Sony raised its annual profit outlook by 13 per cent on Wednesday after posting a record second-quarter profit, as its gaming business continued to capture "nesting" demand ahead of the launch of the next-generation PlayStation 5 (PS5) console next month.
Consumers’ shift to gaming software downloads and online subscription services during coronavirus lockdowns boosted profits despite the PlayStation 4 console coming to the end of its lifecycle.
Such high-margin online revenue is likely to help Sony’s gaming business stay profitable this year, outweighing massive marketing and production costs associated with the new console launch.
Sony pre-sold as many PS5 consoles in the first 12 hours in the United States as in the first 12 weeks for its predecessor PlayStation 4 device, Jim Ryan, chief executive of Sony Interactive Entertainment, said in an interview.
“The demand as expressed by the level of pre-order has been very, very considerable,” Mr Ryan said.
Robust start
The upward revision in outlook also reflects a robust start for Japanese animated film Demon Slayer, co-distributed by Sony's music unit, which has been shattering box-office records in Japan since its October 16th release.
Higher revenue from gaming and entertainment content gives validation to chief executive Kenichiro Yoshida’s strategy to increase recurring revenue streams that cushion the impact of volatile hardware sales cycles.
Sony is targeting PS5 console sales of 7.6 million units or more in the year through March, chief financial officer Hiroki Totoki said at a briefing, citing the sales achieved for the PS4 when it was launched seven years ago.
But Mr Totoki also warned of major damage to its prized image sensor business from tighter US curbs on Huawei Technologies, which banned global suppliers from selling it chips – such as Sony’s – made using US technology without a special licence.
The Chinese smartphone maker was Sony's second-largest image sensor customer after Apple, accounting for about 20 per cent of its $10 billion (€8.5 billion) in sensor revenue, according to analyst estimates. – Reuters
