Sony Group Corp.'s (NYSE:SONY) PlayStation 5 (PS5) faces a notable downturn in sales, leading the company to acknowledge that the console is nearing the latter stage of its life cycle. Originally targeting 25 million units sold by the end of the current fiscal year, Sony now anticipates sales of only 21 million, citing lower-than-expected sales during the crucial 2023 holiday quarter despite aggressive promotions.

Sony senior vice president Naomi Matsuoka revealed that the company foresees a decline in the sales momentum of the PS5 starting from the upcoming fiscal year, commencing in April 2024 and concluding in March 2025, Bloomberg reported.

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"Looking ahead, PS5 will enter the latter stage of its life cycle," Matsuoka said. "As such, we will put more emphasis on the balance between profitability and sales. For this reason, we expect the annual sales pace of PS5 hardware will start falling from the next fiscal year."

With over 54.7 million units sold since its November 2020 launch, the PS5's impending transition to the latter half of its life cycle raises speculation about the next-generation console, potentially the PS6. For instance, Hideo Kojima's anticipated game, "Physint," rumored as a PS6 launch title, is slated to commence development after "Death Stranding 2," implying a release no earlier than 2026.

The Tokyo-based company also announced a hiatus on major existing PlayStation franchise releases until April 2025, including titles like "God of War Ragnarok" and "Marvel’s Spider-Man 2."

Hiroki Totoki, head of Sony Interactive Entertainment, clarified that while major projects are in progress, no new major franchise titles will debut in the upcoming fiscal year.

"Regarding first-party software, we aim to continue to focus on producing high-quality works and developing live service games. But while major projects are currently under development, we do not plan to release any new major existing franchise titles next fiscal year like God of War Ragnarok and Marvel’s Spider-Man 2," Totoki stated, as per IGN.

Despite PS5 sales falling short, Sony's financial report revealed impressive numbers, with 8.2 million consoles shipped in the third quarter of fiscal year 2023, a year-on-year increase of 1.1 million units.

Additionally, over 89 million games were sold across PS5 and PS4 platforms during the same period. Sony's gaming arm reported record quarterly profits, surpassing expectations with total revenue reaching $9.5 billion.

Looking forward, Sony predicts lower sales for the first quarter of 2024, primarily due to an anticipated decline in hardware sales offset by non-first-party title sales and add-on content. Notably, sales continue on the PlayStation 4 platform, indicating its sustained relevance amid the PS5's success.

In response to the PS5's sales challenges, Sony is diversifying its exclusive game lineup by securing 'second-party' titles like Square Enix's "Final Fantasy 7 Rebirth" and action games "Stellar Blade" and "Rise of the Ronin." These titles aim to bolster the PS5's exclusive offerings and appeal to a broader audience.

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Image credits: Natanael Ginting on Shuttestock.