PlayStation 5 Will Save Sony Again…But Only If it Nails One Crucial Detail

Journalist:
April 17, 2019

The PlayStation 5 is coming. Sony has finally revealed the first details of its “next generation console” in an interview with Wired.

The PS5 will feature 3D audio, 8K resolution, backwards compatibility, and – crucially – an SSD which will dramatically speed up loading times.

Tech-specs aside, Sony left us guessing about all the important aspects. Features and games were all absent. Most importantly: no news on price.

There’s a lot riding on the PlayStation 5 for Sony. The Japanese tech company needs a home run to kickstart its flatlining growth. But it all rests on the crucial price point.

Can the PlayStation 5 Save Sony?

Sony is in trouble. About 80% of its operating profit has flatlined, including income from gaming, TV, camera sales, and financial services. As for Sony’s smartphone division, it’s currently a $142 million loss-making black hole.

The PS4 was always Sony’s big moneymaker. In 2017, PlayStation sales helped propel Sony to a 364 percent profit growth. Even last year Sony hit the enormous 90 million buyer mark. But we’re five years into the PS4 lifecycle and it’s starting to lose steam. In Sony’s first-quarter earnings call, PS4 sales showed slowing growth.

Sony’s six-month stock chart shows a dangerous downward trend. Source: Yahoo Finance

After hitting a ten-year high in 2018, Sony stock has fallen back 33 percent with no sign of growth from any of its major departments. It needs a big hit and all eyes are on the PS5.

PlayStation 5: What We Know So Far

Sony dumped a heap of technical details about the PS5 this week. The headline feature is the potential addition of a solid state drive (SSD).

In one test, Sony claimed the SSD reduced loading times from 15 seconds on the PS4 to less than a second on the PS5 technology.

Other key features include 8K resolution and 3D audio which is designed to immerse the gamer completely in the experience. Although, for some gamers, the focus on 8K technology was a wasted effort:

Gamers are also excited about the hinted backwards-compatibility, allowing them to play PS4 games on the next generation console. The lack of backwards compatibility on the PS4 was one of the biggest complaints.

What Sony *Didn’t* Say Is More Important…

While the tech-specs are promising, Sony left out all the most important aspects: price, features and games.

People don’t choose consoles because of loading times. They choose it based on gaming and price, both of which are missing so far. As one writer at Forbes pointed out, Sony carved out a huge advantage over Xbox by undercutting the price by $100. If Sony prices the PS5 too higher, it could kill sales.

SSD hardware is expensive. Some rumors estimate the PS5 price at $499, which is significantly more expensive than the PS4. Reading between the lines, Sony’s Lead Systems Architect for PS4 seems to bracing gamers for a higher price:

“I believe that we will be able to release it at an SRP [suggested retail price] that will be appealing to gamers in light of its advanced feature set.”

The PlayStation 5 could reignite Sony’s financial growth. But if it gets the price point wrong, things could go from bad to worse.

Ben Brown

Ben is a journalist with a decade of experience covering financial markets. Based in London, UK, his writing has appeared in The Huffington Post and he was Chief Editor at Block Explorer, the world's longest-running source of Blockchain data. Reach him at benjamin-brown.uk or on Twitter at _Ben_Brown. Email ben @ benjamin-brown.uk.