PlayStation’s new chairman says its studios need to improve ‘when it comes to business’

PlayStation’s new chairman and Sony’s current president was asked for his early assessment working directly with the games business during an earnings call on Wednesday, and told listeners he believes its studios can improve “when it comes to business”.

Sony president, COO and CFO Hiroki Totoki assumed the role of chairman of Sony Interactive Entertainment in October, ahead of CEO Jim Ryan’s retirement. From April 1, Totoki will act as interim CEO of SIE.

Sharing his initial impressions from his first four months working directly with SIE, the exec said he had made a point to attend management meetings and visit PlayStation’s game development studios to get a better understanding of the business.

The Sony president said that while he was impressed with the motivation and creativity of studio workers, he believed there was “room for improvement” when it came to how they invest money and plan development schedules, in order for the overall business to achieve its growth goals.

Sony announced strong PS5 sales of 16.4 for the first three quarters of the fiscal year. However, while games business revenue was up 15% year-on-year, operating profit was down significantly at 25.9%, which Sony said was partly due to a decrease in sales and an increase in losses from hardware due to promotions.

“It’s been about four months [since I became Chairman] and I’m trying to demonstrate leadership and have as many meetings as possible with the management team,” Totoki told media and investors listening to the web call, via a translator. “I’ve also visited studios, and everyone is working really hard to fulfil their responsibility to try to optimise the business, and I understand that.

“But overall growth and sustainable profitability for increasing margins… how will that translate to these goals? I don’t think people understand that deeply. I think that is the problem of the organisation.

“So, as far as I’m concerned, I try to understand what is happening in the company, in the industry, and also from the perspective of analysts, and try to explain that in a transparent manner so that people can recognise and notice these issues so that we can have a harmonised approach going forward.”

The exec continued: “People who work in the studios have very high motivation. They’re very highly motivated, they’re very good people, and they have great creative minds and knowledge of live streaming.

“However, having said that, when it comes to the business, I think there is room for improvement. And that’s to do with how to use money, the schedule of development and how to fulfil one’s accountability towards development – those are my frank impressions. I will continue to engage in dialogue with the people so that we can find the right way to proceed.”

Sony Interactive Entertainment had set an ambitious sales target of 25 million PS5s for the year ending March 2024. However, in the latest quarter, it sold 8.2 million consoles, bringing the total for the year so far to 16.4m. The company said it now expects to fall short of its original target by 4 million units (21m).