TOKYO: Sony Corp on Wednesday raised its annual profit outlook after reporting a surprise second-quarter profit increase, as its gaming business continued to capture “nesting” demand driven by COVID-19 lockdown measures.
The upward revision also partly reflects a robust start for Japanese animated film “Demon Slayer”, co-distributed by Sony’s music unit, which has been shattering box-office records in Japan since its Oct. 16 release.
Higher revenue from gaming and entertainment content gives validation to Chief Executive Kenichiro Yoshida’s strategy to increase recurring revenue streams that cushion the impact of volatile hardware sales cycles.
July-September profit reached 317.76 billion yen ($3 billion), up 13.9% from 278.96 billion yen in the same period a year prior, the entertainment and electronics firm said in a statement.
The result compared with the 197.55 billion yen average of 11 analyst estimates compiled by Refinitiv.
Sony raised its annual profit forecast to 700 billion yen from an earlier estimate of 620 billion yen. That compared with the 672.33 billion yen consensus of 24 analysts.
The firm now forecasts its gaming division to post annual profit of 300 billion yen, from the previously estimated 240 billion yen.
Consumers’ shift to gaming software downloads and online subscription services during lockdown boosted profit despite the PlayStation 4 console coming to the end of its lifecycle.
Such high-margin online revenue is likely to help Sony’s gaming business stay profitable this year, outweighing massive marketing and production costs associated with the launch next month of the PlayStation 5 (PS5) console.
Meanwhile, Sony cut the outlook for its sensor business by 38% to 81 billion yen, after tighter U.S. curbs on Huawei Technologies Co Ltd banned global suppliers from selling it chips – such as Sony’s – made using U.S. technology without a special licence.
The Chinese smartphone maker was Sony’s second-largest image sensor customer after Apple Inc, accounting for about 20% of its $10 billion in sensor revenue, according to analyst estimates.
($1 = 104.7000 yen)
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