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Market Insight

Sony Lays Out PlayStation Now Service Strategy to Maintain Cloud Gaming Leadership

October 01, 2019

Piers Harding-Rolls Piers Harding-Rolls Director – Research and Analysis Director, Games, IHS Markit

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Sony is the biggest cloud gaming operator in the market today. In 2018, the company had 36% share of the overall market and generated $140m in consumer spending. The entire cloud gaming market was worth $387m in 2018 and is forecast to growth to $630 million in 2019 as new services launch and existing services become more relevant to a broader set of consumers. IHS Markit forecasts the cloud gaming market to be worth $2.5 billion by 2023, less than 2% of the overall games market at this time.

To maintain its leading position Sony is focusing its PlayStation Now strategy: slashing its price, improving its content and spending a significant sum on marketing to boost adoption. Having operated PS Now since 2014, Sony believes it is the right time to enter a more expansive phase for its subscription service.

The upcoming launch of Google Stadia and Microsoft’s own Project xCloud strategy has resulted in a more aggressive approach, but this is also a good time to lay the foundation for future growth as the company starts the transition to its next-generation console platform.

While Sony Interactive Entertainment recognises PS Now as an important pillar of its future growth and its aim to expand its audience, it expects this service to remain a secondary concern behind its core console business. Microsoft is following a similar approach.

Importantly, console platforms are well positioned during this phase of slow cloud transition as they are able to offer all forms of distribution, a flexible strategy which will fit with a cross section of users. Hinging off this console strategy, cloud gaming services will enable platform holders to start to engage new audiences to expand their reach. This will be a slow transition.  

PS Now monthly pricing falls into line with other entertainment subscription services – At $9.99/€9.99/£8.99 for the month to month subscription rate the service is much more competitive and will be one of the cheapest cloud gaming services available with such a deep catalogue of content.

The addition of heavy hitting titles such as GTA V, God of War, Uncharted 4 and Infamous Second Son for 3 months, with the promise to rotate in other popular titles after this period, will drive more trials of the service and the subscription base. Enhanced ad-spend and marketing will help expose a broader audience to the PS Now proposition.

While, PS Now cannot compete with the first-party day and date releases Microsoft bundles into Xbox Game Pass, PS Now’s offer of streaming, and a bigger catalogue of games, at a similar price point makes Sony’s service a lot more competitive.

PS Now has enjoyed over 40% growth year-on-year in terms of subscriber numbers since it first launched. The support of downloads and launch in new territories has helped boost this performance. This new pricing, content and marketing spend will increase this subscriber growth yet further and will ensure the service maintains its cloud gaming market leadership in 2019 and into 2020.

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