Sony cut its sales forecast for its flagship PlayStation 5 console on Wednesday, after warning of weaker transactions in its key gaming division.
The Japanese gaming giant said it now expects to sell 21 million units of the PS5 in the fiscal year ending March, down from a previous forecast of 25 million units.
The cut in outlook comes after Sony posted record quarterly revenue in the all-important December quarter which encompasses the holiday season. Sony sold 8.2 million units of its flagship PlayStation 5 console in its fiscal third quarter, which runs from October to December. Sony has sold 16.4 million PS5 units so far in its fiscal year.
Sony also trimmed its fiscal year sales forecast for the gaming division by 210 billion yen to 4.15 trillion yen, saying it expects a decrease in sales of hardware.
The company’s challenge now lies in trying to keep up momentum for the PS5, which was released more than three years ago. In October, Sony made available a refreshed version of the console with better specs.
Rival Nintendo has been grappling with a similar issue, managing to keep interest in its near seven-year old Switch console thanks to new game releases and movies associated with its famous characters, like Super Mario.
Sales at Sony’s gaming business rose 16% year-on-year to 1.4 trillion yen in the December quarter, the company said on Wednesday. However, operating profit fell 26% in the division, due to increase losses from hardware due to promotions in the period as well as a decline in sales of first-party games.
Sony also lowered its sales forecast for the entire company to 12.3 trillion yen from 12.4 trillion yen for the fiscal year.
Sony beat analyst expectations by a wide margin in its fiscal third quarter when it reported results on Wednesday.
Here’s how Sony did in the December quarter versus LSEG consensus estimates:
- Revenue: 3.75 trillion Japanese yen ($24.9 billion) versus 3.58 trillion yen expected
- Operating profit: 463.3 billion yen versus 428.4 billion yen expected
Financial unit spinoff, chip boost
Sony said that it will partially spin off its financial services business via a public listing. The company plans to distribute slightly more than 80% of its shares of Sony Financial Group through dividends in kind as a result of the spinoff, in a listing due to take place in October 2025.
Sony’s financial services unit saw revenue in the December quarter rise more than 1,100% to 311.7 billion yen. The company said this was thanks to a rise in sales at its insurance business.
Sony also reported a 21% jump in sales in its image sensor business, which it sells to companies like Apple for smartphones.
Sony aims to sell 18 million PlayStation 5 consoles in its financial year ending in March 2023.
Thiago Prudencio | Lightrocket | Getty Images
Meanwhile, Sony in January scrapped a planned merger with Indian firm Zee Entertainment. The deal, which was negotiated for more than two years, was seen as a way for Sony to get a foot into the lucrative Indian entertainment market.
Hiroki Totoki, Sony’s chief financial officer, said on Wednesday that India has “great growth potential,” adding that the company will “seek various opportunities” in the country and will look into plans to “replace” the failed merger with Zee.
Correction: This story has been updated to reflect Sony’s record revenues for the quarter.