Sony Corp. (NYSE: SONY) announced plans to phase out physical gaming discs starting in 2028, aligning with shifting consumer preferences toward digital formats. The company’s decision coincides with Take-Two Interactive’s announcement that its latest Grand Theft Auto will be released exclusively in digital format. Sony currently leads the market with an estimated 75 million active PlayStation 5 units globally, compared to 30 million Xbox Series units.
Despite potential cost savings from discontinuing physical discs, Sony faces significant challenges related to memory costs, which remain a pressing issue for both Sony and its competitors like Microsoft. The announcement adds to concerns over consumer ownership rights, as it eliminates the ability to resell or lend games, tightening ownership to digital platforms. A Dutch law firm is pursuing a lawsuit against Sony seeking $457 billion for what they term the “Sony tax,” related to the company’s 30% commission on digital sales.
Following the announcement, Sony’s stock is down about 17% this year, trading around $21, with a consensus price target of $22 indicating limited upside potential. The company recently increased the price of its disc-edition PlayStation from $549.99 to $649.99, raising further scrutiny over its push towards digital sales.
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