Video game

SONY is launching a video game subscription service

Sony group company SONY plans to roll out a new video game subscription service as early as next week, according to a Bloomberg report. The company will integrate its existing services – PlayStation Now and PlayStation Plus.

Citing sources familiar with the matter, Sony will add several hit games from recent years to the PlayStation subscription service, Bloomberg noted. Additionally, the most premium tier will allow players to stream games over the internet and access extended demos, according to documents obtained by Bloomberg last year. Still, Sony won’t be releasing same-day headlines on the streaming service.

Sony has been working on the video game service for some time under the code name “Spartacus”. Sony’s foray into the streaming market is understandable as subscription services guarantee a stable and recurring revenue stream.

However, SONY faces fierce competition in this space of MicrosoftMSFT Xbox Game Pass subscription service. Microsoft’s competitive position in the cloud gaming space has been strengthened by bundling cloud gaming with the Xbox Game Pass Ultimate service (at no additional cost).

Sony Corporation Pricing and Consensus

Sony Corporation Price Consensus Chart | Quote from Sony Corporation

The company’s Game Pass subscription service launched in 2017 has been a huge success, with over 25 million users.

For $9.99, Game Pass for PC gives players access to 100 titles on PC. Game Pass for console lets gamers play 100 high-quality console titles for $9.99. Microsoft’s Game Pass Ultimate is a subscription service that lets gamers play over 100 video game titles for a monthly fee of $14.99.

Microsoft also releases Xbox Game Studio titles the same day of release for its Game Pass subscribers.

Microsoft’s gaming business is booming. In the last reported quarter, gaming revenue grew 8%. Xbox hardware revenue increased 4%, driven by new consoles. Revenue from Xbox content and services increased 10% year over year. For the third quarter of fiscal 2022, Microsoft expects gaming revenue to be up mid-single digit.

By comparison, Sony’s gaming and network services are struggling with declining sales of hardware and peripheral devices, declining sales of non-proprietary titles, including add-on content, and weak sales of first-party titles. For the third quarter of fiscal 2021, segment sales decreased 7.9% year-on-year to 813.3 billion yen

Currently, Sony carries a Zacks Rank #3 (Hold). Shares of Sony gained 0.5% from the sector’s 3.4% decline.

Stocks to Watch

Some higher ranked stocks in the broader tech sector include Broadcom AVGO, and Apple AAPL. Both stocks currently carry a Zacks rank of 2 (buy). You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks’ consensus estimate for Broadcom’s fiscal year 2022 earnings is pegged at $35.49 per share, up 7% over the past 30 days. AVGO’s long-term earnings growth rate is set at 14.5%.

Broadcom’s earnings have exceeded the Zacks consensus estimate for the past four quarters, averaging 1.9%. AVGO shares are up 38.8% over the past year.

Zacks’ consensus estimate for Apple’s fiscal year 2022 earnings is pegged at $6.16 per share, up 3.7% over the past 60 days. The long-term earnings growth rate is set at 12.5%.

Apple’s earnings have exceeded Zacks’ consensus estimate in each of the past four quarters, averaging 20.3%. Shares of AAPL are up 46.4% over the past year.

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