Massive PS4 Sales Help Sony’s Lagging Profits

By | 2 years ago 

In 2005, Howard Stringer became the head of Sony and with the new CEO being the company’s very first non-Japanese leader, big expectations were put on him. However, Stringer didn’t manage to achieve these and by the time he resigned and became part of Sony’s board of directors in 2012, Sony was facing its fourth consecutive annual loss and stock prices were down by 50%. By all means Stringer’s tenure had been a disaster which is why, following the continued success of their gaming business, PlayStation boss Kazuo Hirai became Stringer’s successor and was expected to do for Sony’s overall business what he was able to do for the PlayStation brand.

Sadly, Hirai’s two years in charge haven’t gone particularly well either. Forced to fix the mistakes of his predecessor, by September 2014 Sony was facing its sixth profits warning since Hirai took charge and the company upped its estimates from a 50 billion yen loss (just over $425 million) to a huge 230 billion yen loss (approximately $1.9 billion) due to “a significant change in the market and competitive environment.”

Sony’s troubles largely stem from poor sales in its smartphone and TV divisions. The iPhone 6 and the iPhone 6 Plus (the best selling iPhones yet) have completely overshadowed Sony’s Xperia handsets while they also face competition from Samsung’s varied smartphone portfolio (which mostly run on Android, just like Sony’s phones). Sales in the TV division have been slowing down for a while prompting many investors to ask Hirai to sell it off and cut his losses – but not only is he staunchly against this, but he also has big plans to revitalize their TV business by making TVs with Netflix.

Sony Kazuo Hirai PS4

But for all these failures, the one sector of Sony’s business that is performing alarmingly well is gaming. The PS4 has become a savior during a desperate time for the company and it has helped double the revenues of their gaming business. In the latest Sony financial report, the company has revealed exactly how much of an impact the console (and the brand) is having on its bottom line.

Sony was already forced to delay the release of these numbers thanks to the company-wide hack that took place over Christmas in retaliation of their film The Interview (which lost them another $200 million, it’s worth noting) so they’ll be glad that they actually have something positive to report.

The most impressive of these statistics is that Sony shipped a massive 6.7 million PS4 consoles during the quarter (which ended on the 31st of December). Shipped is not the same as sold through (shipped is the amount of consoles that have been sold to retailers, sold through is the amount bought by consumers) but it does indicate impressive demand for the console. Sony will also be glad that the PS4 slightly outpaced the Xbox One’s 6.6 million units shipped, even with its North American price promotion. And there were 147 million PS4 games sold too.

PS Plus 8 Million Subscribers

Elsewhere in the PlayStation brand, Sony said that ‘favourable’ exchange rates and an uptick in PlayStation Plus subscriptions also helped their profits. That’s great news for Sony but many will hope that they put that extra revenue to strengthening the PlayStation Network’s security. Meanwhile, PS3 sales declined as expected and moved 1.1 million units while Sony’s handheld business (which includes the PS Vita, the PSP and the PlayStation TV) collectively moved 1.4 million units. Sony would no doubt like to improve the sales figures of the PS Vita and the PS TV so we can probably expect those to be pushed as PS4 companion devices even more in the future.

Overall, Sony made 89 billion yen ($757 million) during the holiday season which is a giant increase from the 26.4 billion yen ($224 million) that they made during the 2013 holiday season. That doesn’t mean they’re out of the woods just yet though as they are still expecting a loss of over $1 billion by the time the financial year ends on April 1st, but this will certainly lift their spirits.

However, with the recent sale of Sony Online Entertainment, their new partnership with Spotify and the decision to put all of their multimedia services under the PlayStation banner, Sony has a good chance of cutting that deficit right down. We’ll be able to see how they’re doing in a few months’ time.

Source: Sony

tags:PS4, Sony