Sony’s first-quarter operating profit beats analysts expectations

The Japanese multinational conglomerate Sony reported on Tuesday that it had a 1.1% drop in its operating profit in the first quarter of this year. This downturn however is much lesser than the market expectations indicating that Sony’s gaming business were booming while home-trapped consumers had been looking for entertainment and downloading more games during the lockdown.

The limited impact of the global pandemic on the company can again be justified by the company’s recent announcement of a profit of JPY 228.4 billion (about INR 16,180 crores) for the period April to June, which is just a little lesser compared to its profit of JPY 230.9 billion (about INR 16,355 crores) in the same period last year. The electronics company further estimated a profit of JPY 620 billion (about INR 43,915 billion) during March 2021 making a lesser decline of about 26.7% in the total profit compared to its earlier prediction of over 30% amid lockdown.

The reason behind this relatively lesser impact on Sony during the pandemic than its competitors is its strategy of continuing with the subscription based revenue model for gaming content. To attract more customers towards such revenue streams in the upcoming times Sony has turned to some famous video sites like Bilibili and Epic games and started investing heavily on these sites.

Sony’s PlayStation already has millions of subscribers and it is still growing with customers subscribing its monthly plans with a handful of features. PlayStation4 has over 100 million owners across the globe and it is being preferred as the primary gaming console by most of the users. Downloading of digital games along with the company’s streaming service ‘PlayStation Vue’ were major contributors to the total profit earned during the last quarter. Players are willing to return on video games and spend on season passes. And how Sony continued generating revenue through these is just taking a cut of the sales made for various items in the video games.

Although the downloading rate of games has increased during this year due to lockdown, the pandemic has also brought some negative aspects along with it for Sony. The company faced heavy losses due to cancellation of music events and shutdowns of movie theatres. However Sony is still hoping for recovery of these losses in the upcoming fiscal year assuming that the situations will become normal again. Amidst all these, Sony is all set to launch its PlayStation 5 in holiday shopping season at the end of this year which will eventually help the company sustaining its share price according to some analysts. Sony is expecting a profit of around INR 17000 crores in this financial year from its gaming business considering the hikes in its software sales. The company is also expecting a profit of around INR 130 billion from its image sensor business which includes supplying of camera sensors to Smartphone makers globally. Although the global smartphone market is expected to shrink by 12% this year, Sony has less possibility of getting effected with the rising demand for multiple lens cameras on smart phones.