Market Insight

Sony’s PlayStation to roll out original programming

January 21, 2015  | Subscribers Only

Kia Ling Teoh Kia Ling Teoh Senior Research Analyst – Advertising & Television Media, IHS Markit

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PlayStation will debut its first original TV show, the 10-episode Powers, in March 2015. The first episode of the series will be free for streaming on the console, while the subsequent episodes will require subscription to PlayStation Network (PSN). Sony plans to attract more users to PSN, its online gaming and digital media delivery service, by adding TV shows to its offer.

Our analysis

Original programming is trending in online video, proven successful by online video providers like Netflix and Amazon. House of Cards and Orange is the New Black were a huge success, by Netflix’s own account: the provider has more than 30 original series lined up for the next two years. Similarly, Amazon started to show original TV series on its subscription video service Amazon Prime Instant Video in 2012 and will make more in 2015.

Rival Microsoft’s Xbox revealed its original programming ambition with the setting up of Xbox Entertainment Studios in 2012, with plans to serve 12 original series to its subscribers in 2014. However, the software giant called off the plan as part of a restructuring and closed down the studio. Production on Halo: Nightfall continued, and it aired on Xbox in November 2014. Reported negotiations between Microsoft and US cable network Showtime to bring the show onto the TV screen have not yet resulted in a linear premiere.

By stepping into the original content business, Sony hopes to broaden its revenue stream as well as to beef up its paid subscription income. PlayStation leads the video game console market with its installed base (overall sales) outperforming Xbox and Nintendo in 2013. IHS forecasts the leadership to continue in the next five years. Sony reported 83% year-on-year growth last September, primarily due to the contribution of PlayStation4 hardware sales. Its TV division, however, is losing money. Now for a long-term revenue prospect, Sony is looking to monetize its subscription service and create added value for its consoles. What’s more, by attracting more subscribers to PSN, PlayStation is able to generate and expand its user data and understand usage patterns.

Unlike Microsoft, Sony has existing influence and knowledge in television entertainment within the group. Sony Pictures Television has produced a wide array of programs and operates television channels across the globe. This may prove to be an advantage when launching a slate of programming.

Although PlayStation4 is still in its early lifecycle, it is time for Sony to start considering the feasibility of diversifying its content offer as the device matures and it faces the possibility of audiences' attention diluting away from games. Being the first of its kind to appear on the PlayStation console, the response to Powers will act as barometer for the future business strategy for Sony’s content creation in the video game console space.

Geography
USA
Organization
PlayStation Sony
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