- Discussing Sony's FY2018 Q3 earnings, chief financial officer Hiroki Totoki said the movement toward cloud gaming and video game streaming services could be a potential threat to the company's PlayStation gaming brand.
- Sony's PlayStation 4 is still the most popular video game console of this generation, with more than 90 consoles sold worldwide.
- The large install base has allowed PlayStation to steadily increase earnings from digital games, movies, and subscriptions, even as console sales have started to decline.
While its competitors at Microsoft, Amazon, and Google are diving head first into new streaming technology for video games, Sony sees the rise of cloud gaming services as a potential risk.
During its FY2018 Q3 earnings call, Sony CFO Hiroki Totoki said "games going to the cloud" could be a future threat to Sony's business, and the company will continue to lean on the success of the PlayStation 4 while exploring ways to embrace the cloud gaming trend.
Sony's PlayStation 4 is the leading video game console on the market, having shipped more than 90 million units worldwide since its launch in 2013. But sales of the console have steadily declined in the past year, suggesting that the industry is ready for a new generation of console hardware to arrive. However, new technology associated with cloud gaming could remove the need for video game hardware entirely.
Cloud gaming could remove the need for an expensive video game console.
Cloud gaming uses remote servers to stream video games directly to the player. This allows the user to play the game remotely on their choice of computer or mobile device, so long as they have a strong, stable internet connection to stream games properly. Players could pay a subscription fee to access games that previously required a $300 PlayStation 4.
Totoki said he thinks it will be some time before the video game industry can fully adopt a cloud-based model. He said cloud gaming would take a significant amount of time to implement, and digital content stores like the PlayStation Network would need to renegotiate rates for distribution.
"For example, take an extreme example, people not be using hardware," Totoki said on Sony's recent earnings call with analysts. "Hardware will become unnecessary, some would argue. But on this point, I think that would take a much the longer the time required for games going to the cloud, it would take much long time, much overtime and also the platforms trying to reduce the revenue share percentage."
Sony believes its PlayStation hardware will keep players invested.
Like Apple and Google, Sony profits from each transaction in the PlayStation store, which includes games, movies, and music. The company is confident that third-party developers appreciate their user base of more than 90 million and Sony plans to continue relying on PlayStation hardware to keep users invested in their platform. Several rumors have pointed toward a new PlayStation console already in development, but the company has not publicly hinted at a new device.