PS4 hardware and software sales down as next-gen looms large

Sales and operating income in Sony's video game division are down as a result of waning PlayStation 4 hardware and software sales.

As noted in the company's financials for the three months ended December 31, 2019, sales in the Game & Network Services Segment decreased by 20 percent year-on-year to 632.1 billion yen ($5.79 billion). 

Operating income also fell to 53.5 billion yen ($490.1 million), a year-on-year decline of 19.6 billion yen ($179.5 million), with Sony citing " lower-than-expected software sales of non-first-party titles" and dwindling hardware sales as the main reason for that downturn. 

The PS4, for instance, sold 2 million fewer units in Q3 2019 than in Q3 2018, with sales falling to 6.1 million units from 8.1 million units. Although Sony notes a drop off is expected with the launch of the next-gen PlayStation 5 on the horizon, and points out the console has sold 108.9 million units to date.

It was a similar story on the software front, with cumulative full game software sales dropping to 81.1 million units from 87.2 million units -- a decline of 6.1 million units. Alongside a lack of third party sales, a "significant decrease" in free-to-play titles were also blamed for that shift.

Despite that downturn, Sony notes its overall games business is steadily growing, and points to the fact that the number of PlayStation Plus subscribers increased to 38.8 million users in Q3 from 36.9 million users in Q2 as evidence of that underlying momentum. 

"Our financial results this fiscal year are in a period of adjustment as we approach the transition to the PS5 next generation console and because the contribution of free to play titles last fiscal year was quite large," said the company. 

"On the other hand, when you look at our results over the mid- to long-term, you can see that our game business is steadily growing, as is evidenced by the growth of network services like PS Plus, and we expect that growth to continue going forward."

Based on its performance this quarter, Sony has downwardly revised its fiscal forecast for the segment, and is now predicting sales of 1.95 trillion yen ($17.9 billion) and operating income of 235 billion yen ($2.2 billion) by the end of the fiscal year on March 31, 2020. The company's hardware forecast of 13.5 million units remains unchanged.