Sony reported a 22% rise in its third-quarter operating profit that beat forecasts while lifting its full-year outlook. But the gaming results were mixed.
Sony reported 1,613.6 billion yen in sales for the Game & Network Services division, down 68.7 billion yen from a year ago, despite favorable currency conditions. Operating income for Game & Network Services was 140.8 billion yen, up 22.8 billion yen, or 16%. So sales in the important holiday quarter were down from a year earlier, but profits were better.
Sony is forecasting that sales for the Game & Network Services division will rise to 4,630 billion yen at the end of March, compared with 4,670 billion yen a year earlier. Operating income is expected to be 510 billion yen for the March quarter, up from 414.8 billion a year earlier. Sony said the reason was a decline in sales of hardware. Offsetting that some were positive foreign exchange rates and an increase in sales of first-party games.
Sony’s shares rose on the results.
Operating profit for the whole company was 515 billion yen ($3.3 billion) for the holiday quarter, better than the 469 billion in operating profit that analysts forecast. Sony raised its full-year operating income forecast to 1.54 trillion yen, thanks to strength in music.
During the holidays, Sony sold eight million units of its PlayStation 5 console. That was down 16% from a year earlier. But , which includes the key year-end shopping season – a 16% decline from the same period a year earlier.
Sony didn’t say precisely why, but hardware makers are facing a surge in memory chip prices because AI hardware uses those chips as well. Nintendo also said this week that it saw rising chip prices. Prices rose 40% to 50% in Q4, analyst firm Counterpoint said.
But later this year, Sony should benefit from sales of Take-Two Interactive’s Grand Theft Auto VI, coming out on November 19, so long it is not delayed again.
Sony’s comments
User engagement trended well during the quarter with the number of monthly active users (MAUs) across all of PlayStation in December increasing 2% compared to last December to a record high of 132 million accounts and total play time for the quarter increasing 0.4% year-on-year.
Although conditions in the console hardware market during the year-end selling season were more challenging than expected, we were able to steadily expand our PlayStation 5 (PS5) installed base in line with our original plan and exceeded 92 million units on a cumulative sell-in basis.
While PS5 hardware unit sales have decreased moderately in the latter half of the console cycle, software revenue from the PlayStation Store reached a record high during the quarter, primarily driven by the contribution of major third-party franchise titles and new hit releases.
PlayStation®Plus significantly contributed to the results of the quarter as the shift to higher tiers of the service continued.
As for securing a supply of memory, we are already in a position to secure the minimum quantity necessary to manage the year-end selling season of next fiscal year. Going forward, we intend to further negotiate with various suppliers to secure enough supply to meet the demand of our customers.
Given the stage of our console cycle, our hardware sales strategy can be adjusted flexibly, and we intend to minimize the impact of the increased memory costs on this segment going forward by prioritizing monetization of the installed base to date and striving to further expand our software and network services revenueIn the studio business, Ghost of Yōtei, a tentpole title we released in October, exceeded the sales of the previous title in the same period of time and significantly contributed to the financial results of the
quarter.
Our established live service titles like Helldivers 2 and MLB The Show also contributed stable recurring revenue.
We expect that Marathon, which is scheduled to be released on March 5, will be enjoyed by many users thanks to Bungie (Bungie, Inc.) having strengthened the gaming experience.
Next fiscal year, we plan to release new titles such as Saros and Marvel’s Wolverine, and we intend to enhance our efforts to increase the revenue of our studio business.