Following Chief Executive Officer Jim Ryan’s presentation about the future of the PlayStation Business at Sony’s Investor Relations Day 2019, a questions & answers session was hosted, and the executive provided more interesting insight on a variety of topics.
Vice-Presidents John Kodera and Kazuhiko Takeda also helped out with answering the questions.
First of all, we hear about the exploration of a partnership with Microsoft, and Ryan mentioned that it’s a “broad memorandum of understanding between Sony Corporation and Microsoft” which touches on a number of areas of which game streaming is only one.
Sony has comprehensively reviewed the landscape of potential partnerships and they view the possibility of working with Microsoft as one that provides “great benefit” between the two partners.
That being said, Ryan clarified that “as of now there is no partnership between Sony and Microsoft” as they simply signed a memorandum of understanding committing them to explore potential partnerships.
After those exploratory talks, if an agreement is reached on high-level principles, only then the two parties will start looking at business models.
A potential partnership with Microsoft would provide the opportunity to move to something that’s “less capital intensive” than the current form of PlayStation Now. Yet, this has still to be studied.
To a further question, Ryan mentioned that Sony is “broadly happy” with the ratio of 20% of the market taken by first-party games and 80% by third-party games. It allows the house of PlayStation to have “critical mass” and return of investment on its third-party studios.
On top of that, allowing third-parties to take an 80% market share positions PlayStation as the “publisher-friendly platform.” This has been an approach that Sony has taken since the very start. According to Ryan publishers “enjoy working with PlayStation” and thanks to the massive hardware installed base, there is plenty of opportunities to monetize for partners.
The 20-80% ratio has roughly been the same in past generations, and Sony considers it “about the correct one.”
Speaking of PlayStation Now, Ryan mentioned that Sony has studied extensively what users of the service feel about it, and the quality of the service in terms of lag and breakage doesn’t feature that highly among the points of friction and isn’t included in the top three things that gamers would like to see changed.
While Sony is never complacent and they always strive to make the user experience better, they don’t see this as a critical area of weakness.
Talking about backward compatibility for the upcoming next-gen console, the key point for Ryan is that in a network era backward compatibility is “something that’s extremely powerful” as the game community is “somewhat tribal in its nature” and backward compatibility gives them the opportunity to migrate from PS4 to next-gen while still being able to play their older games with their existing friends.
Sony expects backward compatibility to be a “really critical success factor” for its next-gen consoles and thinks it’s “incredibly important.”
Kodera-san added that backward compatibility is positive not simply because you can play old games on the next-gen console, but also because the community can enjoy the games together via cross-generation gameplay.
Ryan also talked about the Chinese market, mentioning that it’s a very large one, and it’s clearly of interest to any gaming company. With that said, the censorship situation in China in the past year has been “very extreme.” Ryan has spent a considerable amount of his own time visiting China and formulating plans and grow the market there, but those plans had to be put on hold as no new games have been published there due to the approval suspension.
In the long-term, Sony “absolutely” sees China as an area of potential opportunity, but for now, they’re not aggressively investing in the country until the situation around censorship clarifies itself.
If you’d like to read more, you can also check out what Sony’s CEO Kenichiro Yoshida said about the next-gen PlayStation and more earlier today, alongside our report about Jim Ryan’s own presentation.
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