we wanted to popularize console, and the first party titles’ main purpose was to make the PlayStation console popular. It is true, but there is a synergy to it. So if you have strong first-party content, not only with our console but also other platforms like computers, first-party can be grown with multiplatform and that can help operating profit to improve. So that is another one we want to proactively work on. I personally think there are opportunities out there for improvement of margins, so I would like to go aggressive in improving our margin performance.”

While Sony has already embraced the strategy of bringing many first-party PlayStation titles to PC, Totoki’s comments hinted at a potential change in policy. For instance, Helldivers 2 was released simultaneously on PC and PS5 earlier this month, but, more people were playing Helldivers 2 concurrently on PC than had previously been accomplished by versions of more well-known Sony IP, achieving PlayStation Studios’ highest concurrent Steam player record. Hence, although Totoki did not announce plans for more day-and-date PC releases of PS5 titles, his remarks suggest that Sony might be considering such a strategy.

Considering the gradual decline in PlayStation 5 hardware sales projected for the next fiscal year, as the console enters the latter half of its life, Sony is actively exploring ways to expand its user base and increase operating profits. And bringing first-party games to the PC platform, either simultaneously or with shorter time gaps, can be one method to increase the user base and hence the operational profit.

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