In a press release Sony Interactive Entertainment announced that the cumulative PlayStation 4 game sales has reached 1.18 billion through the end of 2019. This is up from 924 million at the end of 2018. This announcement was an update from their previous estimate released earlier this month at CES.
The figure released at the Sony CES press conference on January 7, 2020 was 1.15 billion through 2019 and 876 million through 2018. In other words, the software sales figures were being updated by as much as 5%.
In investor calls this month, DFC has seen some confusion around what these numbers represent. We expect this new update of recent figures to only increase the confusion
The PlayStation 4 launched at the end of 2013 (early 2014 in Japan). The PlayStation 4 game sales numbers represent the total of over 6 years on the market. This averages to slightly under 200 million titles sold a year. However, the sales in 2019 were a whopping 257 million. This is a time when the PlayStation 4 is supposed to be in decline.
The reality is that these unit numbers are increasingly becoming meaningless in the digital age. Of course, many media outlets report that these figures did not include digital downloads. That is misleading, the release states that the numbers include games sold by retailers and on the PlayStation Store. What they do not include is “add-on” content.
For years, DFC has stated that revenue is far more important than unit sales. This comes increasingly true as a system ages and games are sold at a deep discount. For example, currently the PlayStation Store has Grand Theft Auto V for $15 and Far Cry 4 for $10. These were games that had strong sales when they launched for $60 back in 2014.
One billion is an impressive number but the more important figure is that Sony has sold over 100 million PlayStation 4 systems. Going forward, this is the audience they will look to monetize with the PlayStation 5. The question is will this audience start demanding lower prices.
As game prices drop drastically unit sales will naturally soar. Of course, this results in lower revenue per unit. In the PC and mobile game market there has been a downward pressure on software price. Will the same thing happen in the console market?
From an analyst perspective the strong uptick in software sales is pause for concern. Is this a natural late life cycle occurrence or is it a broader trend towards price decline? This is an area we will be researching extensively.