Sony Stock Jumps After Controversial PlayStation Announcement
Sony’s stock has been on the rise recently, following a controversial decision by the company to increase the prices of PlayStation Plus subscriptions. This move, which upset many gamers earlier this week, seems to be paying off for Sony in the short term.
In June 2022, Sony introduced a tiered PlayStation Plus subscription service, starting with the Essential tier at $59.99 per year. This tier retained the same benefits as the original PlayStation Plus service. Gamers seeking more games, classic titles from previous PlayStation consoles, and additional perks could opt for the pricier Extra and Premium tiers. Unfortunately, gamers will now face an average price increase of about 30% for their yearly subscription.
Following the announcement of the PlayStation Plus price hike, Sony’s stock has surged by approximately 3.4%, as reported by Bloomberg. This price increase is expected to boost Sony’s annual net sales by 100 billion yen, equivalent to around $688 million. Sony’s operating profit is also anticipated to increase by $378 million when factoring in the higher subscription prices. Sony claims that this price adjustment will enable the company to continue offering high-quality monthly titles with PS Plus. However, some gamers on social media and online forums suspect that Sony is primarily focused on revenue generation, given that PS Plus is essential for online play in most games.
Despite Sony’s apparent short-term gains from the controversial PS Plus price increase, some analysts caution that these stock and revenue boosts may be short-lived. The price hike could prompt gamers to consider canceling their subscriptions or downgrading to the Essential tier. Bloomberg also spoke with CLSA analyst Amit Garg, who suggests that Sony’s move might set a precedent for future price increases by Sony, Microsoft, and other subscription service providers. Nevertheless, the long-term impact of the PS Plus price increase on competing services like Microsoft’s Xbox Game Pass remains uncertain.
While Sony’s rising stock benefits shareholders in the short term, gamers may be reevaluating their PS Plus subscriptions, potentially leading to reduced revenue in the long run. Some players are also disappointed with Sony’s free PS Plus games for September 2023, which include the poorly-received Saints Row reboot from the now-defunct Volition. This situation has cast Sony in a negative light, and restoring goodwill may necessitate the introduction of new benefits.
At the very least, PS Plus will continue to offer new game additions across all three tiers each month. The inclusion of first-party day-one releases with PS Plus could alleviate some of the frustrations caused by the price increase, but the final decision rests with Sony. Currently, PS Plus does not seem to be moving towards adopting the day-one release benefit that Xbox Game Pass offers.