A report in the Wall Street Journal this weekend shares the details of a recent Sony strategy meeting centered around the upcoming PlayStation 5. The gaming market wars are heating up with the advent of new streaming alternatives like the Google Stadia, but Sony is doubling down on hardware.
According to the Wall Stret Journal, Sony CEO Kenichiro Yoshida considers the PlayStation 5 to be a “niche product” with a core audience of more “serious” gamers supporting it. “Details when making games have become more important than ever,” Yoshida said at Sony’s market strategy meeting. Sony emphasized the PlayStation 5’s hardware specs, which will be able to handle demanding graphical effects like ray tracing to create more immersive gaming environments.
Sony’s PlayStation is the company’s “flagship consumer product,” and the console generated $12 billion in revenue and almost $3 billion in operating profit, including subscription services. Sony is aiming to continue the console line’s success with the PlayStation 5, which is speculated to release in time for the 2020 holiday season.
The thinking is that people buy a console to play high-quality games available only on that platform, not smaller games also available on smartphones.
2020 is shaping up to be packed with a lot of competition for Sony in the gaming sector. Microsoft has a slated release of holiday 2020 for its “Project Scarlett” next-generation console, and new hardware-free services like Google Stadia launching for Founders in November. Apple’s also entering the arena with their own service, dubbed Apple Arcade.
Console hardware is also coming up against some political and economic trouble with the uncertain trade conditions between the United States and China. In a joint statement from Sony, Microsoft, and Nintendo, the companies warn that among other things, a tariff on Chinese manufactured goods could cost gaming consumers an additional $840 million, and price is already a concern for potential next generation console adopters.
According to the report, despite recent cooperative agreements Sony sees Microsoft as its main competitor in the console wars, with Google posing more of a problem as internet technology improves in major markets. The report also says that Sony doesn’t see Nintendo as direct competition, as Nintendo’s demographic tends to be younger gamers while Sony targets a more mature audience.
Sony’s latest market strategy is less interested in overall sales, opting to focus more on “devoted fans who buy big budget titles.” The Wall Street Journal specifically mentions Red Dead Redemption and Fallout, two franchises that have expanded (with some hiccups) into the massively multiplayer online category.
The report’s source at Sony says the company “believes people buy a video game console to play graphics-heavy games.”
To satisfy these expectations for big-budget titles and high performance console hardware, Sony will court larger software developers and publishers in an effort to snag exclusives for the PlayStation 5. Smaller game companies feel “snubbed” by Sony, who will not be supporting indie game developers at the Tokyo Game Show this September. Nintendo, in contrast, will be there showcasing small developers.
Sony believes that a high performance console will still be a required part of playing the most demanding games, while maintaining a stable experience. Cloud services are dependent on solid internet connections, but a console doesn’t have to be.
Sony CEO Yoshida described the fifth console in the PlayStation lineup as “dramatically increasing the graphics-rendering speed” and added that the change “clearly demonstrates why it makes sense to have a next-generation console.”
Sony is also interested in making more big-budget games in its in-house development studios. Sony is confident that the popularity of the console will keep small and independent companies developing for the PlayStation 5.