Sony Corporation, the global tech and entertainment conglomerate behind products such as the PlayStation, announced a 31 per cent decline in its operating income for the first fiscal quarter, attributing the drop to decreased profits within its financial services and movies divisions.

The company also raised its full-year sales forecasts, largely fuelled by robust growth projections for its PlayStation gaming business.

In its financial report for the April-June quarter, Sony disclosed the following figures, comparing them to Refinitiv consensus estimates:

• Revenue: US$20.7 billion, exceeding the anticipated US$16.1 billion, marking a 33 per cent year-on-year surge.
• Operating Profit: US$2.31 billion, slightly lower than the expected US$2.26 billion, which resulted in a 31 per cent year-on-year downturn.

The decline in operating income was primarily attributed to a 61 per cent plunge due to changes in interest rates related to variable life insurance in Sony’s financial services and a 6.0 per cent decrease in revenue and a 68 per cent drop in profit within its picture division, despite the success of Spider-Man: Across the Spider-Verse, which grosses US$633 million at the box office.

The underperformance was linked to strikes led by the Writers Guild of America and other unions, protesting the use of artificial intelligence to generate movie scripts.

Sony expects its PlayStation gaming business to flourish, aiming to achieve a record-breaking sales figure of 25 million PlayStation 5 units during the current fiscal year ending in March 2024. This target follows the successful sale of 3.3 million units during the April-June quarter, representing a 38 per cent year-over-year growth. These figures, while softer than the holiday-season-driven December quarter, still exhibit resilience in the face of macroeconomic challenges.

Sony adjusted its revenue projection for the entire fiscal year upwards by 6.0 per cent, reaching US$112.6 billion. Specifically, it has increased its sales forecast for games and network services by 7.0 per cent, now anticipating US$37.5 billion in revenue.

Despite these successes, Sony noted a potential decline in profitability for its latest console in the coming fiscal year due to changes in promotional strategies across specific geographic regions. Console makers often offer discounts or bundle deals with games to bolster sales during peak shopping periods. This, coupled with indications of satiated demand, raises questions about the platform’s future performance.