Sony is banking on entertainment and video games to support its growth in 2025-2026. Despite sluggish sales of the PlayStation 5 and rising component prices, the Japanese group expects an increase in profit and relies on music, concerts, and derivative products to offset the stagnation of its cinema and consumer electronics.
Sony, the Japanese champion of consumer entertainment, raised all of its annual forecasts for the 2025-2026 fiscal year on Thursday, citing an expected increase in video game sales thanks to favorable exchange rates.
For the fiscal year ending in late March, the group expects a 5.9% increase in net profit compared to the previous year, while previously forecasting a decrease to 1.130 trillion yen (6.1 billion euros).
It anticipates a 20.6% surge in operating income and a slight increase in revenue (+2.2%).
The expected growth in its video game business, which accounted for nearly 40% of its sales in the previous fiscal year, is largely attributed to the weakness of the yen, which is currently compensating for the decline in console sales.
To address the declining demand for its PlayStation 5 console (-16% in volume year-on-year for the October-December quarter), Sony, now in its sixth year of operation, offered massive discounts to consumers last year.
However, like its global competitors, the Japanese company is experiencing an increasing shortage of semiconductor chips, driving up component prices and reducing manufacturers’ margins.
Japanese Nintendo saw an 11% drop in stock prices on Wednesday after reporting lower-than-expected sales and maintaining very modest forecasts.
This chip price surge could also force Sony to delay the launch of a potential PlayStation 6 until the second quarter of 2028, according to Yasuo Nakane in a recent Mizuho note.
Sony could also face headwinds if the highly anticipated game “Grand Theft Auto VI” (GTA VI) is further delayed, currently scheduled for release in November, as noted by UBS analysts.
The company is counting on growth in music due to increased concert and artist merchandise sales, as its results are expected to remain steady in cinema and consumer electronics.
Sony initiated a restructuring process several years ago to reduce its exposure to low-margin consumer electronics in the face of increased competition and focus on its key growth drivers: entertainment and imaging technologies.
A significant move in this direction was the announcement last month of the sale of its division including the Bravia televisions to its Chinese rival TCL, which will take over production next year through a joint venture with Sony, holding the majority of shares.
With AFP
