TOKYO -- Japanese gamers are getting the short end of the joystick as Sony Interactive Entertainment has prioritized U.S. and other overseas consumers in its PlayStation 5 marketing strategy.
PS5 has been in short supply in Japan since its rollout in November, frustrating many domestic fans. Sony did not ramp up local supply of the device even for the year-end shopping season, the hottest time for video consoles.
Even more galling for Japanese gamers is that Sony has stopped shipping all but one PS4 model.
The supply crunch was highlighted on Jan. 1 when Tokyo's famous electronics store Yodobashi Camera put PS5 units on store shelves, despite growing concerns about surging coronavirus cases in Japan. The pandemic has forced stores to make the popular game console available mostly through an online lottery. The industry has adopted the online lottery formula to prevent big crowds at stores and reduce purchases to resell at hefty profits.
Japanese gamers were stunned by a report in early January saying Sony had stopped shipments of most PS4 models in Japan, with the Twittersphere erupting over the news. "It was earlier than expected," said one tweet. "I need to buy PS5 now," said another.
In fact, Sony stopped domestic shipments of three PS4 models as well as one version of the premium PS4Pro at the end of April 2020. In September, the company ceased shipping all but one PS4 model to retailers in Japan.
Sony is expected to take similar steps to phase out PS4 in overseas markets but has refused to offer details.
Sales of new game consoles generally track upward for several years before peaking. Annual sales of PS4, which launched in 2013 and racked up global sales of over 100 million units, peaked at 20 million units in fiscal 2016.
Even after PS4 hit the market, Sony continued shipping PS3 until 2017 to ease upgrade pains for users. The company has adopted the same approach to phasing out PS4.
PS4 peripherals and games will remain on shelves so Sony can continue harvesting the lucrative revenue stream. The company's game business is now a major earner thanks to recurring online game fees paid by 46 million subscribers.
The decision to scale back supply of PS4 prior to the PS5 launch is meant to encourage upgrading to the new model, especially among PS4Pro users. This power play makes sense to Sony management, as the PS5 console is backward compatible with most PS4 games -- a big change compared with the transition from PS3 to PS4, which did not support earlier games.
But PS5 sales in Japan have been lackluster, with only about 266,000 units sold in the first eight weeks, according to Japanese gaming magazine Famitsu. This is about half that of PS4 over the same time frame and less than 60% of PS3, whose initial sales also suffered from lack of supply. Notably, PS5 sales hardly surged during the Christmas and New Year shopping season.
But this is by design as Sony focuses on the North American market, where nearly 2 million units have already flown off shelves, according to VGChartz, a game information website. The company is facing stiff competition from new Microsoft Xbox consoles in the region, making imperative a deep supply of PS5 there. According to VGChartz, about 1.5 million new Xboxes have already been sold in North America.
The latest Xbox also has a solid presence in Europe, where 700,000 consoles have been purchased since its launch last November, compared with 1.6 million for PS5.
In contrast, Sony is not feeling the heat in Japan. Despite relatively modest PS5 sales at home, sales of rival Xbox consoles have not been much better, with only 30,000 sold to date, according to Famitsu. In other words, Sony does not have to worry about Xbox conquering the Japanese market.
Microsoft is also struggling to secure a stable supply of consoles due to a processing and graphics chip shortage that is plaguing most of the world. Executive Vice President of Gaming Phil Spencer recently asked the chief of Advanced Micro Devices -- the U.S. chipmaker supplying both Xbox and PS5 -- to keep up with demand. "I was on the phone last week with [CEO] Lisa Su at AMD [asking] how do we get more?" Spencer said, according to CNN.
AMD apparently cannot keep up as demand for chips used in home entertainment is soaring due to the pandemic.
Sony hopes to sell over 7.6 million PS5 consoles globally by the end of March, breaking the PS4 sales record for the first year. The target seems within reach given that 4.5 million units have already been purchased, according to VGChartz.
Robust sales were also predicted for Japan as consumers spend more time at home. But the supply shortage is irking some Japanese gamers. More than a few have lost their passion for PS5, while others have migrated to PC games.
This shows that Sony's strategy of pushing people to PS5 by aggressively phasing out PS4 may backfire at home.
Still, the company appears unfazed, launching on Jan. 1 another overseas PS5 drive in India -- hardly an encouraging sign for frustrated Japanese gamers and perhaps signaling a significant loss of prestige and trust at home.