Sony has released its financial report for the third quarter of FY23 ended December 31, 2023. The company’s gaming business continues to grow, but leadership thinks that PlayStation, as a business unit, needs a better understanding of how to generate sustainable profits.

PlayStation reports revenue of $9.6 billion for Q3, as Spider-Man 2 hits 10 million units sold

Marvel’s Spider-Man 2

Financial highlights

  • According to its consolidated financial results for Q3, Sony’s Game & Network Services segment reached ¥1.44 trillion ($9.6 billion) in revenue, up 16% year-over-year.
  • Operating income was ¥86.1 billion ($572 million), down 26% year-over-year.
  • Increase in sales of third-party games and impact of foreign exchange rates were the main revenue drivers in the third quarter.
  • Speaking of PlayStation’s operating income, the company cited the increase in losses from console sales due to marketing and the decrease in sales of first-party games as the main negative factors.

Game/hardware sales and outlook for the PlayStation business

  • Game sales amounted to ¥733 billion ($4.87 billion), up 18% compared to the same period last year, of which digital sales were ¥282.8 billion ($1.8 billion) and add-on content was ¥349 billion ($2.32 billion).
  • In the third quarter, full game sales on PS4 and PS5 totaled 89.7 million units, of which 16.2 million were first-party titles. Digital sales accounted for 66% of the total.
  • Sony’s biggest first-party release of 2023, Marvel’s Spider-Man 2, has now sold over 10 million copies globally (as of February 4). The game took 107 days since launch to reach this milestone.

  • PlayStation Network reached 123 million monthly active users, an increase from 107 million in the previous quarter.
  • Revenue from hardware sales grew 7.6% year-over-year to ¥474.2 billion ($3.15 billion). In Q3, Sony sold 8.2 million PlayStation 5 units. This is a new quarterly record for the console, but 1 million below the company’s expectations. PS5’s lifetime sales have now reached 54.8 million (as of December 31).
  • Sony also lowered its full-year forecast, currently expected to sell 21 million PS5s in FY23 (instead of 25 million).
  • The company’s senior VP Naomi Matsuoka noted that PlayStation is entering the “latter stage of its life cycle,” with Sony expecting its annual sale pace to start falling the next fiscal year beginning April 1, 2024 (via Bloomberg).
  • Sony Group president and COO Hiroki Totoki, who will also serve as interim CEO of Sony Interactive Entertainment following Jim Ryan’s resignation in April, outlined a major problem he sees with the PlayStation business. He thinks SIE doesn’t “necessarily have deep understanding of how their work is being translated to growth, generation of sustainable profits and higher margin for the unit as a whole.”
  • According to Totoki, PlayStation doesn’t plan to launch “any new major existing franchise titles next fiscal year” (from April 1, 2024 to March 31, 2025). This means the company will rely on third-party games and platform exclusives from its partners like Square Enix.
  • “We expect third-party software sales to continue to expand gradually due to the expansion of the PlayStation 5 install base and the high level of user engagement,” Totoki said (via Gematsu).

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