is obviously unwilling to follow arch-rival Microsoft MSFT 1.52%
to new forms of distribution for video games. It can afford not to – for now.
The maker of the popular PlayStation consoles announced new subscription-based services on Tuesday. The company is effectively adding two new tiers to its existing PlayStation Plus service and scrapping PlayStation Now, a cloud gaming service launched in 2014. This feature will now be included in the top tier of the new offerings, which will compete with the top tier of Microsoft’s Xbox Game Pass service.
The main difference between the two is that Sony has opted to block the latest games from its own studios from reaching the service on the same day as their retail release. That keeps it from cannibalizing some revenue from more traditional players who choose to buy the games rather than subscribe to a service.
In contrast, Microsoft has embraced the day-one release approach to the point of undertaking two very significant deals with the specific goal of building its catalog of fully owned gaming properties that can lead players to subscription-based gaming offerings. Publisher Bethesda Softworks’ $7.5 billion acquisition in 2020 brings games like Doom, Elder Scrolls and Fallout to Microsoft’s stable, while Activision’s upcoming $75 billion acquisition Blizzard would give the software giant control of a games publisher with more than 370 million monthly active users and major franchises like Call of Duty and World of Warcraft.
At about a tenth of Microsoft’s free cash flow, Sony simply doesn’t have the financial resources to compete at this scale. The company has instead opted to bolster its in-house development strength with its $3.6 billion acquisition of Bungie in January and most recently its acquisition of Canada’s Haven Studios for an undisclosed sum.
Sony also chooses to pay attention to its bottom line; PlayStation CEO Jim Ryan told The Wall Street Journal on Tuesday that new game releases into the subscription service “won’t allow us to sustain the level of investment that we’re making into our studios.”
That reflects Sony’s film studio arm’s decision not to follow its Hollywood peers headlong into cash-burning streaming services. And in the case of the PlayStation business, the company is operating from a position of strength.
While sales of gaming consoles have generally been constrained over the past year due to component and supply shortages, Sony has still comfortably outperformed its rival. From its launch in late 2020, the PlayStation 5 sold 17.3 million units by the end of 2021, according to Sony’s accounts. Microsoft doesn’t announce Xbox sales, but market research firm Niko Partners estimates that the two new Xbox consoles, which launched in the same month as the PlayStation 5, sold a total of 12 million units by the end of last year.
Time will tell if Sony’s approach is the right one. If Microsoft is able to complete its Activision buyout, the company would have the option to launch future Call of Duty sequels on Game Pass, which could attract millions of new subscribers and would be the first test of the concept with such a tented property . Sony doesn’t need to play this game now, but it might have no choice but to sign up at some point.
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https://www.wsj.com/articles/sony-doesnt-play-microsofts-game-11648592153?mod=rss_markets_main Sony doesn’t play Microsoft’s game