Sony Nets a First Quarter Profit on the Back of Strong Results From Pictures Division

Company executives noted global macro-economic pressures on the horizon

Sony Earnings
Photo illustration by TheWrap

Sony Group Corp. reported modest growth in its first fiscal quarter thanks to strong results from its entertainment division, but warned of financial challenges to come.

The company generated $17.5 billion in revenue between the months of April and June and a group profit of $1.65 billion. This was slightly below analyst expectations via Yahoo Finance, with an average projection of $18.04 billion in revenue. Overall, net profit rose 3% from a year earlier while revenue increased 2.4% year-over-year.

In terms of Hollywood, Sony’s Pictures Division – which oversees film and TV operations – generated $2.64 billion in revenue and $394 million in operating profits. This represented a significant year-over-year increase from the $1.87 billion in revenue and $232 million in profit the division garnered during the COVID-impacted Q1 of 2021.

Overall, Sony’s Pictures Division spurred a 41% increase in sales across deliveries, licensing and home entertainment revenues, which is partially credited to anime streaming service Crunchyroll which the company acquired from AT&T last year. This helped to offset the box office disappointments of Sony’s two global theatrical releases in the quarter, “Morbius” (which grossed just $167 million worldwide) and “Father Stu” ($22 million).

Without an in-house premium streaming service to prop up, Sony has become Hollywood’s top content arms dealer with lucrative Pay 1 and Pay 2 deals with Netflix and Disney, respectively. Netflix’s June comedy “The Man From Toronto” and Apple TV+’s “For All Mankind” Season 3 are also among the recent titles that originated from Sony’s entertainment division. The company is uniquely positioned to collect lucrative licensing revenue as studios focus on building up internal streaming services.

Moving forward, Sony leadership said it will release 17 theatrical titles in the U.S. market in the 12 month period beginning at the end of June. Among these titles are the Brad Pitt-led “Bullet Train” (Aug. 5), “Spider-Man: No Way Home — The More Fun Stuff Version” (Sept. 2), and the highly-anticipated animated sequel “Spider-Man: Across the Spider-Verse” (June 2, 2023).

Overall quarterly results for the Japan-based company were impacted by the fluctuating value of the U.S. dollar. In an attempt to curb decades-high inflation, the U.S. Federal Reserve has been using interest rates at the same time that the Japanese Yen has fallen in value.

Though the company moderately raised its revenue forecast for this fiscal year thanks to music, entertainment and product sales, it is forecasting challenges ahead. Sony reduced its fiscal-year net-profit projection by 9.3% to JPY800 billion, citing slowing games revenue and macro-economic pressures.