Ace Institute of Economic Research looking into Sony's claim about taking Japan seriously

Clout

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May 30, 2020
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To begin, I received a notable response to my previous article. In reading it, one can see that there are a number of game users who harbor internal anger towards Sony (SIE). In the past few years, we’ve seen Sony (SIE) become more focused on the U.S. market while beginning to steadily drifting away from Japanese PlayStation users. The intent of my previous article wasn’t to ruffle feathers with a sensationalist title, but to inform Sony headquarters and SIE of Japanese PlayStation users’ profound feelings of despair; I think it’s likely that they have understood that.

However, Sony HQ has told us directly that they value the Japanese market, a comment that we were grateful to hear. I do think it’s highly probable that Sony does take Japan seriously. That said, while their feelings are valuable, their actions do not match those feelings. That’s why users believe Sony and CEO Jim Ryan have shown disregard for the Japanese market. In mentioning this, one might think this is simply conjecture by the ACE Economic Research Center.

To be a bit more specific,

1. The PS4 launched in 2013, but Japan’s release came afterward.
2. After fall 2018, Sony implemented its own regulations on depictions in games, which has censored content aimed at Japanese users
3. The PS5 reveal video had no Japanese narration, while there were issues with the font used for the subtitles as well as their Japanese translations
4. The confirm button was changed from O to X in order to set a global standard
5. Due to manufacturing issues, the initial launch allocation for PS5 in Japan was barely above that of the PS3, preventing the system from reaching early adopters

And so forth. As counterpoints to the above, all that can be said is that E3 and year-end PlayStation sales campaigns (price drops) were implemented on a global basis and that the PS5 launched in Japan at the same time as the rest of the world. In all probability, the PS5’s global launch was simply in response to Microsoft’s attempt to go on the offensive, with Japan’s status as a Tier 2 region remaining unchanged. It’s difficult to agree that Sony is taking Japan seriously when taking these measures into account. The main issue concerns the 2nd point above. Aniplex, which is part of the Sony umbrella, is deriving large amounts of income from Fate/Grand Order’s swimsuit characters, but on PlayStation, games that depict swimsuits either cannot be sold or have had alterations forced onto them. This is nothing but a double standard. All this does is feed into users’ distrust. This policy should immediately be rescinded. However, it unfortunately seems to be taboo for Sony’s upper management to breach the topic of censorship, so we predict that ACE Economic Research Institute’s opinion will be ignored.

Next, let’s look at 25 years of data.

Post-Launch Sales Data for 25 Years’ Worth of Consoles
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(Source: Famitsu)

As I mentioned previously, PS5 has fallen below PS3 as predicted. Based on this graph, can one really sense that Sony (SIE) has plans for success in the Japanese market? ACE Economic Research Institute cannot see it.

Even then, PS5 sales in the 4th and 5th weeks are around 11,000 units, while the 6th week is 17,000 units. These sales are far too low. Total sales of 240,000 are by far the lowest in the history of PlayStation home consoles. If this were to continue, lifetime sales of PS5 would perhaps end up at less than half of PS4. Such a small penetration poses a threat to Japan’s console games market.

Quantitative analysis shows that Sony is not taking Japan seriously. That is why users have accused Sony of disregarding the Japanese market and why it’s not unreasonable for those users to feel a sense of hopelessness.

One more point I wanted to make is that SIE shifting its HQ to the US led to its attitude towards Japanese users becoming rather cold, and why SIE has lost its Japanese principles. As mentioned previously, Japanese users aren’t likely to channel their dissatisfaction on social media, so US SIE HQ staff might perceive that as the Japanese just politely accepting whatever is given to them, regardless of how cold they have actually become. However, that couldn’t be further from the truth: they’ve simply begun to vanish into the sunset quietly.

With all that taken in account, Sony (SIE) might believe that their high end game experiences are not needed in Japan, where moe is mainstream. The platform maker has lots its motivation to take responsibility in the Japanese market. Early PS5 trends have shown that the PlayStation brand in Japan is in decisive decline and ACE Economic Research Institute cannot help but be disappointed. We think Sony will come to regret this.

Even then, as I said before, half of the global game market is concentrated in the US and there are many people who believe that winning there will round things off neatly. Indeed, in a global context, the Japanese economy has been stagnant for 30 years, and its share of electronic products is now only around 10 percent, which has led Japan to having a thinner presence.

It’s not clearly understood why Japan’s economy has been sluggish for this long. The ACE Economic Research Institute believes that the increase in single-person households and small living space are major factors, but this isn’t the place to discuss this, so let’s move on.

With Japan only having a 10 percent share, it’s conceivable to see that some may stop caring about it, but is Japan actually a market where game consoles don’t sell? Should Japanese users be resigned to accepting this situation?

Yearly Japanese Hardware Sales
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(Source: Famitsu)

Shown in this graph are yearly sales of the 3DS, PS4 and Switch from launch. There are years where both the 3DS and Switch have sold over 5 million units. Furthermore, Switch sales in year 4 are incomplete, but show that its peak has surpassed that of the 3DS, showing that concerns about Switch running out of steam are falsehoods. Total sales of Switch have surpassed 17 million units. In all likelihood, total sales will exceed 25 million units.

Also, we have commented that sales (shipments) of Switch in its entire lifecycle may exceed 150 million units. We think that sales are progressing in line with our predictions. On the other hand, PS4 has never sold more than 2 million units in a single year. Final sales in Japan will total around 9.5 million units, below that of the PS3. It’s highly likely that total PS4 sales will end up at below half of Switch sales. Even when taking into account the presence of the handheld-only Switch Lite, we can see that PlayStation sales are unambiguously in decline.

What do you think? Does Japan look like a market where games don’t sell? Japan is a market where you can be rewarded with 20 million sales for your efforts. Abandoning this market because one thinks photo-realistic games are not mainstream or that non-portable home consoles don’t sell is a very problematic business approach, and I can’t really feel a strong response from Sony (SIE) in this regard.

Also, if investment markets feel that PS5 is selling, then perhaps they might not perceive of the decline of the Japanese market as a problem at all.

The late Satoru Iwata, Nintendo’s former president, was known to avoid using the word “failure” because he thought it had an adverse impact, but the ACE Economic Research Institute believes that admitting when something has failed will lead to success in the next generation.

We still think Sony (SIE) will continue to ignore these points. However, looking at the present situation, in which Sony (SIE) has failed to ship enough PS5s to Japan for the year-end shopping season, we cannot help but be deeply concerned for the future of the PlayStation market in Japan.

 
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