Sony’s Kaz Hirai Details the Future Strategy for PS4 and PlayStation: Promises Mindset Changes and Investment

Giuseppe Nelva May 24, 2014 4:40 PM EST

Sony recently held its corporate strategy meeting in Tokyo, explaining the future moves planned by the publisher to exploit the PlayStation brand and make it as profitable as possible. The company’s CEO Kaz Hirai talked at length about PlayStation 4, PlayStation Plus, PlayStation Now and more.

One of the most interesting points was made during the Q&A Session, as Hirai-san explained that the PSN and PlayStation Plus are going to “grow hugely,” so this year is the right time to invest in building up their infrastructure:

For PlayStation Plus and the PlayStation Network Business in General, but also the video and music businesses and the networking in those areas, the market there is going to grow hugely, but at the same time as we see the growth of the business, we have to be prepared with a solid enough network infrastructure. We have to be able to accommodate the increase in subscribers by having a solid enough network system and infrastructure and therefore we believe that now is the time of investment, so that when we see a growth in subscribers we can still maintain the network business, so this year is the time when we have to invest in infrastructure building.

Hirai-san also mentioned that Sony needs to change its mindset on the business models related to PlayStation in order to offer new experiences:

New Experiences for the user is what we’re always aware of. […] We’re saying that TV is going to be a totally different TV, and a different dimension. SCE is selling consoles now, but with PlayStation we need to rapidly change that business position, so we need to really transform that mindset. That’s what I tell people and what I tell myself. To change my mindset totally.

It’s worth mentioning that the original speech in Japanese talked about selling consoles and having to buy disks, but the second part was omitted by the English simultaneous translation.

During the opening speech Hirai-san explained the future PlayStation strategy in great detail, even if the numbers provided are the same we already heard in previous releases. Still, he made quite a few relevant points, that you can read in the full transcript below:

This fiscal year we are set to consolidate our leading position in the home console market by further expanding PS4 sales around the world. Following its introduction in North America in November 2013, in 5 months, PS4 has launched in 72 countries and regions achieving cumulative sell-through of 7 million units as of April 6. It’s been a hugely successful launch, but the key to the long term success of the platform lies in how solidly we can continue to grow the installed base. In terms of game titles for PS4, as of April 13, 47 titles had been launched with a total of 20.5 million units being sold via retailers and over the network on the PlayStation Store. By extracting the best creativity from all of our partners in the game development community, PS4 has dramatically expanded the possibilities of game play. But at the same time, PS4 is also designed to provide the kinds of social experiences via the network that offer users a richer gaming experience than ever before. PS4’s remote play function also allows users to easily enjoy the PS4 experience on their PlayStation Vita, expanding the PS4 gaming experience beyond your living room, and making it available anytime, anywhere. From a profitability perspective, PS4 is also already contributing profit on a hardware unit basis, establishing a very different business framework from that of previous platform businesses. The network functions that are possible with PS4 continue to evolve by the day. Approximately half of PS4 users are registered to the PlayStation Plus subscription service, while the number of active users on the PlayStation Network and Sony Entertainment Network exceeds 52 million worldwide. Many of our users now enjoy an array of game, music and video content via the network. And our PlayStation App for smartphones and tablets that lets players share their PS4 experience to their mobile devices, is also proving hugely popular, with the total number of downloads already exceeding 4.5 million. Sales from our network business including game, music and video services exceeded 200 billion yen in fiscal 2013, and we intend to further expand that figure going forward. When I was telling you about our entertainment business earlier, I said that the shift in digital content delivery from downloads to streaming is only going to accelerate. In the case of game content, the data format is completely different from movies and other video content, so there needed to be a technological revolution before we could switch from distributing game content via downloads to streaming. But starting this summer, we will begin distributing PS3 games via streaming to our users in the U.S. on an open beta version of our new PlayStation Now streaming service, first for PS4 and then PS Vita. And that’s just the first step. Going forward, we will use streaming to deliver the PlayStation experience worldwide. We also plan to make PlayStation Now compatible with new “BRAVIA” LCD TVs to be launched in the U.S. market this year. And in the future, we intend to extend its availability to a wide range of networked devices. So, as you can see, in the Game and Network business we are set to secure even greater sources of profit by further expanding our content, software and network services on the firm foundation of a platform business that continues to generate stable profit itself, and offer our customers even more new and exciting entertainment experiences. This year marks the 20th anniversary of PlayStation. The PS2 platform was the biggest success until now in terms of profit, but I believe that PS4’s hardware, software and services have the potential to combine and develop into a platform capable of generating even greater profit.

We’ll have to see if Sony will manage to turn its game business into a fully profitable self-sufficient entity, but I can’t help hoping that they won’t change their mindset from selling consoles and disc-based games too radically. PlayStation Now has potential and it’s a great accessory to the PlayStation brand, but I personally can’t see it becomeing the “main” PlayStation business, at least not for a long time.

It’s also interesting to see that Hirai-san intends to invest in strengthening the network infrastructure despite the company’s financial losses. If anyone had any doubt on Sony’s ability to expand and invest, this should tell them that the Japanese giant is more solid than some would like us to believe.