Music and gaming help Sony hike net profit forecast

Sony raised its full-year net profit forecast after a solid performance in the first quarter, predicting strong sales in its video game, music and image sensor sectors – Copyright AFP/File CHARLY TRIBALLEAU

Sony raised its annual net profit forecast on Wednesday after a solid performance in the first quarter, predicting strong sales in video games and music, as well as image sensors used in iPhones.

The yen’s weakness against the dollar in recent months has boosted takings for the Japanese electronics and entertainment conglomerate.

CEO Hiroki Totoki said after the announcement that a rumoured takeover offer for US film and television giant Paramount had been abandoned by the Japanese giant, which decided it was “not a good strategic fit for us at this time”.

Paramount has agreed a merger with production company Skydance.

For April-June, Sony logged a six percent on-year jump in net profit to 231.6 billion yen ($1.6 billion), beating analyst estimates.

The company now forecasts net profit of 980 billion yen in 2024-25, also a six-percent rise on-year.

That is up from the previous estimate of 925 billion yen, which would have been lower than the 2023-24 result.

Music streaming has been a money-spinner for Sony, which has an impressive back catalogue and whose current roster includes top artists such as Beyonce and Lil Nas X.

“An increase in the number of paying subscribers for streaming services and market expansion in emerging countries” helped boost takings in music, said senior vice president Naomi Matsuoka.

The overseas success of Japanese pop duo Yoasobi, who were invited to an April state dinner at the White House for Prime Minister Fumio Kishida, shows that Sony and its subsidiaries are “able to create hits that transcend national and regional boundaries”, she added.

Sony said user engagement in gaming remained high in the quarter, with its flagship PlayStation 5 console now in its fourth year on the market.

In gaming, “Helldivers 2” and the PC version of “Ghost of Tsushima” are contributing to profits, while upcoming titles include the latest “Astro Bot” and the PC version of the smash hit “God of War Ragnarok”.

For Sony’s huge movie business, Matsuoka said box office revenues in the United States had been hit by strikes in Hollywood.

But films released since June, including “Bad Boys: Ride or Die” and “The Garfield Movie” are already proving box office hits, she said.

Yasuo Nakane of Mizuho Securities said before the earnings announcement that Sony could log a record high profit this year for its image sensors.

Sony may also see record profits next year in the gaming sector under new leadership, he said in a recent note.

“Our near-term outlook includes expectations that platform business group CEO Hideaki Nishino will improve PlayStation 5 supply chain management, including procurement, inventory, and logistics,” Nakane said.

Nishino is also expected to “maximise PS5 platform profits through a balancing of hardware, software and network operations”, he said. “We believe that both are possible.”