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Japan’s Sony on Wednesday significantly lowered its annual sales forecast for its PlayStation 5 console and said it plans to list its financial business next year as it focuses on entertainment and image sensors.

Sony has lowered its PS5 sales forecast for the fiscal year ending in March to 21 million units, down from 25 million previously, after sales were weaker than expected during the holiday shopping season.

The company said it expects sales to decline gradually starting next fiscal and has no plans to release any major franchise titles in the upcoming fiscal year.

Sony, which said it is considering splitting its financial business in 2023, said it plans to list Sony Financial Group in October 2025 and maintain less than 20% of its shares.

The company’s operating profit for the October-December quarter rose 10% to 463.3 billion yen ($3.08 billion, or about Rs. 25,568 crore), versus the average estimate of 428 billion yen (about Rs. 23,663 crore) from 11 analysts surveyed by LSEG. ) exceeded. This is because the boom in the finance, film, and music businesses offset the slump in gaming.

Known as the inventor of the Walkman, Sony has transformed from an electronics manufacturer into an entertainment and technology giant encompassing movies, music, games and chips.

Sony sold 8.2 million PlayStation 5 units in the third quarter, the year-end shopping period, a significant increase from 7.1 million units in the same period last year.

Operating profit in its gaming business fell by about a quarter due to higher hardware losses due to promotions and lower sales of its first-party titles.

“Sony tried hard with promotions, bundles and discounts, but the sales targets were too ambitious from the start,” said Serkan Toto, founder of consulting firm Kantan Games.

“Ultimately they will probably land closer to 22 to 23 million units,” Toto added.

The number of monthly active users on the PlayStation Network, which measures platform engagement, reached 123 million at the end of the quarter, up from 107 million three months ago.

Sony announced that Marvel’s Spider-Man 2, which was released on October 20, sold 10 million copies, and that it also released a slim version of the console starting in November to increase sales.

Nintendo last week raised its annual Switch forecast to 15.5 million units from the previous 15 million as the Kyoto-based company extends the life of its aging console.

Xbox maker Microsoft is set to share an update on its gaming business on Thursday amid speculation it will release its titles to other platforms.

“If large third-party titles grow, that will be a positive factor and we hope to capitalize on that momentum,” Sony President Hiroki Totoki said at a news briefing.

Sony, a leading manufacturer of image sensors for smartphones, reported an 18% increase in chip segment profits due to increased sales.

TSMC said last week it would work with companies including Sony to build a second fab in Japan, following a vote of confidence from the country’s leading contract chipmaker.

Last month, Sony canceled its plans to merge its Indian operations with Zee Entertainment in a $10 billion (about Rs 83,000 crore) deal that could create a TV giant.

The Indian market has significant growth potential in the long term, Totoki said.

“If we can find other opportunities to replace these types of initiatives, we will actively look at them, and we will also need to restructure our organic growth strategy,” Totoki said.

Sony’s stock price closed 0.5% lower ahead of the earnings report. This year they returned 9%.

© Thomson Reuters 2024

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