Comment & Opinion

Master The Meta: Sony’s emerging ecosystem

How the PlayStation maker is building a formidable games business

Master The Meta: Sony’s emerging ecosystem

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Sony’s recent corporate strategy meeting and investor day presentation reinforced our previous takes on how the company is building a formidable games business:

  • Sony has sold 7.8 million PS5 consoles, which tracks ahead of the PS4 in its respective launch time (2013).
  • Consoles are attracting a more diverse audience. Women represent 41 per cent of console ownership vs 18 per cent in the PS1 era.
  • Software/services/peripherals represent 80 per cent of game business sales, up from 52 per cent in 2013.
  • There are 47.6 million PS Plus subscribers, which is up 15 per cent over last year and up five times since 2014. Related, PS Now hit 3.2 million subs, up 77 per cent over last year. Overall, PlayStation hit 109 million monthly active users.
  • The company is increasing its investment in IP development (both first and third party). And it is starting to see moderate success in their PC ports of PlayStation exclusives.
  • Altogether, Sony is hoping to increase its console market share from 45 per cent (PS4 era) to 50 per cent plus.

Sony’s progress in games is commendable, but I think it’s important to take a slightly broader perspective. As I noted in episode number one of The Metacast, ecosystems are increasingly important, and there are three distinct types:

  • Franchise ecosystems - when a company builds a multi-game plus multi-platform strategy around a key franchise (think Call of Duty model).
  • Gaming ecosystems - when a company complements its games with hardware, platforms, software, or other types of services that bring greater scale and cross-sales.
  • Entertainment/tech ecosystems - when gaming is just one piece of a company’s broader self-reinforcing strategy.

Sony touches on number one and number two but ultimately falls into bucket number three. Yes, it’s built an incredible games ecosystem that could likely thrive on its own if spun out, but it’s just one strategic piece of the whole.

Sony is set to launch an Uncharted film in 2022 starring Tom Holland as Nathan Drake. Image credit: Sony Pictures

Sony’s purpose is "to fill the world with emotion, through the power of creativity and technology" and there’s plenty of evidence that Sony’s different business units increasingly collaborate as an ecosystem:

  • Uncharted is a hit franchise for PlayStation but is now getting a movie produced by Sony Pictures.
  • The Last of Us (another hit franchise) is heading to HBO but is being co-produced by Sony Pictures Television.
  • Demon Slayer was originally a comic made by Aniplex (Sony-owned) but has since been turned into a successful anime plus movie, and a Sony Music artist recorded the theme song. A game is also in the works. Sony also owns Crunchyroll.
  • Travis Scott is a Sony Music artist who collaborated with Fortnite on a digital concert experience, which many players experienced via PlayStation.

Sony is also growing its ecosystem through partnerships and strategic investments.

It’s generally a good sign when a company is thinking about when to build, buy, partner, and invest.
Aaron Bush

For example, Sony invested $400 million into Bilibili last year. Bilibili already operates a successful Fate/Grand Order mobile game (licensed from Sony) in China and will likely bring more of Sony’s anime/comics IP to mobile and elsewhere in the years to come. Also, Sony recently announced a strategic investment in Discord, which will integrate with PlayStation next year.

The rabbit hole goes deep, but let me leave you with three clear takeaways:

First, it’s generally a good sign when a company is thinking about when to build, buy, partner, and invest. Many aren’t, but Sony is doing just that.

Second, despite all the talk of disruptive technologies (like cryptocurrency, AR/VR, or UGC), the truth is that ecosystems like Sony aren’t going anywhere, and, if anything, are getting stronger. The bigger and more interconnected Sony’s web becomes, the more likely it is that Sony dabbles in emerging technologies more so than gets replaced by them.

Of course, the wider the ecosystem, the harder it is to be good at everything (from console games to mobile games to movies to hardware, etcetera.), so even though outsized aspirations are great, execution remains the largest risk.

And lastly, as the biggest games companies grow in more ways, the industry can no longer be viewed in a vacuum. Sure, many (if not most) games companies will stay narrowed in on their niches, but as is shown by Sony (as well as Microsoft, Epic, Tencent, and others), games are increasingly falling into an increasingly ecosystem-driven world.

When more leading games companies operate at the broader cross-section of entertainment, tech, social, or even something like crypto, it’s critical to understand those industries/perspectives, too. (written by Aaron Bush)

Master the Meta is a newsletter focused on analyzing the business of gaming. To receive future editions in your inbox sign up here: regularly posts content from a variety of guest writers across the games industry. These encompass a wide range of topics and people from different backgrounds and diversities, sharing their opinion on the hottest trending topics, undiscovered gems and what the future of the business holds.