Sony profits soar as it benefits from home entertainment boom
Profits at Sony Corporation have climbed by more than a quarter as demand for the PlayStation 5 games console, which boomed during the Covid-19 pandemic, continues to outpace supplies.
The Japanese entertainment and electronics conglomerate reported a 26% rise in operating profit in the three months to the end of June to 280.1bn yen (£1.85bn) from 221.7bn yen a year earlier.
The better-than-expected firstquarter results prompted the company to raise its profit forecast for the year to March 2022 to 980bn yen from 930bn yen, anticipating that prospects for its music, movies and electronics divisions will continue to improve as the global economy emerges from the pandemic. That is still lower than the consensus prediction of equity analysts, which forecast a 1bn yen profit for the year.
Sony expects to sell 14.8m PS5s in the 12 months ending March 2022, a figure hindered by a shortage of semiconductors. As a result, the production volumes of its popular games console continued to fall short of demand. The console, which sells for as much as $500, quickly sold out.
In the UK, the launch overwhelmed retailers last November as Britons flooded online shopping websites to snap up a console as Covid-19 measures began to drag into the winter months. It caused the entire John Lewis website to crash for almost two hours, with crashes reported at Tesco and Game sites, too.
Sony’s chief financial officer Hiroki Totoki told a news briefing after Sony’s results that the company had secured enough chips to achieve its PS5 production target but cautioned that supplychain constraints could also affect the production of other consumer electronic devices.
“We use a lot of semiconductors and it is a source of concern,” Totoki said. “We can’t become complacent.”
There are signs that profits from Sony’s gaming sector are beginning to decline as Covid-19 restrictions ease and people spend less time at home but the conglomerate said solid earnings in its music and electronic products businesses helped to offset the second-quarter slowdown.
In Sony’s music segment, profits rose from 35.6bn yen to 55.4bn yen after stronger sales for recorded music and music publishing, including gains in paid subscription streaming services and ad-supported music streaming.
A box office triumph for the anime epic Demon Slayer, distributed by Sony’s animation unit Aniplex, also boosted its better-than-expected quarterly results.
“Going forward, Sony will be selling every single PS5 it puts into markets in a matter of seconds. Therefore, a challenge is not generating demand but supply,” the industry analyst Serkan Toto told Bloomberg. “On software, Covid-19 is affecting production and so many big titles that would drive hardware sales and PlayStation network subscribers got delayed to next year.”