Live games could boost PlayStation earnings 'in a way we haven't seen'

Sony's new live service games could significantly raise PlayStation's annual revenues per user metrics and supercharge its digital business.

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For years Sony has watched third-party giants like Activision, Take-Two, and EA made billions of dollars from live games. Now Sony finally wants in on the action, and is making big investments into live games. By 2025, Sony wants to have 12 live games on the market. This high-level expansion is expected to fuel long-term, recurring player spending and help boost its digital & add-on revenues--a segment that already makes more revenues than PlayStation hardware, software, and services.

In a recent business event, Sony Interactive Entertainment CEO Jim Ryan says that ARPUs, or annual revenues per user, could well surpass the PS5's current $174 ARPU if even only a fraction of Sony's new live service games are successful.

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"The comparison of live service games with the more traditional, historic way of publishing a console game--which is to charge $60-70 upfront--it really depends on the quality of the live service game. If it's a great live service game, the ARPU will be significantly higher than the money that is recouped from sale of a single game at $60 or $70 dollars.

"These games often realize ARPUs in the many hundreds of dollars. However, obviously, not every live service game falls into that category.

"There are some that are less successful and have lower ARPUs, which is why I made the comment that I made earlier, that if we are successful in having a meaningful proportion of the 12 live service games under development be successful, and have these games realize an ARPU of perhaps in the net of many hundreds of dollars, that will perhaps help us move PlayStation's ARPU in a way that we haven't seen before."

The PlayStation boss also discussed the PS5's current ARPU lead over the PS4. Sony expects PS5 owners to spend more over time.

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"Yes, the chart that you reference does show an existing ARPU of 15% increase for PS5 over PS4. We anticipate that the ARPU differential is likely to increase over time.

"I would say two things for that: The first, the quality of the games that we see coming to the PS5 platform is only going to increase with time, and we already have visibility on some wonderful and very exciting games that show a relatively greater increase in quality that what we saw in the equivalent period in the PS4.

"Secondly, I would say the move that we are making to include a greater component of live service games in our portfolio is likely--if we execute well--to further stimulate the increase in ARPU that I have referenced."

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