Sony, the Japanese gaming giant, announced a downward revision of its sales forecast for its flagship PlayStation 5 console on Wednesday, citing weaker transactions in its key gaming division. The company now anticipates selling 21 million units of the PS5 in the fiscal year ending March, down from a previously projected 25 million units.
This cut in outlook follows Sony’s posting of record quarterly revenue in the all-important December quarter, encompassing the holiday season. Despite the robust performance, Sony’s sales of 8.2 million PS5 units in its fiscal third quarter fell short of the anticipated pace. So far in its fiscal year, Sony has sold 16.4 million PS5 units.
Alongside the reduction in PS5 sales forecast, Sony also adjusted its fiscal year sales forecast for the gaming division, expecting a decrease of 210 billion yen to 4.15 trillion yen. This adjustment reflects an anticipated decline in hardware sales.
The challenge for Sony lies in sustaining momentum for the PS5, which was released more than three years ago. Despite unveiling a refreshed version of the console with enhanced specifications in October, maintaining consumer interest remains a formidable task. Rival Nintendo faces a similar challenge with its aging Switch console, but has managed to sustain interest through new game releases and leveraging its iconic characters such as Super Mario.
In the December quarter, sales at Sony’s gaming business increased by 16% year-on-year to 1.4 trillion yen. However, operating profit in the division declined by 26%, attributed to increased losses from hardware promotions and a decrease in sales of first-party games.
Sony’s overall sales forecast for the fiscal year was also slightly lowered to 12.3 trillion yen from 12.4 trillion yen. However, the company surpassed analyst expectations by a significant margin in its fiscal third quarter.
In a separate announcement, Sony revealed plans to partially spin off its financial services business via a public listing, with the distribution of slightly more than 80% of its shares of Sony Financial Group through dividends in kind. This move, slated for October 2025, aims to unlock value and enhance focus on core operations.
Furthermore, Sony reported a remarkable 1,100% increase in revenue in its financial services unit in the December quarter, driven by a surge in sales at its insurance business. The company also noted a 21% sales jump in its image sensor business, which supplies components to industry leaders like Apple for smartphones.
In contrast, Sony faced a setback in January with the abandonment of a planned merger with Indian firm Zee Entertainment, a negotiation spanning over two years. Despite this setback, Sony’s CFO, Hiroki Totoki, expressed optimism about India’s growth potential and indicated plans to explore alternative opportunities in the region.
Sony’s strategic adjustments reflect its commitment to navigating challenges in its gaming division while capitalizing on growth opportunities in other segments, demonstrating resilience amidst evolving market dynamics.
