Sony cuts profit forecast after games business falters

TOKYO, July 29 (Reuters) – Sony Group Corp ( 6758.T ) revised up its profit forecast on Friday after a weak first quarter at its PlayStation business, which it attributed to a lack of new games and declining consumer demand for casual games. Covid-19 limits the stay-at-home game.

Sony has said that the company has disrupted production of the PlayStation 5 console while citing supply chain disruptions from the upcoming console.

“Last quarter was a bump in the road for Sony,” said Serkan Toto, founder of Kantan Games Consulting.

“Sony seems to be getting more and more PS5s into stores now, especially in the US and Europe.”

Sony’s key gaming division fell 37% in the April-June quarter from a year earlier, which Chief Financial Officer Hiroki Totoki blamed on a lack of top titles during the Covid-19 pandemic and people’s lives returning to normal.

“Growth of the overall gaming market has slowed down due to increased exit opportunities following the decline in Covid infections,” Totoki said.

Sony slashed its annual profit forecast for its gaming unit by 16%, citing lower-than-expected costs in its deal for “Halo” creator Bungie and expected declines in game sales from third-party developers.

The group-wide operating forecast through next March was cut 4 percent to 1.11 trillion yen ($8.37 billion).

Sony has increased interest in its movies and TV shows.

The corporation said it aims to sell 18 million PS5 consoles next year as it streamlines its supply chain and ramps up production. By the end of March, it had sold 11.5 million units.

Totoki told a news briefing: “With the recovery from the damage from the lockout in Shanghai and the improvement in supply, we are working to bring supply in time for the year-end holiday season.”

Sony sold 2.4 million PS5 units in the first quarter, up slightly from the same period a year ago, while software sales fell 26 percent to 47 million.

Sony competes with Microsoft Corp ( MSFT.O ), which aggressively buys content to push content into its Xbox Game Pass subscription service.

Sony’s Redmond, Washington-based rival this week reported a decline in gaming revenue in the fourth quarter and delays in upcoming high-profile game titles.

PlayStation’s pipeline includes highly anticipated titles such as “The Last of Us” in September and the “God of War” remake in November.

Shares of Sony closed ahead of earnings. The group’s shares have lost around a fifth of their value this year, compared with a 3% decline in the blue-chip benchmark Nikkei 225 (.N225).

($1 = 132.6600 yen)

Reporting by Sam Nussey; Further report by Nivedita; Edited by Stephen Coates and Edmund Claman

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