Sony stock surges after controversial PlayStation announcement

Sony's stock price is rising after the company made the controversial decision to increase prices for PlayStation Plus subscriptions. This decision has angered and upset many players earlier this week. PlayStation Plus will be more expensive for players in the future, but Sony appears to be immediately benefiting from the price hike.

In June 2022, Sony introduced its tiered PlayStation Plus subscription service, with the Essential tier starting at $59.99 per year. The Essential tier continues to offer the same benefits that subscribers already had with the original PlayStation Plus service. Players who desire more games, classic titles from previous PlayStation consoles, and additional perks can opt for the more expensive Extra and Premium tiers. Unfortunately, players now have to pay approximately 30% more on average for their annual subscription.

According to a recent report from Bloomberg, following the announcement of the PlayStation Plus price increase, Sony's stock price has risen by approximately 3.4%. The price hike is expected to increase Sony's annual net revenue by 100 billion yen, which is roughly equivalent to 688 million US dollars. Sony's operating profit will also increase by 378 million US dollars when considering the higher price for annual subscriptions. According to Sony, the price increase enables the company to offer high-quality titles with PS Plus every month. However, many players on social media and online forums believe that Sony is merely trying to boost its revenue, as PS Plus is required for online play in most titles.

Although Sony appears to be benefiting from the controversial price increase of PS Plus, some analysts warn that the rising stock price and revenue may only be temporary. For instance, the price hikes could lead to players canceling their subscriptions or switching to the Essential tier. Bloomberg also spoke to analyst Amit Garg of CLSA, who believes that the price increase could trigger a series of price hikes in the future from Sony, Microsoft, and other subscription service providers. However, it remains to be seen what long-term effects the PS Plus price increase will have on a competing service like Microsoft's Xbox Game Pass.

The rising stock price of Sony benefits shareholders in the short term, but players may reconsider their PS Plus subscriptions, leading to a long-term decline in revenue. Some players are also frustrated with Sony's free PS Plus games for September 2023, which include the poorly received Saints Row reboot from the now-defunct developer studio Volition. The situation surrounding PS Plus puts Sony in a negative light, and to restore trust, the introduction of new benefits may be necessary.

At least PS Plus will continue to offer new game additions every month across all three tiers. First-party title releases on launch day with PS Plus could alleviate the frustrations players have with the price increase, but ultimately, the decision lies with Sony. Currently, PS Plus does not seem to be heading towards adopting the launch-day first-party advantage that the Xbox Game Pass offers.

Source: Bloomberg