All the way back in 2016, with the PS4 ramping up into a massive sales success, Sony carried out a fairly major organisational shake-up of its games-related businesses.
Operationally, the biggest change was bringing everything PlayStation-related under one roof – up until that point, there had been a distinct business unit called “Sony Network Entertainment” running services like PlayStation Plus, as well as powerful and unusually autonomous regional units of Sony Computer Entertainment, all of which was merged into a single new management structure.
The most eye-catching aspect of the change, though, was where that new management structure, Sony Interactive Entertainment, was to be headquartered – not in Tokyo, but in California’s Bay Area.
This shift wasn’t all that meaningful in real terms – it was an acknowledgement of PlayStation’s contemporary reality as a major international business with studios all over the world and deep ties to California’s tech and entertainment industries, not a coup or a power-grab.
Nothing really changed all that much because PlayStation now had a home address in San Mateo rather than Shinagawa. Still, though, it definitely felt like a cultural shift to many of the platform’s fans – and for those fans in Japan, it was something of a bitter pill. Not unexpected by any means – Japanese gamers had long lamented that their days of being “first among equals” in PlayStation’s global consumer base were long past – but a little tough to swallow nonetheless.
It’s fair to say that the strategic considerations might have been different if Japan was actually a really important market for Sony
There’s probably a little of that bitter aftertaste back in a few mouths in Japan this week, with Sony announcing that it’s hiking the prices of all of its PS5 hardware – not just the console, but controllers and PSVR2 headsets as well – by quite a considerable sum. The PS5 console itself rises ¥13,000 (about $90 / €80) to ¥79,980 (roughly $550 / €500) for the disc drive model. The new prices take effect on September 2nd.
Unsurprisingly, there’s nowhere that actually has stock to sell at the old prices right now, with plenty of people on social media posting glum pictures of out-of-stock signs from electronics retailers that hark back to the supply-constrained early days of the console. Quite a few of those pictures are accompanied with laments about Japan’s economic woes, Sony’s lack of regard for the Japanese market, or both – but as before, nobody actually seems surprised by this, just disappointed.
Quite a few unhappy consumers are also seemingly steeling themselves for more sticker shock when the PS5 Pro details and pricing are presumably announced in the coming months.
Sony’s rationale for the price bump, it should be noted, is entirely economically reasonable (which, like being “technically right”, is one of the worst kinds of reasonable to be). Various macroeconomic trends have conspired to drop the value of the Japanese Yen to its lowest ebb against the US dollar since the 1980s; most of these have less to do with the “real” economy, as it were, and more to do with the machinations of central bank interest rates and inflation-related policies.
Things will probably revert to the mean, at least somewhat, over time. But for now, the Yen is cheap and thus products like the PS5 were effectively selling at a major discount in Japan. Sony has overcorrected quite a bit, but given recent currency fluctuations the new pricing is broadly in the same range as US hardware pricing.
That’s fine as an economic argument goes – but I think it’s fair to say that the strategic considerations might have been a bit different if Japan was actually a really important market for Sony. It’s not always intuitive to people overseas – in fact, it borders on sounding crazy to some people – but in fact, Japan not only isn’t an especially important market for PlayStation; it’s also not a market where PlayStation performs particularly well.
You can understand why this is counter-intuitive, of course. Sony is still a Japanese company, after all, even if it shifted PlayStation’s HQ across the Pacific. And we all know what a disastrous failure Xbox is in this territory (a reputation that is in no way overblown), so surely PlayStation must rule the roost? Even if Japan isn’t a super-important territory for Sony commercially, surely PlayStation must be an important platform for Japan culturally?
The reality, however, is very different – because Japan is a Nintendo territory through and through. In fact, this is arguably the only territory where every other platform holder plays a distant second fiddle to Nintendo, although in some European countries it does also come quite close.
Nintendo’s dominance of Japan in recent years, however, isn’t just based on the strength of its IPs, although they’re certainly very beloved here. Japan isn’t just Nintendo territory; Japan is handheld territory, and right now, Nintendo is the only company with a serious handheld device in the market.
The writing has been on the wall in that regard for some time. There are various theories about why handheld gaming is so important to the Japanese market – the importance of playing out-of-home in a country with long train commutes, small apartments, and so on, is definitely part of it, while it’s definitely also true that young consumers here are less likely to have a TV at all, making a display-less console a tough sell to them. These are long-term factors, though they’ve only been becoming more influential over time, and Sony hasn’t been unaware of them.
You could argue that Sony’s persistence in pushing its handheld ventures – the PSP and PS Vita – came largely in an attempt to maintain relevance in its home territory, even though those platforms never really took off elsewhere.
In the PSP at least, it achieved that for a time, with Monster Hunter in particular being an absolutely massive hit on PSP here. (The odd, if not unwelcome, situation that Capcom finds itself in with that franchise is arguably Sony’s problem in microcosm – while in Japan Monster Hunter is seen essentially as a handheld game and thus needs to be on Switch, it has found massive overseas success as a home console game on PlayStation, leaving the company with no choice but to bounce between two successful iterations of the franchise.)
Japan is handheld territory, and right now, Nintendo is the only company with a serious handheld device in the market
You could even argue that the PS Portal, an odd thin-client handheld device with no real parallels anywhere else in the gaming hardware world, exists largely as an attempt to claw back a bit of that relevance in Japan – it doesn’t work in out-of-home contexts, but perhaps reflects a sense that PlayStation’s dependence on a big TV as the centre of its experience is cutting it off from the potential market in Japan.
That hypothesis may well be correct; PS Portal seems to be barely spoken about overseas, but in Japan it’s been back-ordered through most retailers since launch and is a current favourite of price-gouging scalpers.
None of this, incidentally, is to say that Sony is doing especially badly in Japan. In 2023, it sold around 2.6 million PS5s, its best sales year since the PS2 era. Relatively speaking, then, it’s doing fine in Japan right now – it’s just that this essentially means the market here hasn’t grown in decades and is an ever-shrinking slice of a growing global pie.
By comparison, the Switch sold 4 million units in the same period – despite being far deeper into the tail end of its lifespan. Sony’s second place in Japan isn’t even close, and one can’t imagine that slapping an extra chunk of coin onto the hardware price will help.
So yes, the currency markets arguably leave Sony little choice – but that’s only because we accept that growing and building the Japanese market isn’t a major priority for the company.
There were other pathways here. It’s entirely plausible, for example, that one reason the Switch 2 has been delayed so much is because Nintendo isn’t happy to launch a new platform in economic conditions that could keep it out of reach of Japanese consumers, who make up a dramatically bigger slice of its global pie than they do for Sony.
Talk of strong or weak currencies is all very well, but the weakening Yen has not been reflected in salary inflation in Japan to any extent, so PS5s really did just jump up massively in purchasing-price-parity terms. Of course, Sony will also be conscious that a really big price differential risks creating a grey market for cheap Japanese hardware in other countries, and thus exacerbating stock shortages in Japan.
Presented in those terms, it’s a no-win situation – Japanese gamers can be faced either with higher prices or massive supply channel issues. Sony has unsurprisingly chosen the option that generates more money.
The harsh reality remains that in Sony’s home territory, the market is waiting for Switch 2; nothing before that is likely to really change the face of the console competition in this region
Even in the reaction to the price hike from consumers, though – disappointed social media posts and all – you can see the root of the larger problem. The rumblings of discontent are muted; consumers in Japan seem fairly ambivalent about PS5 overall.
After the price hike was announced, there was a run on second-hand PS5 hardware – with most comments about hunting in second-hand stores or online sales sites seeming to come from people still playing on PS4 and feeling like this was as good a time as any to upgrade, rather than being pushed by any special enthusiasm.
It’s also telling to look at what people talk about playing on PS4, and wanting to continue playing on PS5 – mostly free-to-play titles like Apex Legends, Genshin Impact, and Overwatch, which ties in with the observation that the attach rate for PlayStation in Japan is also lower than in most other countries, with the main audience for it here seeming to be people who use it as an F2P box.
There isn’t a whole lot on the horizon that’s likely to set a match under PS5 sales here either. Unlike most territories, Japan is unlikely to be hugely animated by the GTA 6 launch next year either; it will do fine, of course, but it won’t shift consoles the way it does in other countries.
The next Monster Hunter title is arguably the biggest game on the horizon that’s likely to shift PS5 units, but many of that series’ aficionados in Japan prefer the Switch iterations. The harsh reality remains that in Sony’s home territory, the market is waiting for Switch 2; nothing before that is likely to really change the face of the console competition in this region.
Source : Game Industry