PS5 is still behind PS4 and whilst PS4 will sell 19 million units this FY launch alligned, PS5 is forecasted to sell 18 million units. So it's falling further behind.

I'm not talking about now, I'm looking ahead. The previous generations had a big price cut in the second half. We are in the 4th year and see a big slowdown, bigger then PS4, because that got a slim with pricecut.

There's also the fact that there could be a PS5 collection when the PS6 drops which would make one a fool to buy those games. I felt the fool when I seen the ps4 collection all free, All games I paid for, most full price. The jump from PRO to ps5 doesn't look all that spectacular either, maybe it would be for OG ps4 owners getting 4k but the graphics don't look very much more impressive. 

It's an odd situation. Only reason to upgrade is you get more free stuff on PS plus and PS catalogue. 

It depends on who you talk to but I don't view those discussions as hyperbolic. The issue is definitively there but it's not about the industry not being sustainable or profitable, it's specifically about profit margins.

The cost of doing business in this space has risen so much while the consumer pool has stagnated and despite the rise in game price profit margins are very low. Sony is strong but it has been stronger with the PS4 for sure and way more sustainable with it than it is with the PS5.

This slide from the presentation explains it better : 

Profit margins for 2022 and 2023 have been < 7%

This is an issue, it is literally what led Sony and the industry to cut expenses and let go of so many workers. 

Also going forward you can see see what Sony intends to do:

• Continued expansion of the installed base
(this would be hard to achieve as PS5 is tracking under PS4 so it is probably intended to be achieve through expansion on PC)

• Drive consistent revenue from Content, Services and Peripherals
(This makes me think the focus is much more on increasing monetization of content than increasing the amount of content, this can be seen through large investments in GAAS)

• Thoughtful investments in key innovation areas Studio Business Group
(Thoughtfull is the keyword here, security will be played bold/risky move will be avoided, no more studios acquisition for sure during the next 2 years)

• Strong release slate and ongoing execution of live service roadmap

• Expansion of franchise reach
(this screams PC release for sure)

• Continued financial discipline
(Expect more layoffs and/or closure. One thing is certain keeping the status quo in the way business is done in the console space is not an option. This is where the hyperbolic discussion comes in, but it is greatly subjective. I don't view discussions saying the industry needs to change/adapt to the current context as hyperbolic. It just is what it is an actors are adapting to it.)

• Early returns from past acquisitions and investments Profitability
(For the same reasons as they are avoiding bold/risky move, they stressing their recent bold/risky move to prove themselves quick)

• Agile and streamlined cost structure

• Further investments in efficiency

This actually makes me mad. Sony is making more money than ever yet they still laid off a bunch of employees, including employees at Insomniac who, IMO, are basically keeping the PS5 afloat with first party releases. Take away all insomniac games from the PS5 and you have like half the amount of first party releases.

I'm really tired of companies doing this. Higher than ever profit and revenue but they still justify cost cutting measures as if they are essential. It's just greed at this point.

Not that I'm a fan of everything that they do, but this is the one area I respect Nintendo in more than any other videogame publisher.

But that's the issue Sony is Not making more money than before, they're only making more revenue than ever before but those are sustained with more expenses than ever before.

Now their profit margins are just under 7% (2022, 2023) which is way lower than 2021 12.4%. 2018,2019,2020 was even better than this. In other words, $100 invested in PlayStation yielded $112+ and has done similar or better for the better part of the last decade. now it's down to $107 and the outlook, if nothing is done, may even be lower. Now Sony has many other industries than just gaming. What do you do as an investor if you expect 7% ROI with PlayStation but 10% with Sony Picture (hypothetical, to illustrate a point), obviously you invest more in Sony Picture at the expense of PlayStation.

This would not be an issue right now, the current context has been a long time coming and actors were more or less taking this into account. But then COVID hit and made investor thinks PlayStation (and all actors in gaming) could yield a crazy amount short/mid/long term like 20% or even more. After all, with everyone at home playing video games certainly, they would retain a lot of new players and outrace the rise of dev cost with player base growth. Investment flooded in from all actors, acquisitions were made, new projects were launched, and new studios were popping up every other week, salary was increasing. And then, it was just a dud. Investors invested $b on a current yield of 12% expecting to strike gold and that it would raise 20%+ and now they face only 7% and with no expectation that it would be any better in the future. As previously mentioned 7% is still profit but when you can just turn around and invest your money in another division that yields 10% you just do so and the alternative is that the gaming division proves it can still outperform others on yield but it cannot while still being overinflated from the 2020-2021 craze.

So yes, this is maddening for sure but, at least it's understandable, and no it's not that actors are at their peak and wanting more, it's that companies took a nose dive and are trying to get things under control.

Nintendo on the other hand, didn't fall for 2020-2021 craze, has maintained way better ROI and unlike Sony/MS they cannot just decide to invest in another more fruitful division. 

Didnt they just go on the record to state they've made more profit during the PS5 generation than the PS4 generation?

Their profit margins are less per game. That's being made up through microtransactions which have exploded in recent years. 

Yes "generation" but not ecosystem, they count profit from PS4 ecosystem 2020+ toward PS5 gen which IMO was the vast majority of 2020/2021 profits and a large portion still of 2022/2023.

Also they mentioned consumer increased spending with PS5 hardware but the still the RoI is <7%. So like I said revenue is all time high but so is spending and RoI is very low.

The PS5 has not just leveled up but transcended to a whole new plane of existence, leaving its predecessors in the dust like they’re stuck in a 16-bit era. The PS1 and PS2 might have built the foundation, and the PS3 and PS4 might have refined the craft, but the PS5 just said, "Hold my DualSense," and smashed through the record books like a gamer with unlimited Mountain Dew and Doritos.

It’s like the PS5 found a cheat code in the game of economics, proving once and for all that next-gen truly means next-level profits. GG, PS5, GG.

Well thanks for explaining why Sony is acting like they are winning the console wars. Becaues finacinally it looks like they are winning the console war.