Sony Predictions Persisted Playstation Win as Firm's overall Earnings Drop

August 10, 2023: On Wednesday, Sony reported a 31% profit plunge in the first fiscal quarter as its life insurance unit carried on its bottom line. Still, the company raised full-year sales forecasts based on desired strength for its PlayStation gaming industry.

Sony said its operational income suffered from significant decreases in profit from its financial services and movies and pictures companies. Profits from Sony’s economic services department dropped by 61% in the first fiscal quarter, which the company attributed to changes in interest rates related to variable life insurance.

Movies-wise, Sony had a solid performer this year in the form of Spider-Man, Across the Spider-Verse, which grossed $633 million at the box office. There have been other hotly-anticipated movies this year which served better, such as Universal Pictures’ Oppenheimer and Warner Bros’ Barbie.

Sony reported a 6% decrease in income and a 68% slump in profit in its pictures division. The company blamed the disappointing performance on strikes by the Writers Guild of America and other unions in protest against using artificial cleverness to generate movie scripts.

Nevertheless, Sony raised its earnings forecast for the entire year by 6% to 12.2 trillion yen, thanks to strength in its PlayStation gaming unit. Sony made a 7% upward revision to its sales forecast for games and network services to 4.2 trillion yen. Its projections for profit remained intact at 270 billion yen.

Sony is anticipating a bumper year for its PlayStation gaming business. The company previously stated that it expects to sell a record 25 million PlayStation 5 units in the current financial year, which ends on March 2024, compared with 19.1 million units in the previous year.

Sony is selling 3.3 million units of the PlayStation 5 in its April-June quarter, up 38% every year. The numbers are softer compared with the December quarter, when consumer electronics tend to do well thanks to the vacation shopping period. But it’s still a solid result, given the macroeconomic weakness that has caused consumers to tighten their purse strings.

Piers Harding-Rolls, analyst at Ampere Analysis, told CNBC that Sony’s strong PlayStation results recalled its “much healthier position with regards to console availability.”

“With impressive PS5 sales over the last three quarters, Sony is reaping the benefits of an engaged player base looking to spend on software and services,” Harding-Rolls said. “Major third-party releases such as Diablo IV and Final Fantasy XVI helped drive earnings forwards in the quarter.”