Spider-Man: No Way Home Success, Gaming Boom Helps Sony Lift Full-Year Profit Outlook

Spider-Man: No Way Home Success, Gaming Boom Helps Sony Lift Full-Year Profit Outlook

Spider-Man: No Way Home Success, Gaming Boom Helps Sony Lift Full-Year Profit Outlook

Sony raised its full-year net profit forecast on Wednesday, buoyed by the success of its latest Spider-Man movie and strong results in the games business despite global chip shortages.

It comes as the Japanese tech giant battles for gaming supremacy with US rival Microsoft following its blockbuster acquisition of Activision.

Sony has already posted record net profit in 2020-21, with a pandemic gaming boom inflating its profits.

Although the huge demand for games is now waning, Sony said it continues to see strong performance by divisions including film, games and electronics.

The conglomerate now forecasts a net profit of 860 billion yen (about 56,247 crore rupees) for the fiscal year to March 2022, having already raised its estimate for the full year to 730 billion yen (about 47 745 crore rupees) in the previous quarter.

A favorable exchange rate and an expected decline in operating losses across sectors, including its business division, will also boost its results, it said.

The group applauded strong results in its film division, notably for Spider-Man: No Way Home, which was released in December and could soon overtake Avatar as the third highest-grossing film in North America.

“This is the biggest hit Sony Pictures Entertainment has ever seen,” chief financial officer Hiroki Totoki told reporters.

The company’s music segment also scored a winner with Adele’s latest album 30 and higher-than-expected licensing revenue in its popular anime business.

Net profit in the nine months to December 2021 was 771 billion yen (about Rs 50,431 crore), down 20% year on year, Sony said, with sales in the same period up by 13% to reach 7.66 trillion yen (about 50,431 crore rupees). 5,01,046 crore).

“Supply constraints Sony expects global chip shortages to hit sales of its PlayStation 5 console this fiscal year, but said operating profit from its games business would still be higher than expected due to reduction in expenses.

The company has struggled to roll out the PS5, which remains difficult for consumers to obtain, in part due to global supply chain disruption, including chip shortages.

“Device supply constraints are expected to continue, but we will continue to do everything we can to meet the strong demand for the PS5,” Totoki said.

The group lowered its annual sales forecast for the console to 11.5 million units from the previous target of 14.8 million.

Sony’s bullish forecast comes two weeks after its share price plummeted when Microsoft acquired Call of Duty maker Activision Blizzard in a landmark $69 billion (roughly Rs. 5,16,174 crore) deal .

Sony retaliated with its own acquisition announcement this week, unveiling its $3.6 billion (about Rs 26,930 crore) deal to buy Bungie, creator of hits such as Halo and Destiny.

The deal will keep Bungie independent, with games to play on competing devices, according to Sony.

“Using the acquisition of Bungie as a catalyst, we aim to accelerate the growth of its own game software production and more than double its current sales by fiscal year 2025,” Totoki said.

The pair plan to launch more than 10 live game titles over the next four years, he added.

Mio Kato, an analyst at Lightstream Research who publishes on Smartkarma, said the Japanese company remains on solid footing even as the gaming battle escalates.

“Sony seems to have a very good ability to identify talent,” he told AFP, adding that this approach is “much more effective than if you go to the big studios.”

But others are less convinced, with Asymmetric Advisors’ Amir Anvarzadeh writing that as streaming begins to “dramatically change the business model of gaming, we believe this is a contest Sony simply cannot. not win given its limited financial resources”.

The Japanese giant is also looking to diversify further and last month announced plans to explore the rapidly growing market for electric vehicles.

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