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Sony boosts outlook as PlayStation heads for record year

Oct 30 2018 09:51
Pavel Alpeyev and Yuji Nakamura, Bloomberg

Sony upgraded its earnings outlook for a second straight quarter, thanks to a plethora of hit video-game titles that are boosting the PlayStation business.

Operating profit for the current fiscal year through March will be ¥870bn, up from the prior forecast of ¥670bn, the Tokyo-based company said in a statement on Tuesday. Revenue will be ¥8.7trn, compared with the previous outlook for ¥8.6trn issued in July.

The optimism is being fuelled by growth in the PlayStation division, where last month’s Spider-Man set a new sales record for a Sony-developed video game.

With third-party releases in the December quarter also setting records, the business is providing much-needed stability during a year of uncertainty for smartphone demand, according to Damian Thong, an analyst at Macquarie.

“This will be the best year for the PlayStation for first party games and overall profitability of the platform,” Thong said prior to the earnings release.

Operating income was ¥239bn for the September quarter, the Tokyo-based company said in a statement on Tuesday, topping analysts’ average estimate for ¥205bn. Revenue was ¥2.2trn, compared with the prediction for ¥2.1trn.

Operating profit at the PlayStation division rose 65% from a year ago to ¥91bn for the September quarter, accounting for a third of all company income. Sales for the September quarter climbed 27% to ¥550bn.

Sony had already lifted its forecast for the division in July thanks to PS4 exclusive God of War, which in April sold a record 3.1 million copies during its first three days. Last month’s Spider-Man, also a PS4 exclusive, topped that with 3.3 million copies over an equal period of time, resulting in back-to-back outlook upgrades.

The December quarter also looks strong, thanks to one of the best third-party line-ups in the PlayStation’s history. Analysts predict record sales of Red Dead Redemption II, released last Friday, after it became the best-reviewed game of the year, according to Metacritic.

This month’s Call of Duty: Black Ops set a new PlayStation record for first day digital sales. Other big titles expected this quarter include Battlefield V, Fallout 76 and Just Cause 4.

Fortnite, a free-to-play game, also delivered a boost during the quarter as spending on in-game items - with revenue shared with Sony - jumped over the school holidays. Introduced last year, it has become this year’s hottest title, especially popular with teenagers.

“Fortnite delivered explosive profits over the summer months. That will contribute to Sony’s top line in a significant way,” said Hideki Yasuda, senior analyst at Ace Research Institute.

The chip division’s operating profit fell 3% from a year earlier to ¥48bn, on sales of ¥254bn. While the latest iPhones did not include any models with three cameras, newer phones from Chinese makers like Huawei are adopting the idea. Sony is the market leader in image sensors, chips that convert light into digital bits.

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sony  |  playstation  |  gaming  |  ict  |  companies
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