PlayStation reports flat Q1 sales, says it's "cautiously moving forward" with halting physical disc production

Sony's G&NS segment sales remained unchanged in the first quarter, although operating income climbed by 37% thanks to US tariff refunds. The company's operating income increase was tempered by higher costs for next-gen platforms and restructuring, leading to overall lower earnings. Sony announced it would gradually discontinue physical disc production for new PlayStation titles beginning in January 2028, a move met with both support and opposition.

CFO Lin Tao acknowledged the criticism but stated the company would proceed cautiously while engaging with consumers. First-party game sales declined, falling from 6.9 million to 6 million units, while non-first-party software sales rose slightly from 65.9 million to 66.1 million units. Total software sales hit ¥526.6 billion ($3.2 billion), with digital software and add-ons accounting for ¥485.2 billion ($3 billion).

Physical software sales were ¥20.5 billion ($128 million). The decision to halt physical disc production stemmed from a combination of factors, with the primary reason being the ongoing shift towards digitalization, which extends beyond PlayStation to all content types. Tao explained that the company thought carefully about the future, ultimately deciding to move forward cautiously with the plan.

She acknowledged strong emotions surrounding gaming and its nostalgic value, promising to consider these sentiments as the digital ecosystem evolves. Network services grew by 21% year-over-year to ¥172.6 billion ($1 billion), with monthly active users (MAUs) reaching a record high of 125 million in June, marking a 2% increase. However, total playtime dropped by 4%, but user engagement remained robust due to season updates and new hit titles.

Hardware sales totaled ¥222 billion ($1.3 billion), down 10.4% year-over-year, with PlayStation 5 unit sales decreasing from 2.5 million to 1.6 million units. Sony now predicts G&NS sales of ¥4.5 trillion ($28.1 billion) for the full year, up from ¥4.4 trillion ($27.4 billion), and operating income of ¥660 billion ($4.1 billion), an increase from ¥600 billion ($3.7 billion).

The company also addressed its hardware production outlook, noting that they have secured enough memory to meet projected sales volumes for FY26, and there are no changes to the hardware profitability forecast for FY26 compared to FY25.