Sony CEO outlines one of the biggest issues with subscription gaming

While Sony has adapted PlayStation Plus to be more like Xbox Game Pass, the Japanese company identifies potential issues with competitor tactics like day-one releases.

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Sony Corp. CEO Kenichiro Yoshida has a very nuanced and level-headed approach to video game subscriptions. Rather than go all-in on subscriptions and services, Sony has kept its more traditional business models alive: Selling hardware at a profit with multiple revisions over time, relying on full game sales, and doubling-down on big AAA blockbusters sold at a premium on day one. This has led to a balanced business that delivered a record-breaking $26.9 billion revenues in FY22.

While Sony has broken from its traditions by bringing its games to PC and mobile (with cloud gaming already offered on PS Plus), the company has no plans to break one rule: No day-and-date releases. Sony is not eager to launch big PS5 games like Spider-Man 2 as part of PS Plus. Multiple sources (FTC v MSFT, Xbox docs, etc) have proven that day one Xbox Game Pass releases can "cannibalize," or jeopardize the sales of full games--Game Pass subscribers can avoid paying $69.99 per game.

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If you're a PlayStation gamer, odds are that you already know about this. So why repeat it?

Recently, Sony Corp. CEO Kenichiro Yoshida sat down in an interview with Norges Bank Investment Management CEO Nicolai Tangen to talk business.

In that interview, Yoshida shared some very interesting comments on subscriptions that underlines how Sony Corp. is approaching things like PlayStation Plus:

"...People usually play one game at a time, so an all-you-can-eat-type of [subscription with many games may] not be so valuable compared to video streaming services. We have kind of a balanced hybrid service on PlayStation Network, subscription as well as pay-per content."

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Time is indeed a problem with value gaming subscriptions. Consumers simply don't have enough time to play everything, and gaming itself is not passive and requires active participation at all times. Users have to actually play the game--they can't just pop on a Netflix show for background noise.

As such, gaming doesn't translate to subscriptions the same way that video does--companies are finding this out the hard way, which is one of the reasons why prices have gone up (pricing goes up to offset the value).

It's also worth noting that PS Plus and Xbox Game Pass are high-margin businesses in terms of investment/upkeep, however the services themselves compete directly with each company's storefronts. The cannibalization--or replacement--factor happens with time as wall. Consumers simply have too much choice and too little time. So it's up to service-holders to make that time worthwhile.

Almost the entirety of the interview is just Yoshida reiterating announcements that were previously made. Sony will treat PlayStation as the core games platform while also releasing games on mobile, cloud, and PC (Sony already does the last two).

But these comments strongly reinforce that Sony doesn't want to add too much value to PlayStation Plus. The service has grown tremendously over the last year with hundreds of games offered. One thing hasn't changed, though, and that's Sony's opposition to day and date first-party releases.

Too much value can (and usually does) undercut profits, leading to more dangerous price hikes that jeopardize subscriber counts. Running a service is a delicate balancing act of pricing, value, and profit. Sony knows consumers only have X amount of time in order to enjoy content, and remember that Sony also runs video streaming services that compete with this time factor (unlike Microsoft, whose only entertainment subscription is Game Pass).