PlayStation State of Play 2/25/2021 Review

There was a lot of PlayStation news this week from GQ having a pretty candid conversation with Jim Ryan, CEO of Sony Interactive Entertainment, there was also the first, true State of Play since summer of last year and then jut recently Sony revealed their financial earnings for Q3 of FY2020. When trying to figure out what best way to organize all of this news it made sense to consider it in the context of past, present and future of PlayStation.

PAST

Before jumping into the State of Play it’s important to look at how Sony and PlayStation as a brand have been operating over the past few months. In early February, Sony released their earnings report for Q3 FY2020, which was the three months ending December 31, 2020. This means that we will see just how well the PS5 launched despite is strained supply chain.

Overall sales look great for PlayStation, although not quite on the same level as some other gaming companies that have seen massive surges during 2020. Sales of their gaming and network services division were up vs the same time frame the year before from 632.1 billion yen to 883.2 billion yen.

Looking deeper into their gaming and network sales, for the last three quarters of the fiscal year, Sony saw approximately a 40% increase in sales which they attributed to an increase of sales for in game content as well as increase in hardware sales due to the PS5 launch. The PS4 still sold over a million units and the increased margins on that unit helped their bottom line.

However, their operating income wasn’t quite the same level of increase as they sales due to a few reasons including the increase of selling, general and administrative expenses or SGA related to the PS5 along with losses resulting from strategic price points for PS5 hardware that were set lower then manufacturing cost.

This does explain why Sony was very hesitant in 2020 about revealing the price of the PS5 as they likely wanted to see what Microsoft was going to do so that they could price their system as high as possible without hopefully incurring losses. Unfortunately, Microsoft had a very aggressive approach with both the Xbox Series S at a much lower entry price but also a very reasonable price for the Xbox Series X based on the internal components.

This is just a theory but it could also explain why it seemed like there was a lot more optical drive versions of the PS5 available because its unlikely that an optical drive cost a hundred dollars to Sony when they are purchasing in the bulk quantities across all their divisions. This would lead to a smaller loss on the systems with an optical drive, which explains why there was significantly less digital PS5’s available during the launch window. If this was the case, then it was a very smart decision to still produce digital versions but focus on producing more optical driver versions that have a smaller loss margins.

Focusing on hardware sales, in Q3, Sony sold 4.5 million PS5’s and surprisingly still sold 1.4 million PS4’s. PS4 saw a massive decrease compared to six million in the same quarter of 2019, but selling over a million units is quite impressive for a seven year old system. As for the PS5, it clearly would have been able to sell much more as the demand outpaced the supply by a large margin. According to Jim Ryan in an interview with GQ, PS5 sales “more than we did PS4’s in 2013 and that was a high watermark for the PlayStation generation”

Finally for the rest of FY2020, Sony is revising their projections for the gaming and network segment upwards slightly based on higher than expected software sales, including add ons, higher than expected digital sales, peripheral sales and cost reductions.

Present

State of Play

PlayStation 5 was released in November with a few next gen titles but since then things have been pretty quiet. Not just with Sony, but with the whole gaming industry as a whole, and this isn’t a bad thing as gamers have been able to get into their backlog and discover possible missed gems. It also allows for smaller, indie games to get a chance that they likely wouldn’t have if released during a busier window.

Last week, Nintendo did their first Direct after a hiatus of 532 days and what a coincidence that Sony has been planning one as well. The last, full State of Play was back at the beginning of August and while not quite 532 days, seven months is still a long time especially when you have just released a new console.

Even though many people still can’t get their hands on a PS5, there is still a sizeable audience that is curious about what they will be playing in 2021 outside of Returnal and Ratchet and Clank as those are the only two big, first part titles with an actual release date.

On February 25, PlayStation did a state of play with focus on “new updates and deep dives for 10 games coming to the PS4 and PS5, including new game announcements and updates on some of the third party and indie titles you saw in June’s PS5 showcase” On the PlayStation blog, Sid Shuman also mentioned that the show would be about 30 minutes.

Taking a quick look back at the June Showcase, games that were teased that haven’t already been released include FF16, which likely won’t be out for some time, Harry Potter which has already been delayed, RE8, Deathloop, Oddworld Soulstorm, FNAF, Returnal and God of War Ragnarok.

Heading into the State of Play any type of news on any of those games make sense as three of them are due out within the next few months and expectations wouldn’t be wrong to see deep dives on Returnal and Deathloop as these games are PlayStation exclusives. The potential for some news about Horizon Forbidden West was there as Jim Ryan did mention that it is still on track for 2021.

What ended up coming from the State of Play was quite straightforward and uneventful. Two of PlayStation’s biggest games that are set to come out in 2021 include Horizon: Forbidden West and Ratchet and Clank: Rift Apart, both of which were absent from the show. However it’s likely they will both get their own State of Play prior to their releases.

Personally for me, one of the highlights, due to the fact that I grew up with PlayStation and have fond memories of Abe’s Odysee back in 1997, was Oddworld: Soulstorm. This series lost its way over the years but Soulstorm seems to have captured the essence of the originals. Finally getting a release date was nice, the release date being in April was a lot sooner than expected and the game being one of the PS Plus games for April is fantastic news.

Speaking of PS Plus, the presentation ended with a lengthy portion about the next gen version of FF7 remake, which is due out in June and will be free to original owners and there will also be a new episode called Intergrade Personally, I felt like the segment went on too long, and that they missed an easy slam dunk by not announcing the FF7 Remake is one of the free PS Plus games for March, which was announced mere hours after the State of Play.

The presentation also took a deeper look at Returnal, one of our most anticipated games for 2021, which is due out at the end of April. The visuals look fantastic, the gameplay looks fast and frenetic and it has a signature Housemarque look to it. Returnal looks to be taking full advantage of many of the features of the PS5 and the Dual Sense but the main concern for most will be if Housemarque is able to weave together a strong narrative with this game after being mostly known for almost non existent storylines from their previous arcade entries. The big question is will the game be able to justify its full price which is a first for Housemarque.

Sony played it very safe with this State of Play and it was slightly underwhelming as a whole and left out some announcements from GQ that would have made more waves in the State of Play, but the big difference between the disappointment here and with something like Nintendo Direct from last week was that we already have some idea of what we can expect play this year on the PlayStation with games like Ratchet, Retrunal, Deathloop, and Horizon, all of which are PlayStation exclusives.

Future

One of my biggest hopes for the PS5 was that there was going to be a PSVR2, that would hopefully be able to leave some of the woes of the original PSVR in the past, mainly the rats nest of cables and breakout box that was required to operate it. The resolution wasn’t the best available on the market, but it felt similar to having most of the letters of a word, where your brain fills in the gaps. The lower visual fidelity and the cable mess likely enabled Sony to price their VR unit significantly lower than the rest of the competition, which lead to a higher adoption rate and likely the reason we are getting a successor.

Sony was clearly pleased with the sales figures of the PSVR as they were constantly giving updates in press releases and earnings reports. Typically if something isn't selling well, the company will be more vague and word the success differently as opposed to concrete sales figures. The last update we received was at the end of 2019 when Sony announced that as of the end of 2019, PSVR had sold over 5 million units. Even though, when compared to the total sales of PS4 is around 115 million, PSVR is less than five percent, 5 million is still a very respectable number when considering the price.

One aspect of the PSVR that was a monumental success was the amount of games sold. In 2017 when the total sales for Project Morpheus were only around one million, the total game sales were over 12 million, which works out to an average of 12 games per user. The gold standard for attach rate is the Wii and that is around 9 games per user and this is about thirty percent better. Its well known that gaming companies make money on software much greater than hardware, which is why many systems are sold at a loss initially, just like the PS5. 12 games per user shows just how invested in PSVR every user was and makes it much easier for Sony to justify a successor.

On the PlayStation Blog, Hideaki Nishino, SVP of Platform Planning & Management gave an in depth breakdown of some things that could be expected for the next generation of PSVR including some key features. Getting it out of the way immediately, PSVR2 will have less cables but will still be wired, which initially is a somewhat of a letdown but the success of PSVR was due to the some of the concessions that it made in order to reach the biggest market.

It didn’t have fancy hands controllers, instead it used the move controllers, it had too many wires and its resolution wasn’t the best, but some of my best memories of last generation are based around the PSVR, Keep Talking and Nobody Explodes comes to mind.

According to the article the PSVR2 will have “dramatic leaps in performance and interactivity. We’re taking everything we learned to develop a next-gen VR system that enhances everything from resolution and FOV to tracking and input. It will connect to PS5 with a single cord. One of the new innovations we’re excited about is our new VR controller, which will incorporate some of the key features found in the Dual Sense”

If PSVR2, which isn’t quite called PSVR2 just yet doesn’t feature a completely wireless setup then hopefully it will feature some type of improved inside out tracking and remove the need for a separate camera. Reading between the lines of the statement, it will connect to the PS5 using a single cord makes it sound like you won’t need an additional camera but that could be reading too far into the statement.

PSVR was released in October of 2016, just short of three full years after the release of the PS4, which could be an indicator of the potential release date of the PSVR2. In the article they did say that it wouldn’t release in 2021, which would lead to the obvious assumption that a 2022 release would be expected especially since they mentioned dev kits are already out with developers. I think the safe thing is to assume that PSVR2 will be released in 2023, just like how the original launched around 3 years after the PS4.

Developers are just getting the dev kits now and it takes time to build a game, especially something that is more than just an “experience”, which i’m sure is something that Sony wants to get away from. The cost of manufacturing PSVR2 will come down as every month passes and materials to construct the unit become more readily available. It will also give the PS5 user base time to grow. These are some key factors in why it PSVR2 shouldn't be expected in 2022.

Something that I would expect would be for the system to come with a pack in game to really show off all of the new features of the hardware, similar to how the PS5 launched with Astro’s Playroom and the PSVR launch with PSVR Worlds. I would expect with the success of Astrobot Rescue Mission and Astro’s Playroom on the PS5 that Team Asobi and Sony would launch PSVR2 with a new Astro title, whether that be packed in like Astro’s Playroom or not. We have already seen how Team Asobi took full advantage of the power of the PS5, plus all of the features of the Dual Sense to create a magical, nostalgia filled experience.

VDGMS