Sony Had A Good Q4 Game But It Needs To Figure Out How To Evolve Beyond PlayStation

On Tuesday, Sony Group Corporation SONY reported its fourth quarter results. Sony’s net profit grew from stronger earnings that were generated by its gaming and move business. 

Fiscal Fourth Quarter And Fiscal Year Highlights

For the three months that ended in March,  Sony reported revenue grew 13% YoY to 3.481 trillion yen, while net profit rose 34% YoY to 189.005 billion yen which is about $1.21 billion. 

The gaming business reported that operating profit more than doubled to 105.98 billion yen, while the movie business followed with a nearly doubled operating profit of 30.67 billion yen.

For the fiscal year, Sony sold 20.8 million units of PlayStation 5, which is more than 19.1 million units it sold during the previous fiscal year. Like Microsoft Corporation MSFT, Sony annoucned it will be laying off about 900 employees from its PlayStation business in response to the videogame industry’s struggles to regain its vigor in a post-pandemic reality. Back in October, Microsoft laid off about 8% of its videogaming workforce. Even GameStop Corporation GME also announced job cuts. 

Moreover, the videogame retailer’s stock plummeted on Friday as meme-stock mania faded. GameStop reported preliminary first quarter results and they showed a first quarter drop in sales. GameStop expects first quarter sales to range between $872 million to $892 million while it reported $1.24 billion during last year’s comparable quarter. But, GameStop is also expecting to narrow down its net loss from last year’s $50.5 million to somewhere between $27 million and $37 million.

Fiscal Year Outlook 

The Japanese entertainment and electronics company plans to spin off its financial business, which is why it guided for a revenue drop of 5.5% to 12.310 trillion yen and a net profit decline of 4.7% to 925 billion yen. However, Sony guided for its game business operating profit to continue to rise at 6.8% to 310 billion yen. Sony also expects its movie business profits to rise 2% to 120 billion yen.

Sony and Microsoft rivalry will live on, but there’s bigger fish to fry. 

Both for Sony and its rival Microsoft, findings ways to grow revenue is more important than winning the console war. Microsoft undoubtedly upleveled its game by acquiring Activision Blizzard but console wars are becoming less and less relevant as both Microsoft and Sony need to figure out how to evolve in the new gaming era that is in the making.

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