Demand for Gaming Products Surges
The company recorded an operating profit of ¥359.2 billion ($3.4 billion) in the quarter from October to the end of December, which is 20% more than in the same period in 2019. The company said its business revenues during that quarter rose by 9% year-over-year to ¥2.7 trillion ($25.70 billion).
Encouraged by a strong earnings report, Sony hiked its full-year profit outlook for its business through March 2021 to ¥940 billion ($8.95 billion), 34% higher than its previous forecast of ¥700 billion ($6.6 billion).
The company reported that sales at its gaming unit climbed by 40% to ¥883.2 billion ($8.41 billion), boosted by the rollout of the PlayStation 5 console in November. As a result, the gaming business reported an operating profit of ¥80.2 billion ($760 million), marking a 50% rise year-over-year.
Software and network services sales helped boost profits but were curbed by PlayStation 5-related costs. The company launched the new console on November 12 in expectations to attract gamers with a next-gen machine with significantly improved performance and graphics, as well as exclusive video games.
Sony’s largest competitor, Microsoft, also launched its new Xbox Series X and S consoles at the same time with a different approach that includes paid subscription plans in an effort to establish its gaming ecosystem.
The company’s new gaming console recorded a similar performance like its predecessor, PS4, shipping 4.5 million consoles up to December 31. However, the tech company said it is experiencing manufacturing challenges as it deals with a short supply of semiconductors.
"It is difficult for us to increase production of the PS5 amid the shortage of semiconductors and other components," Hiroki Totoki, Sony's chief financial officer, said at a press briefing.
Still, analysts at Omdia expect the demand for PlayStation 5 and other gaming products to remain strong this year.
“Supply will define the marketplace until at least Q2, and after that it’s down to PlayStation and Xbox to really start delivering the goods in terms of first-party exclusives. Along with retail bundling, this is a crucial aspect of stoking second-year momentum in the console marketplace,” he told CNBC.
Sony Corporation has elevated its full-year profit and sales outlook Wednesday after posting strong earnings results in the previous quarter as its business was boosted by the launch of the new PlayStation 5 console.