An analyst for the Ace Research Institute has claimed that Nintendo has an “oligopoly” in Japan, while PlayStation game sales have been practically “eradicated.”
Analyst Hideki Yasuda wrote an opinion piece for GamesIndustry.biz Japan (Translation: DeepL) discussing the third quarter financial results of both Nintendo and Sony Computer Entertainment (SIE); a period from October to December 2020.
The Nintendo Switch had sold 11.57 million units- an increase from 10.58 million units in the same period in the prior year. Breaking 10 million shipments in the third quarter (a peak for the console market), and reported as a surprising achievement for two years running. Software sales also increased by 17% to 75.87 million units.
GamesIndustry.biz Japan argues that the Nintendo Switch is driving software sales, rather than the other way around. They theorize this is due to “the Switch’s play style is very well suited to the lifestyle changed by the Corona disaster,” its portability while still being able to be played on a TV, and by being “a low-cost, long-lasting game console.” Shortages also wound down in Spring 2018.
Yasuda proposes that minor hardware changes would be key for the Nintendo Switch in 2021, citing the Game Boy, PlayStation 2, and Nintendo DS. He cites how the Wii and PlayStation 4 which had no or practically no variations experienced sharp drops in sales in the latter half of their respective launch years.
The analyst then turns his eye to SIE, noting that while the places where the PlayStation 5 is being sold has greatly increased, shipments are lower compared to the PlayStation 4 on a per-country basis. Low shipments in Japan caused shortages; something noted in other countries as well, and exacerbated by scalpers. This has been the case since March 2020.
Yasuda proposes that sluggish sales of the PlayStation 4 in Japan, combined with being shipped there later than other parts of the world, contributed to less shipments being sent to Japan. He also notes that if shipments have increased to other countries, this has not been the case in Japan.
Some stores have resorted to lotteries, with many giving up after multiple attempts. Yasuda states that thanks to this, Nintendo Switch software dominates the sales charts in Japan, while PlayStation 5 games “have been eradicated.”
Yasuda notes that PlayStation 4 shipments to Japan in the third quarter (October to December 2020) was an estimated 80,000 units; with 1.4 million units globally. Both he and the Ace Research Institute state this Japanese 5% of total sales also applies to the PlayStation 5. “In other words,” Yasuda claims, “it is safe to assume that the SIE headquarters in the US is aware that the Japanese market is 5% of the total.”
By comparison, Yasuda notes the Japanese shipments of the Nintendo Switch make up a 1/4 to 1/5 of their global supply. Combined with his belief that hardware drives software sales, and the PlayStation 5 having poor availability for almost a year, SIE’s situation is “problematic.”
Further, Yasuda claims that SIE did not post a loss during the PlayStation 5’s launch due to the COVID-19 coronavirus pandemic and quarantine orders increasing demand for gaming consoles. They also note that SIE had “no major change in the business structure” during that period.
SIE has a planned PlayStation 5 production of 7.6 million units for financial year 2020, and 14.8 million in 2021. Yasuda believes these figures- if SIE is aiming to increase production to on par with the PlayStation 4- should be much higher when considering the PlayStation 5 is being sold in more nations.
Yasuda recommends increasing production, but knows the shortages of semiconductors will cause issues. Nintendo meanwhile claimed they have enough of them, and Yasuda notes that have an ongoing “oligopoly in the hit charts.”
The Ace Research Institute also notes that if resales of the PlayStation 5 consoles and games continues for a long period, software sales and PS Plus subscribers will be affected. While SIE are reportedly hoping to maintain the PlayStation 4 community, but limited PlayStation 4 supply and slow sales may put a dampener on that.
Yet further bad news for SIE is how Japanese developers have reportedly stated in their financial results that the high-end videogame market in Japan will be difficulty in the next fiscal year. As such they are reducing development in Japan, and focused on high-performance consoles. Yasuda claims “game developers are likely to be affected by the intentions of the upper management of SIE.”
“It’s hard to see Sony fulfilling its responsibilities as a [platform],” Yasuda concludes, “and I’m concerned that this could cause a lot of problems in the mid to late [fiscal] 2020s. Let’s hope this prediction turns out to be unfounded.”
Yasuda had previously criticized SIE’s “restrictions on expression and suppressed the release of titles for Japanese users;” claiming that it is “definitive” PlayStation will fall in Japan. He also claimed SIE were not realizing the region’s potential.
This theory and Japanese player’s rejection of PlayStation are born of the aforementioned restrictions, and SIE’s growing lack of faith in the Japanese market. In late December 2018, SIE Japan Asia President Atsushi Morita stated the then recent spate of censorship of anime-styled sexual content on PlayStation 4 games had been “to meet global standards.” This censorship was seemingly forced in Japan.
SIE frequently cites global and community standards as reasons for their censorship practices. This has led to Japanese developers to release on other platforms, or create different versions.
This was the case with D3’s ““ Omega Labyrinth Life, which was released uncensored on the Nintendo Switch at launch. A censored version for the PlayStation 4 titled Labyrinth Life (omitting the “Omega” which is stylized as a busty girl in the logo) was released also at a reduced price to reflect the cut content.
Most recently, CyberConnect2’s President claimed SIE have policies against depicting dismemberment or missing limbs for Japanese developers. This may be born mostly of criticism and concern from people within Japan however, rather than additional complaints from overseas.
In addition, Bloomberg reported claims that PlayStation employees and developers were losing faith in Japan as a market. The anonymous employees claimed that the company had begun to focus more on the US, after the PlayStation 4 had been disappointing in Japan.
According to several employees of PlayStation Japan, this resulted in the Japanese office being (in Bloomberg’s words) “sidelined” when it came to planning the promotion of the PlayStation 5. Employees from Tokyo told Bloomberg they have been waiting for instructions.
SIE CEO Jim Ryan denied those and prior reports, insisting that the Japanese market is still important to them. It should be noted that Japanese fans were not happy with Sony’s decision to switch the X and O commands to the western standard, and two major PlayStation 5 livestreams premiering at 5 a.m. JST.
Earlier this month, Sony Japan Studio was rumored to be “winding down“ games development, with the vast majority of developers being let go. SIE later confirmed the developer was to be “re-organized into a new organization on April 1.”