Sony Expects Lower Gaming Sales as PS5 Demand Slows
Sony Group Corporation forecast a 6% decline in annual sales for its gaming division on Friday, citing weaker hardware demand for the aging PlayStation 5 and rising memory chip prices across the industry.
The Japanese technology and entertainment giant expects gaming sales to reach 4.42 trillion yen ($28 billion) during the fiscal year.
Despite lower projected sales, Sony said gaming profit is expected to rise 30%, supported by stronger first-party software revenue and the absence of a major impairment loss recorded in the previous year.
PS5 Enters Mature Stage of Lifecycle
With the PS5 now entering its sixth year on the market, Sony’s latest outlook also includes investment in its next-generation gaming platform.
The company revealed that PS5 console sales fell sharply in the fourth quarter, dropping 46% year-over-year to 1.5 million units sold.
Earlier this year, Sony announced another price increase for the PS5, including a $100 price hike in the United States. It marked the second console price increase in less than 12 months.
Sony added that future PS5 hardware sales will depend heavily on the company’s ability to secure memory chips at reasonable prices, while hardware profitability is expected to remain stable compared to last year.
Memory Chip Prices and Iran Conflict Raise Concerns
Investors are increasingly worried about the impact of rising memory chip costs and supply chain disruptions linked to the ongoing Iran conflict.
The concerns have affected several electronics manufacturers, including Sony and rival Nintendo Co., Ltd., which is also reporting earnings this week.
Sony previously stated in February that it had secured the minimum amount of memory supply needed to handle the crucial year-end holiday shopping season.
Nintendo also noted earlier this year that higher chip prices had not yet significantly impacted earnings, although prolonged increases could pressure profitability over time.
GTA VI Could Boost PlayStation Ecosystem
Sony’s gaming platform could receive a major boost later this year from the highly anticipated launch of Grand Theft Auto VI by Take-Two Interactive Software, Inc., scheduled for release in November.
Industry analyst Serkan Toto said the market may be underestimating the positive impact the game could have on PlayStation sales and ecosystem engagement.
Analysts also believe Sony’s profit margins could benefit significantly from high-margin software purchases and increased user activity driven by the launch.
Share Buyback Supports Investor Sentiment
Sony announced plans to spend up to 500 billion yen on a share buyback program covering as many as 230 million shares.
Following the announcement, the company’s stock recovered earlier losses and traded around 1% higher in Tokyo.
Other Business Segments Show Mixed Performance
Outside gaming, Sony said it expects stronger profits from its pictures and semiconductor businesses, while forecasting lower earnings from its music division.
The company reported operating profit of 1.45 trillion yen for the fiscal year ended March, representing a 13.4% increase from the previous year. However, the result came in below analyst expectations of 1.56 trillion yen.
Sony also continues expanding in fast-growing entertainment sectors such as anime, which has gained significant global popularity in recent years.
At the same time, the company confirmed it has abandoned plans to develop electric vehicles alongside Honda Motor Co., Ltd..
