Analysts: Sony could defray costs by stripping down PSN’s free services, employ more “freemium” content

By Stephany Nunneley
14 April 2012 20:25 GMT

As Sony CEO Kazuo Hirai restructures the firm with a renewed focus on the PlayStation brand, and looks to “increase sales” via downloadable titles and subscription services through PlayStation Network, analysts believe consumers may soon see a vastly different PSN than what they’ve become accustomed to.

Spealing with GI International, Wedbush’s Michael Pachter said it was unlikely Sony would go the Xbox Live route with PSN by charging for it, but he does foresee the firm stripping down what is free and what is not.

“I think it’s unlikely that they will require a fee, but think they will strip down the free version to multiplayer and not much else in order to encourage people to pay the fee, said Pachter.

Billy Pidgeon of M2 Research agreed, citing the cost of providing networked services, explaining Sony could “defray those costs” while also benefiting from “the currently employed freemium model,” and charging for “enhanced, tiered and incremental items, services and add-ons.” He said that the firm should also look into partnering with more subscription services such as Microsoft did with HBO, ESPN and others.

“The PlayStation Plus program provides great incentives for subscribers, and Sony can get more revenue from advertising, item transactions and specialized services to enhance specific aspects of online gameplay such as custom content and rules for use for individuals, guilds and other groups,” he said. “Sony should also move quickly to shift paid content other than gaming to the network.”

However, Asif Khan, CEO of Panoptic Management Consultants feels Sony should go another route by not “making so many products,” as streamlining the product line “would lower costs” and help curtail the company’s “downright atrocious” profit margins.

Khan also said he feels SCEA would be “better off as a spun-off company,” but Sony would never allow it as SCEA has “some of the best margins and earnings growth in the entire organization.”

Hirai announced earlier this week Sony would be reducing its headcount across the corporation by 10,000 during fiscal year 2012, the restructuring process would end up costing the firm ¥75 billion yen.

Earlier this week, the firm also reported a ¥520 billion ($6.4 billion) annual loss for the financial year ending March 31, due to additional tax expenses from the US.

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