Sony Corp raised its fiscal-year operating profit outlook by 13 percent to ￥700 billion (US$6.7 billion) as its video game unit rode a surge in demand for entertainment from home-bound consumers.
The forecast, up from a previous ￥620 billion, surpassed the average analyst expectation of ￥658.9 billion and precedes the PlayStation 5’s highly anticipated debut next month. Sony aims to sell more than 7.6 million units by the end of March, more than the PlayStation 4 managed in its first year, chief financial officer Hiroki Totoki said.
Sony’s outlook hike underscores how the entertainment giant is benefiting from a global COVID-19 era consumer shift. While sales of its smartphone sensors have been hit by US-Chinese trade tensions, the Japanese company is drawing gamers to its online services.
Sony is betting that the PS5 games console would help it outdo Nintendo Co during holiday season and drive sales growth.
Operating profit for the three-month period that ended on Sept. 30 rose 14 percent to ￥318 billion, outstripping expectations. Game software sales in the quarter were ￥331 billion, down from the ￥432.5 billion of the prior three months.
Sony now has 45.9 million subscribers to its PlayStation Plus service, up from 45 million in the prior quarter.
The company sees improved profits in all segments except for imaging and sensing, raising its fiscal-year operating profit forecast for gaming division to ￥300 billion from ￥240 billion.
Sony’s revised forecast suggests that the company is preparing to take a significant loss from the planned PS5 launch, Ace Research Institute analyst Hideki Yasuda said.
Given that the gaming division has already booked ￥229 billion in profit from the first six months, the slight increase expected for the second half of the fiscal year points to a bigger increase in spending, he said.
“Sony will spend a lot of money to deliver many units of the PlayStation 5 to the US, probably by air,” Yasuda said. “The hardware would be sold at a slight loss as well.”
Sony Interactive Entertainment chief executive officer Jim Ryan said that the company presold as many PS5 units in the device’s first 12 hours of availability as it did in the PS4’s first 12 weeks.
COVID-19 continued to weigh on Sony’s motion picture business, as many movie theaters around the world remained far shy of capacity, although the unit might be headed for a bump in the next quarter, Bloomberg Intelligence analyst Masahiro Wakasugi said.
This is largely thanks to the runaway success of a Demon Slayer movie released on Oct. 16, recording the fastest box office debut in Japan with ￥10.8 billion earned in its first 10 days.
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