Reaction: The Problem with PlayStation Right Now | Push Square
PlayStation is in a precarious position. It’s imperative we don’t overreact: the global economy is, for want of a better word, in the gutter right now – and it’s sad to see layoffs occurring across a spectrum of industries, not just gaming. But in the aftermath of a disappointing earnings report and an enormous downsizing operation earlier this week, we must take stock of the situation as it stands.
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Sony’s gaming division is, in some aspects, firing on all cylinders. The Japanese giant is raking in record revenues, and while it’s had to scale back its hardware sales targets, its current goal of 21 million units in the current fiscal year is no slouch. It’d be easy to overreact and paint PlayStation as a failing business, but that doesn’t reflect reality; there’s a lot of good among the bad.
The division’s big problem is that it’s spending almost as much as it’s making. In its most recent financial report, it registered record-breaking revenue of ~$10.2 billion, only to a turn a profit of just ~$608 million. The optimistic viewpoint here is that it’s a profitable business overall, but with margins as razor-thin as this, the firm is effectively one misstep away from plunging itself into the red. That’s not healthy.
This is why we’re seeing seismic changes across the business, many of which have been poorly received by fans. The firm’s push for successful live service games could guarantee ongoing revenue, although it’s important to remember that the costs associated with maintaining these titles is also high. Nevertheless, companies like HoYoverse are making bigger profits than PlayStation right now.
The division is also trying to expand beyond the boundaries of its own ecosystem, releasing software on PC and making plans to expand to mobile. The reality is that while the costs associated with creating blockbuster games like God of War and The Last of Us have dramatically increased, the size of the
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