Sony once again had its Playstation and camera imaging units to thank for the increase in its fiscal third-quarter operating income, with results strong enough that it also raised its expectations for the full year.
The Japanese entertainment and technology conglomerate, however, continued to see its Pictures unit, which includes films and TV shows, retreat with lower revenue and operating profit.
Overall, Sony posted operating income of 515 billion yen ($3.28 billion), up 22% from a year earlier. The company also raised its full-year operating income forecast by 8% to 1.54 trillion yen, or $95.6 billion.
Sony’s total revenue for the December quarter inched up 0.5% to 3.7 trillion yen ($24 billion).
Gaming continues to be a powerhouse for Sony, with operating income up 19% to $897.9 million.
PlayStation’s user engagement increased by 2% year over year with a record high of 132 million accounts, while total play time rose 0.4% year over year. Despite more challenging than expected conditions in the console hardware market, Sony’s installed base for the PlayStation 5 exceeded 92 million units on a cumulative basis. 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
Since its release in October, “Ghost of Yotei” has exceeded the sales of “Ghost of Tshushima” over the same period of time and was a significant contributor to the games unit’s financial results during the quarter, along with live service titles “Helldivers 2” and “MLB The Show.” Looking ahead, Bungie will release “Marathon” on March 5 and Sony plans to release new titles such as “Saros” and “Marvel’s Wolverine” next fiscal year.
Its image sensor business, which powers the cameras in many popular handsets like Apple’s iPhone, saw operating profit rise 35%. Mobile image sensor sales increased due to a gradual recovery in the smartphone market strong shipments for new products and higher die-sized sensor.
“Going forward, we think that the impact of the situation in the memory market will become more apparent, mainly in the form of fewer smartphone made primarily for the low-end market. Since Sony’s image sensors are primarily for the high-end market, at this time, we think the impact will be relatively small,” Sony corporate executive officer Lin told analysts. “We will continue to monitor the situation while keeping in close contact with our customers.”
Sony Pictures Entertainment unit saw sales fall 11% year over year and operating income slip 9%, with the December quarter a quiet period for theatrical releases in comparison to the previous period a year ago which included “Venom: The Last Dance” and licensing revenue from other theatrically released films.
The biggest release in the period was anime film “Chainsaw Man – The Movie: Reze Arc,” while “Anaconda,” a comedy starring Jack Black and Paul Rudd, was a late contributor with a Christmas Day debut.
The company’s next big film is the animated comedy “Goat,” about an anthropomorphic goat who aspires to play basketball in a league full of larger animals like giraffes and rhinos. It’s banking on its partnership with Stephen Curry and opens on Feb. 13 ahead of the NBA’s All-Star Weekend.
Music was another positive with operating income rising 9% over a year earlier and sales climbing 13%, driven by an increase in live events sales and streaming
revenue in recorded music.
In December, Sony acquired a 39% stake in Peanuts Holdings LLC, giving it control of 80% of the IP, while the family of “Peanuts” creator Charles M. Schulz will continue to own the remaining 20%. The deal is expected to close during Sony’s fiscal year, subject to regulatory approval.
“We aim to further grow the scale of the business and further increase the value of the brand over the long term by leveraging the strength of the Sony Group,” Tao continued. “Specifically, we aim to enhance SMEJ’s music, video and event business by leveraging Peanuts IP and collaborating with SMEJ’s artists and content. Furthermore, by utilizing SPE’s production capabilities and distribution network, we aim to make Peanuts IP more accessible to a wider audience and share its charm with people all over the world.”
In January, SPE also signed a new pay-1 licensing agreement with Netflix, which Sony executives said would enable its studio to “secure an even more stable revenue base” during the period of the deal.
“The signing of this agreement is proof of SPE’s excellent production capabilities and the power of its appealing IP,” Tao said. “As an independent production company, we will continue to pursue other licensing opportunities with a wide range of distribution partners beyond the Pay-1 window.”
Additionally, Sony signed a memorandum of understanding with TCL Electronics Holdings in January to former a joint venture that would operate the former’s home entertainment business. The companies are negotiating details with the intention of reaching a definitive agreement by the end of March.
“By leveraging Sony’s high-definition and high-fidelity technology, brand
strength and operational management capability while utilizing TCL’s
advanced display technology, cost competitiveness and vertical supply
chain strength, the joint venture aims to further strengthen the
competitiveness of this business and realize sustainable growth,” Tao said.
Shares of Sony Group Corporation are down 2.9% following the earnings announcement.
