A new corporate report reveals just 3% of PlayStation’s revenue in its most recent fiscal year came courtesy of physical sales.
That means of the ~$31.5 billion the manufacturer made, just ~$945 million could be attributed to boxed PS5 and PS4 software. It’s not a drop in the ocean by any stretch – but it is little more than a rounding error at this point.
Important context needs to be taken into consideration here, though, as pointed out by industry analyst Daniel Ahmad.
Based on the complicated way Sony does its accounting, the company only recognises full revenue from physical first-party games, while it writes down a lower royalty value from physical third-party games.
This differs from digital games and add-on content, where it recognises the full revenue value for both first-party and third-party content.
It’s one of the reasons why Sony’s profit margins can look problematic – it’s because it counts all the revenue for digital purchases, and then obviously a lot of that goes back to the original developer or publisher.
We’re not accountants, so we can’t explain it – but we suppose tracking things this way makes its overall revenue higher.
Either way, it means this 3% revenue attributed to physical games is a little bit misleading.
Ahmad points out that unit sales may be a better indicator of how boxed software is selling, and it currently sits at around 24% of overall unit sales. That amounts to approximately 73 million boxed games in the 12-month period which ended on 31st March.
So, it’s a declining share, but it’s not insignificant.
And recent PS6 rumours have reflected this, suggesting Sony plans to include a detachable disc drive with its next-gen console, giving consumers flexibility over how they prefer to play.
Its continued commitment to physical games is one thing we think the company deserves credit for – and it doesn’t look like its approach will be changing into the next-generation and beyond.
Yes, it’s clear the industry is moving in a more digital orientated direction – but on PlayStation at least, physical remains an important niche.