Sony's PlayStation Plus service lost subscribers for the third straight quarter, the company announced Tuesday. But it in a twist, PS Plus is contributing to higher gaming network services revenue. The segment jumped nearly 17% year-over-year and increased by 10% from Q1, despite a decline of nearly 2 million subscribers over the past three months.
The secret: New, higher-priced subscription tiers have boosted the company's average revenue per user, allowing to make up for the loss in subscribers. The strategy may help offset subscriber churn in the short term as Sony finds ways to more aggressively monetize PlayStation fans in its growing software ecosystem.
"Are subscribers down? Yep. But despite that, Sony just had its best quarter ever for subscription revenue," said Niko Partners analyst Daniel Ahmad. "Revenue per subscriber in the PS+ segment is up 21% [year-over-year]."
"All year long the key points of the [video game] market have been continued hardware supply constraints, a shortfall of major releases, the return of experiential spending and higher food and gas prices. What results were people expecting given these factors?" wrote NPD executive director and game analyst Mat Piscatella in response to the news. "Subscription spending still hit a record high for Sony, and there remains pent-up demand for both hardware and content, all while [foreign exchange] and macro factors muck things up. Just because all the numbers aren't all going up forever isn't a bad thing."
Sony executives say the plan over time is to grow PS Plus by making its newer subscription tiers more attractive and appropriately marketing them. The revamped Plus launched this past summer with the addition of two new tiers and a rebrand of the base tier at prices ranging from $10 to $18 a month. This confusing rollout — each tier offers only slightly different benefits — was made worse by a lack of proper marketing and promotional deals, the company explained.
"There have been a declining number of members of PlayStation Plus,” Sony Chief Financial Officer Hiroki Totoki said in an earnings call, as translated by VGC. “However, in the second quarter we renewed our services and there hasn’t been a great momentum as a whole. Also, we didn’t make aggressive promotions during the second quarter. ... Therefore, in the future we are going to have more penetration on PS5 and we are going to have very good titles. In addition, we are able to make better promotions and we think we are able to recover.”
Totoki also pointed to the general game industry downturn this year as one of the reasons why PS Plus membership and software and hardware sales were down across the board this past quarter.
"More people are now going outdoors, and we have yet to get out of the negative cycles. PS4 and third-party software sales have also been rather sluggish, and sales of catalog titles have also been declining," Totoki said.
Climate TRACE's data show emissions at the facility-level.Image: Climate TRACE