For the fiscal year ending 3/31/2024 Sony Group (NYSE: SONY) reported that its Games and Network Services division had revenue of ¥4,267,734 (about $27 billion), up 17% over the previous fiscal year. However, for the fourth quarter revenue was flat compared to the previous year at ¥1,097,331 (about $7 billion).
For the full fiscal year, Sony sold 20.8 million PlayStation 5 units, below its previous estimate of 25 million (lowered to 21 million in February). Hardware sales in the fourth quarter were down 29% over the previous year.
Going forward, Sony expects its revenue from Game and Network Services to decline in the fiscal year ending 3/31/2025. This is mainly due to an expected decline in hardware unit sales. For the fiscal year Sony is expecting to sell 18 million PlayStation 5 units.
This week Sony also confirmed that it was appointing two co-CEOs to lead Sony Interactive Entertainment (SIE). Hermen Hulst (current head of PlayStation Studios) will become CEO of SIE Studio Business Group. Hideaki Nishino (current CEO of the Platform Experience Group) will become CEO of SIE’s Platform Business Group.
Analysis
There is no hiding the fact that the results for Sony’s Games and Network Services division are disappointing. Sony’s miss for PlayStation 5 units last year had been anticipated and accounted for in DFC Intelligence’s forecast. However, the sharp decline Sony is anticipating in the coming year is more than expected.
Unfortunately, Sony rested on its laurels when the PlayStation 5 was in short supply and high demand. This is coming back to haunt the company, but the larger impact is on the many game industry companies that rely on a robust PlayStation ecosystem.
The new joint CEOs seem like a realization on the part of Sony that its game division is really two different businesses. Hulst will lead the software business that focuses on Sony’s first-party games. Nishino will run hardware, services and third-party relations.
DFC Intelligence will be releasing new industry-wide forecasts for the video game industry next week. The unfortunate news around PlayStation sales has a significant industry wide impact. Unfortunately, in the short term most of that impact will be negative. The good news is that as the market shifts there will be opportunities for those that are savvy and stay abreast of emerging trends.
