The Sony share price gained 2% today after the Japanese electronics and media conglomerate announced a rise in fourth quarter profits to the end of March. Strong console and games sales as well as an uptick in revenues generated by music and film assets yielded a profit of 138.6 billion yen (£865 million) compared to 66.5 billion yen (£410 million) a year earlier. Sales grew 1% to 2.26 trillion yen (£14 billion)
The company also told investors it expects to sell around 18 million PlayStation 5 consoles over the current financial year. There was, however, a warning that the manufacture of the consoles could be slowed if there are new Covid lockdowns in China interrupting component supply lines.
If there are component shortages they will be more likely to hit console sales numbers next year. Sony’s chief financial officer Hiroki Totoki told a Tokyo press briefing today that the company has enough in stock to manufacture the 18 million consoles it plans to this year. Last year 11.5 million PlayStation 5s were sold.
Sony’s full-year profit dropped 14% from a year earlier to 882 billion yen (£5.5 billion), falling short of analysts estimates despite the success of the company’s hit movie Spider-Man: No Way Home.
But investors appear to have faith in Sony’s strategy to drive future revenue growth via the PS5 console, for which games can be bought online and downloaded directly. The console also comes with a range of subscription service offerings. The strategy marks a move away from Sony’s traditional electronics product ranges like televisions.
The new focus on gaming and network services, revenues from which almost tripled in the fourth quarter to 55.6 billion yen (£350 million), was demonstrated by the February announcement of the $3.6 billion acquisition of Bungle, the games developer behind the Halo franchise. However, shareholders were told to expect a 12% drop in the unit’s profits this year due to significant investments planned in game development and further acquisitions.
Television media sales were up thanks to licensing income generated by Seinfeld and other popular titles the unit holds the rights to. More television sets and digital cameras were also sold compared to a year earlier despite supply chain difficulties faced. Revenues were also lifted by the acquisition of animation streaming company Crunchyroll.
Sony’s acquisition of Bungle is part of its metaverse strategy, which like many of the biggest tech companies it expects to become a major new market in coming years. It is investing heavily in building a presence in the immersive virtual world accessed through VR headsets.
Sony also announced a major share buyback and will spend 200 billion yen (£1.25 billion) buying back its own stock over the next twelve months to prevent dilution from agreed stock option compensation awards to management and executives.
