Sony readies PlayStation 4 launch in China, prepares for a profitable 2015

26 May 2014

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Gamers play on Sony's PlayStation 4

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After posting disastrous financial results for the last quarter, Sony is optimistic for 2015 due to the success of the PlayStation 4, which will soon be released in China and could be Sony’s greatest console success yet.

Earlier this year, China’s State Council suspended a ban on foreign-made video-game consoles, which had been prohibited since the early 2000s. This opened up the emerging market for the likes of Sony and Microsoft, the latter of which took the lead a month ago by announcing that the Xbox will be available in China this September.

At the time, Microsoft believed the Xbox would become the first foreign-made console on the Chinese market in 10 years but, following Sony’s announcement, it could yet be beaten to the punch by the PlayStation.

Adapting to China’s conditions

Like Microsoft, Sony will partner with a Chinese company for its Far East release, forming a joint venture with Shanghai Oriental Pearl Culture Development (OPCD), which is part of Shanghai Media Group.

Two new companies will be established through this partnership. Sony Computer Entertainment (Shanghai), 70pc owned by Sony China, will manage software services including sales, licensing, distribution and R&D, while Shanghai Oriental Pearl Sony Computer Entertainment Culture Development (49pc owned by Sony China) will manage the manufacture and sales of PlayStation hardware.

Consoles manufactured and sold in China will have to undergo inspection by cultural departments, and Sony has stressed that these two new companies will introduce “quality, healthy games that are suitable to China’s national conditions and the preferences of domestic players, as according to the relevant government policies.”

With this in mind, it’s expected that many PlayStation games on the market elsewhere will be censored in China, and the consoles may be built to be incompatible with releases from other countries.

Profits from PlayStation

In its most recent earnings call, Sony revealed that losses had tripled to US$1.26bn. Its floundering PC business has been cut loose and, without that albatross around its neck, it is hoped that sales driven by PlayStation will result in a turnaround by next year.

Sony’s gaming-related sales were boosted 53pc in the last quarter through the release of the PlayStation 4 and, according to Sony president and CEO Kaz Hirai, the next-generation console is “already contributing profit on a hardware unit basis, establishing a very different business framework from that of previous platform businesses.”

Hirai is referring to the PS4’s predecessor, the PlayStation 3, which took three years to turn a profit. The PS4, however, is forecast to outdo the success of even the PlayStation 2, Sony’s most successful games console to date.

While Sony is still predicting an overall loss for 2014, it’s thought that 2015 – 20 years since the release of the original PlayStation beyond Japan – will bring a new dawn.

In addition to a profit-making PlayStation 4, Sony also expects a revenue boost from its upcoming cloud-based TV and movie-streaming service, which will launch in the US later this year.

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Elaine Burke is managing editor of Siliconrepublic.com

editorial@siliconrepublic.com