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PlayStation's Largest Threats Are Free-to-Play and Cloud Gaming, Says CFO

Hiroki Totoki sony cfo

Sony and PlayStation have released their latest quarterly financial report, marking down 2018 as another year of PlayStation 4 dominance. The console sold over 8 million units, 18 million in all of 2018, and is set up strongly for the next-gen transition. While offering comments on the report, Sony CFO Hiroki Totoki discussed that future transition and the competition PlayStation could face. According to Totoki, the largest threats to PlayStation will be free-to-play and cloud gaming.

With regards to free-to-play gaming, Totoki doesn't specify exactly what makes the service a threat to PlayStation. He simply cites it, as well as the "open platform" market of free-to-play games, as a potential risk. Open market likely refers to the rapid increase of multi-platform free-to-play games like Fortnite and how their success continues to break down boundaries in the industry. For example, Fortnite almost single-handedly led to Sony opening its arms to cross-play between platforms, something Sony was publicly against for quite some time.

Regarding cloud gaming, Totoki is much more specific. He sees that cloud computing could diminish the need for console hardware. However, Totoki responds by saying that he can't see cloud gaming reaching the point of being truly threating within the next five years. He also claims that competition will be reducing revenue share as part of implementing cloud gaming, which will slow the rate of adoption.

project stream

Totoki is confident in PlayStation's upcoming five years. He believes that Sony's focus on offering key first-party software and "immersive experiences" on PlayStation platforms will allow them to maintain competitive control despite the threats of free-to-play and cloud gaming. Totoki even goes so far as to say that PlayStation will not be affected by these risks, at least over the next five years.

The onset of cloud gaming market dominance is certainly worth evaluating in 2018. Sony may know that as well as any company, given the success of its PlayStation Now game streaming service. The question Sony and others are posing is when cloud gaming reaches the point where the core audience begins to stop buying hardware in preference of a cloud gaming service on their PC or already-owned hardware.

The first major test to Totoki's claim is whether cloud gaming is really 5 years away. Rumors claim that Microsoft is working on a piece of Xbox hardware that's designed purely for streaming, backed by the company's Project xCloud software. Google also continues to move forward with its PC-based Project Stream. The cloud gaming services necessary to take on the current power structure are looking to be ready within the next five years, for certain. But the question remains whether global online infrastructure will be ready in equal measure. Nevermind public interest in the first place.

As Totoki says, PlayStation doesn't seem to have anything to worry about - for the time being.

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