Sony Shifting Focus To Third Party Games, TV, Ancillary Revenue Models and Higher ARPPU

Over the last few days, a few notable quotes and charts have come directly from Sony during their Investors Relation Day 2015.  For their gaming unit, the direction given to Playstation games and features is a focus on TV, various revenue models and third party games, while putting less emphasis on first party exclusives.

Currently, their shift away from high quality first party exclusives has held true.  Aside from a remaster of last gen’s The Last of Us whose reviews matched PS3’s 90+ ratings, new PS4’s first party games have been mediocre.  From The Order 1886, DriveClub, Killzone, Knack and Infamous, overall not the greatest games.  An odd shift away from last gen when PS3 had lots of unique and high scoring exclusives.

Bloodborne is the system’s key game in 2015.  An exclusive, but actually a partnership game with From Software.

Andrew House, Sony Computer Entertainment CEO stated during Investors Relation Day:

“We are working very hard to continue very strong support from third-party pubs and devs,” House said. “Our first-party lineup is a little sparse this year, so I think this places even greater emphasis on getting good third-party support.”

Therefore, it seems Sony won’t have much for the rest of the year regarding first party games.  E3 always surprises with some last minute Wow Factor games from Microsoft, Sony and Nintendo, but given the lack of details on fall 2015 first party games and his statement, it seems gamers looking for something special in the fall will be disappointed with PS3 or PS4.

In the gaming slides below, there is no mention of PS Vita either except a few bullets on write-off expenses.

ARRPU means Average Revenue Per Paying User

For those of you not familiar with the bar charts below, these kinds of business charts are called “Bridge” or “Waterfall” charts.  They compare a starting and ending point by showing various up and down bars in the middle which are the driving factors.  Easy to understand, but making these myself at work they are a pain in the butt to make in Excel!

Sony Investor Relations PDF Link.

Slide 5 – 2014 Recap

Highlights units sold, PS Plus subscriptions, VR and new services PS Now and PS Vue.

Sony PS IR Slide 5Slide 6 – 2014 Recap of Financials vs. 2013

Highlights operating income change vs. 2013 coming from higher PS4 hardware/software sales and PS Plus subs.  Partly offset by decreasing PS3 sales, PS Vita and PS TV write-offs and getting unlucky with foreign currency.

Sony PS IR Slide 6Slide 7 – 2014 Recap of Financials vs. April Forecast

Highlights a favourable gain in forecast coming from higher PS4 sales and PS Plus subs (network), partly offset by decreasing PS3 sales and various write-offs like PS Vita and PS Vue (coming from above slide).
Sony PS IR Slide 7Slide 9 – Mid-Term Strategies and Focus

Highlights getting more users, Cloud TV service, other markets, higher PS Plus subs, more sales from TV/music services.  Increase ARPPU is a key strategy.

Sony PS IR Slide 9Slide 10 – 2015 Strategy Part 1

Highlights stregthening PS4 with third party games, system/OS efficiencies and VR.  Also, enhance PS Plus with more TV content

Sony PS IR Slide 10Slide 11 – 2015 Strategy Part 2

Highlights increasing ARPPU with first party games, PS Now, PS Vue and PS Music.  Retain ancillary services like Netflix, Hulu, MLB etc…

Sony PS IR Slide 11

Slide 12 – 2015 Forecasted Financials vs. 2014

Highlights a slight decrease vs. 2014.  Positive contributions from PS4 and PS Plus revenue increasing and certain expenses less than expected.  Offset by decreasing PS3 sales, network expenses and foreign currency headaches.

Sony PS IR Slide 12

Slide 13 – Focusing on the Future

Highlights “continued network platform re-architecture”…. (making online and PS Plus better?), PS Vue, PS TV, VR.

Sony PS IR Slide 13