Tech and gadget powerhouse Sony could be moving away from some of its most well-known products, according to recent statements from CEO Kenichiro Yoshida. Yoshida took over the role in April from a chief financial officer position, and many are wondering how the company will fare stepping away from what brought it into prominence.
For decades, Sony became a name among anyone looking for the latest and newest gadgets. Gaming consoles, television sets, Walkmans, transistor radios -- Sony's legacy with gadgets is one that spans decades and generations of users. However, Yoshida and other executives are slowly pushing the company away from hardware and into software. The CEO announced he would encourage more investment into online content with an intention to boost recurring subscription revenues and furthering Sony's intellectual property holdings.
"Yoshida is clearly sending a signal that recurring revenue from the content business, software, services, and subscription segments are important," said David Dai, an analyst at Sanford C. Bernstein & Co. in Hong Kong, to Bloomberg. "That’s what is going to drive growth and also sustain growth."
The decision, according to Yoshida, was one backed by "moving people's emotions" rather than pushing the technological boundaries to which the company was so accustomed.
"Sony is proving that it can evolve with the landscape ... with a shift from a hardware-to content-driven profit model," SMBC Nikko Securities Inc. analyst Ryosuke Katsura wrote after the company’s latest earnings report last month. "The real key is whether it provides investors with a clear road map."
Yoshida is expected to further address these issues in the company's investor relations meetings in Tokyo. These meetings bring together all eight of the company's divisions, and executives will collaborate on a mid-term strategy that will last until 2021.
The Fate of the PlayStation
Sony's gaming consoles have seen a slight stagnation through the years. One device in particular has gamers nervous regarding Yoshida's announcement -- the upcoming PlayStation 5. The PS4 has been a powerhouse for Sony, and it sold roughly 79 million units by the end of April. However, rumors have started that the PS4 is on its last leg after declining sales.
PS chief Kodera: PS4 is entering final phase of its life cycle, which would have negative impact to the unit, but recurring revenue via membership services etc should cushion some of that.— Takashi Mochizuki (@mochi_wsj) May 22, 2018
Plenty of rumors have hinted that Sony had already filed to trademark the name "PlayStation 5" and that the PS5 wouldn't hit shelves until 2020 at the absolute earliest. But, given this most recent push onto subscription services and away from gadgets, some gamers fear that the move could be driving people away from consoles entirely.
With a bigger push toward subscription models, however, fans of PlayStation consoles can expect to see those gadgets staying around a little bit longer. Bloomberg noted that despite a 20 percent drop in PS4 hardware sales recently, the PlayStation name still turned a considerable profit thanks to the PlayStation online subscription service.