Sony Group Corp. offered a conservative profit outlook for the current fiscal year, signaling caution about the impact of the global consumer spending slump on its entertainment businesses.
(Bloomberg) — Sony Group Corp. offered a conservative profit outlook for the current fiscal year, signaling caution about the impact of the global consumer spending slump on its entertainment businesses.
The Tokyo-based firm said it expects operating income of ¥1.17 trillion ($8.7 billion) in the year ending March 2024, below average analyst estimates of ¥1.27 trillion. This was largely down to its PlayStation division, where Sony’s guidance fell short of consensus and the company said it expects fewer sales of PlayStation Studios games this fiscal year.
Sales of Sony’s flagship PlayStation 5 console reached 6.3 million in the quarter to March, more than tripling the supply-constrained numbers from the same period last year and showing Sony is finally able to distribute the hardware at scale. But game sales were down to 68 million units from 70.5 million in the same period a year earlier. The company reported operating profit of ¥128.5 billion.
The delayed adoption of the console, which launched in late 2020, is showing signs of hampering Sony’s ability to monetize the hardware through more lucrative software and subscription sales.
“Sales of the hardware are increasing on par with Sony’s plan, but the momentum of software, the lucrative part of the game business, remains weak. This shows PlayStation users are not buying new games,” said Hideki Yasuda, an analyst at Toyo Securities.
Monthly active PlayStation network users were down to 108 million from 112 million in the holiday quarter, and PlayStation Plus subscribers were up only slightly at 47.4 million.
There were no major new releases from Sony’s in-house game studios in the quarter just ended. That limited growth in the PlayStation division, which also didn’t get much of a boost from the just-launched PlayStation VR2 headset.
Read more: Sony PSVR2 Headset Off to Slow Start as Metaverse Push Sputters
Music streaming has proven a bright spot for Sony. Growing use of streaming services like Spotify on mobile devices has helped the company’s bottom line, thanks to its control of the publishing rights for many of the most popular artists.
The image sensor division was in its quiet season, as major customers like Apple Inc. generally buy large quantities of the semiconductors closer to the launch of their flagship devices, though it performed better than the previous year.
Sony is gearing up to increase output of the PS5, which is still establishing the broad user base it needs to get the virtuous cycle of software and hardware sales reinforcing one another. Analysts see the current fiscal year as crucial to its success.
(Updates with more details from Sony’s report)
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