Sony is becoming the “PlayStation company”

Just about 10 years ago, a typical American household used all of Sony devices. They have cassettes, CD players, stereos, televisions…. are from Sony, along with a Walkman or Discman player to take anywhere. Today, the Sony collection often “offload” to a single product, which is the PlayStation video player.

Last week Sony started selling the PlayStation 5 to the market. The level of interest in this event shows that the Japanese tech firm seems to be becoming a “PlayStation company”. Just as the $ 160 billion video game industry is outpacing music and cinema globally, games are now its most profitable segment.

Sony used to be the “tycoon” of entertainment equipment, supplying from semiconductors, color TVs, cassette players, to CDs … smartphones and television sets, making PlayStation its most existential link with technology consumers.

” We went through a tough time, ” said Kenichiro Yoshida, President and CEO of Sony in an interview last week. However, this chairman also affirmed, the video game segment has helped the company regain its position.

Mr. Yoshida helped initiate a dramatic transformation of Sony’s culture and business model about six years ago, when he became CFO. He cut costs, cut investments in smartphones, and retreated from low-cost PCs and televisions.

“ The entertainment segment, led by video games, is Sony’s new look, also a new growth engine. Mr. Yoshida has made clear statements about changing Sony from a traditional electronics business to an entertainment technology business, ” commented Kota Ezawa, research expert at Citigroup, a financial institution.

As a result, in the first half of Sony’s current fiscal year, video games contributed more than 27% of revenue, about 42% of the company’s specialized operating income. By comparison, Sony’s electronics segment only accounts for 20% of revenue and 8% of specialized operating income.

Furthermore, Sony is still one of the largest companies in Japan, with around 110,000 employees, a market value of around $ 108 billion.

Sony’s video games segment, with its new PlayStation 5 machine hitting the market, currently contributes more than 27% of revenue.

It is known that the PC and mobile game segment currently accounts for three-quarters of the global market, but Sony is not involved. Mr. Yoshida described the strategy of focusing on heavy video game consoles as targeting the “niche” market. Anyway, everyone understands the “niche” market has huge potential for profit.

Damian Thong, an expert at consulting firm Macquarie, shares a broader view: “The way PlayStation goes beyond consumer electronics as Sony’s core business really reflects the change in the way people are. join the modern world “.

On the other hand, Ezawa estimates that Sony could actually lose as much as $ 100 on every $ 500 PlayStation 5 it sells. This loss will be slightly reduced by large scale production.

But that’s actually normal in the video game business. Sony and Microsoft, which have a competing Xbox product line, both lose money selling hardware devices, and then make a profit by selling games or charging royalties from independent game publishers.

Sony itself admits that the success of the video game console business is due to its exclusive series of games, including God of War, with more than 51 million copies sold. New games like Ghost of Tsushima have also sold over 5 million copies since their July release.

According to the New York Times