- Summary:
- Will Sony's share price cope with the pressure as Microsoft is set to launch their new generation Xbox consoles, scheduled for release on November 10?
As retailers re-open, online retail giants such as Amazon are feeling the impacts of rising staffing costs and capital, leading to the potential for further losses in their share price. Similarly, the Tokyo-based electronics company, Sony Corp. has erased recent gains and closed at 2.4% lower on September 15, which was their lowest level since July this year. Bloomberg reports how some factors contributing to this downturn may include the production cut in the console production of the PlayStation 5 unit, scheduled to be released on November 12. Due to production issues with its custom-designed chip, they have adjusted estimated levels from 15 million units to around 11 million.
One of their biggest competitors, Microsoft is also set to launch their new generation Xbox consoles, scheduled for release on November 10. With a rising interest in the video game sector amidst the ongoing pandemic, the competition between the two rivals is becoming more intense. Because of this, Sony had previously increased its forecast due to the pandemic-related lockdown orders, which led to people staying at home and playing videogames. However, they ran into several issues with production and as of the moment, yields have not yet stablised at lows of 50%. Their PlayStation 5 chips are produced by Taiwan Semiconductor Manufacturing (TSM), which is one of only two businesses that have been known to able to produce transistors as small as seven nanometers.
For those who are in investing in Sony shares, some online stock trading platforms don’t include stamp duty. This means that global investors can save 0.5% compared to a traditional UK share purchase. In addition, advanced trading tools enable you to set predefined stops to avoid slippage. On the other hand, there are several factors that investors should consider before buying Sony stock. Firstly, Sony generates much of its revenue through in-house content such as digital sales of games and exclusive downloads. With recent best-selling games such as the Ghost of Tsushima and The Last of Us: Part 2, they have developed an extensive fanbase.
Alongside the launch of the PlayStation 5, Sony is also placing a greater emphasis on the services side of the industry. Their goal appears to be to generate more revenue through cloud-subscription services with the PlayStation Now and PlayStation Plus, the latter of which charges a monthly subscription fee. Microsoft’s counterpart to these services is the Xbox Game Pass, which allows Xbox users to access games on mobile devices. To reflect this interest, statistics show that the PlayStation Now has expanded from over 700,000 users in March 2019 to 2.2 million as of April 2020. Despite the lack of growth in hardware unit sales, these are some of the major factors contributing to the growing profits in the gaming segment.
According to a gaming analysis firm, the PlayStation 5 and the Xbox Series X are equally priced, but PlayStation 5 Digital Edition “offers a substantial discount at no cost in terms of performance or hardware, besides the disc reader.” Sony is capitalising on the rising popularity of digital downloads, as disk drives become less essential in today’s digital landscape. As a result, Sony’s stock performance is heavily reliant on its ability to reach the digital market, which can potentially bolster its future revenue.
Sony’s share price drifts lower
