Sony’s Movies, Music and Games Units All Grow Profitability in Second Quarter, as Group Earnings Wobble

All three of Sony Group Corporation’s entertainment segments – film and TV, music and Games and network services – improved their profitability between July and September, the second quarter of the Japan and Hollywood conglomerate’s financial year.

Group revenues increased by 8% in local currency terms to JPY2.83 trillion ($18.7 billion), compared with JPY2.75 trillion in the same quarter last year. But Sony’s financial services unit and its entertainment technology segment pulled down group sales and profitability.

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The group’s net after tax profits dropped a hefty 29% to JPY200 billion ($1.32 billion). That compared with JPY264 billion ($1.74 billion) in the equivalent quarter last year and JPY282 billion ($1.88 billion) in the April to June 2023 quarter.

(Currency figures have been converted to US dollars at today’s prevailing rate of exchange, where US$1 = JPY151 and reflect the current extreme weakness in the Japanese yen.)

The group also unveiled figures for the first six months of its financial year (April to September 2023). These showed revenues of JPY5.79 trillion, up 19% compared with JPY4.86 trillion, net income down 23% at JPY4.18 billion (compared with JPY482 billion), adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) down 15$ at JPY833 billion (compared with JPY901 billion) and its preferred new measure operating income before depreciation and amortization, also down 15% at JPY822 billion (compared with JPY882 billion).

Sony’s ‘Pictures Division,’ which encompasses feature film, TV networks and television production, had a strong quarter, despite the twin Hollywood strikes, and reported increased sales and profits. Expressed in dollars, the division enjoyed revenues of $2.77 billion, which compared with $2.43 billion in the equivalent July to September period in 2022, and with $2.32 billion in the April to June first quarter. The division’s operating income was $204 million, which compared with $202 million in last year’s second quarter and with $115 million in this year’s first quarter. Adjusted OIBDA weighed in at $293 million for the quarter and $499 million for the April to September first half.

Sony released four films theatrically during the July-September quarter, compared with three last year. They were: “Insidious: The Red Door” ($188 million worldwide gross box office); “Gran Turismo: Based on a Trues Story” ($114 million); “The Equalizer 3” ($157 million); and late-September release “Dumb Money” ($6 million in the period).

In a subsequent conference call with financial analysts, Sony management recognized the ending of the writers’ guild and screen actors’ guild strikes. But they said that the ongoing impact of production disruption will continue through the remainder of the current financial year and warned of cost control measures in TV. The group’s adjusted guidance for the full year was unchanged at the sales level and down just 1% for OIBDA.

The group shows five more theatrical releases for the current quarter: “Journey to Bethlehem,” “Thanksgiving,” “Napoleon,” “Anyone But You” and “The Book of Clarence.”

The music segment saw sales increase from JPY359 billion to JPY409 billion. Much of this was due to positive impact of the weakness of the Japanese currency, though there were also gains for anime. Sector operating income increased from JPY79 billion to JPY81 billion. Adjusted OIBDA was JPY97 billion, compared with JPY88 billion. Sony increased its guidance for the sector’s full year profitability by 5%.

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The group’s top three recorded music products were Travis Scott’s “Utopia,” SZA’s “SOS” and Harry Styles’ “Harry’s House.” Doja Cat also enjoyed four weeks at the top of the Billboard charts with “Paint the Town Red.”

The games and network segment saw sales leap, from JPY721 billion to JPY954 billion, helped by high value foreign revenues, increased hardware and software sales.

Sector profits increased from JPY64.2 billion to JPY83.1 billion, despite a slowdown in profitability for the PlayStation5 console. For the full year, games profits now forecast to reach JPY385 billion, compared with last year’s recorded JPY250 million.

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