It’s a mixed bag for Sony in their latest quarterly report, as they report record sales of the PlayStation 5 console at a time when their profits are down.
The company shipped 3.3 million units of their current generation console in the last quarter, accumulating to 5.7 million units for the first half of financial year 2022 and 25 million units overall.
For further comparison, within the same eight quarter period of time, the PlayStation 4 sold 29.4 million units.
Sony’s target by the end of this financial year, which arrives at the end of March 2023, is 18 million units. Obviously, Sony isn’t catching up to that target all that well. But given the current market conditions, they aren’t doing that badly.
Sony is intent in catching up in manufacturing consoles and meeting that demand. In fact, they expressed confidence they could still meet that goal, and that they had already manufactured 6.5 million units in the second quarter. Given the continuing instability of market conditions, nobody, not even Sony, will be able to predict if they can meet that commitment.
As for Sony’s software, their Game and Network Services division reported revenue of $ 4.88 billion, up 12 % year over year. Ironically, their profit fell by as much as 49 % at $ 284.6 billion.
Sony did have ready explanations to their investors for these contradictory results. While they have been making record numbers in revenue as a beneficiary of gaming’s popularity throughout the pandemic, they incurred costs in game development, and acquiring Bungie studios.
They also felt the sting of foreign exchange rates, a situation they usually avoid because Sony is separately incorporated in Japan and America, and the US division reports their profits separately. In this case, the fluctuations of the yen to dollar exchange were so severe that their profit margins could not avoid being affected. As a result, Sony lowered their forecast for this division by 12 %.
Sony’s acquisition of Bungie, which was finalized in July of this year, was valued at $ 3.6 billion. While this was certainly a landmark deal in terms of valuing the largest of game studios, it was definitely a drop in the bucket in terms of the greater picture. Sony will realize the value of acquiring Bungie in the coming years. Here and now, it should be clear that even that $ 3.6 billion isn’t enough to explain the harsh drop in profit.
Given how Take Two CEO Strauss Zelnick believes that video games will be profitable for the next two decades, this will likely be a temporary rough spot for Sony and the PlayStation 5, in the same way that Sony eventually got over the roadblocks they faced with the PlayStation 3, to make it a more respectable console competitive to its peers than when it was launched.