Sony Doubles Down on Entertainment, Expects to Sell 25 Million PS5 Consoles This Financial Year

Sony said it is considering a time frame of two to three years to spin off Sony Financial Group — whose operations include life insurance and banking.

By Reuters | Updated: 19 May 2023 22:11 IST

Sony Doubles Down on Entertainment, Expects to Sell 25 Million PS5 Consoles This Financial Year

Photo Credit: Sony Pictures Animations

A sequel to Sony's hit Marvel's Spider-Man is among games due for release this year

Highlights

Sony said it is considering time frame of two to three years to spin off
The conglomerate is pursuing synergies between its business lines
Nintendo Switch console has install base of more than 125 million units

Sony Group on Thursday said it is examining a partial spin-off of its financial business just three years after taking full control, as the conglomerate doubles down on entertainment and image sensors.

Sony said it is considering a time frame of two to three years to spin off Sony Financial Group — whose operations include life insurance and banking — with an eye to listing the business and retaining a stake of slightly under 20 percent.

Given the capital the business requires, "it is a challenge to balance this with our investment in other growth areas such as entertainment and image sensors," Sony Chief Financial Officer Hiroki Totoki told a strategy briefing.

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The conglomerate is pursuing synergies between its business lines, which include video games, music and movies. It said hit drama The Last of Us on television network HBO drove uptake of the game franchise on which it is based and the music used.

A partial spin-off of Sony Financial, which the group said was made possible by changes in tax rules, would allow the newly listed business to retain Sony branding.

"It doesn't change anything drastically in terms of the outlook for Sony but it does make it a more pure play entertainment company which the market generally likes," said Mio Kato, an analyst at LightStream Research who publishes on Smartkarma.

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The finance business reported a 5 percent fall in revenue to YEN 1.45 trillion (nearly Rs. 87,190 crore) in the year ended March. Operating profit rose 49 percent helped by a one-off gain from a real estate sale.

In the current financial year, Sony expects a 40 percent drop in revenue at the unit due to an accounting change, and a 20 percent drop in profit due to the absence of the year prior's one-off gains.

Sony share price was up 6 percent in Tokyo trade, a day after the group said it would buy back up to 2.03 percent of its stock.

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Loveable Characters

Sony has said it expects to sell 25 million PlayStation 5 consoles this financial year as supply chain snarls ease. That would be a record for any PlayStation device.

However it has also forecast a slide in first-party software sales, reflecting weakness in the games pipeline.

A sequel to Sony's hit Marvel's Spider-Man is among games due for release this year.

Rival Nintendo, whose Switch console has an install base of more than 125 million units, sold over 10 million copies of The Legend of Zelda: Tears of the Kingdom during the first three days from launch.

It has also scored a monster hit with The Super Mario Bros. Movie.

Sony CEO Kenichiro Yoshida said he recently watched the movie in Tokyo and used to play Super Mario too.

"Loveable characters and intellectual property (IP) can live for 30, 50 or 100 years," he said.

"That's something we want to make investment in for sustainable growth," Yoshida said.

© Thomson Reuters 2023

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The Super Mario Bros. Movie

Release Date 7 April 2023
Language English
Genre Animation, Kids & Family
Cast
Chris Pratt, Anya Taylor-Joy, Charlie Day, Jack Black, Keegan-Michael Key, Seth Rogen, Fred Armisen, Kevin Michael Richardson, Sebastian Maniscalco, Charles Martinet
Director
Aaron Horvath, Michael Jelenic
Producer
Chris Meledandri, Shigeru Miyamoto

The Legend of Zelda: Tears of the Kingdom

KEY SPECS
NEWS

Genre Action-Adventure

Platform Nintendo Switch

Modes Single-player

Series The Legend of Zelda

PEGI Rating 7+

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Spider-Man: Into the Spider-Verse

Release Date 14 December 2018
Language English
Genre Action, Adventure, Animation, Sci-Fi, Superhero
Cast
Shameik Moore, Jake Johnson, Chris Pine, Hailee Steinfeld, Mahershala Ali, Brian Tyree Henry, Lily Tomlin, Lauren VélezLuna Lauren Velez, Zoë Kravitz, John Mulaney, Kimiko Glenn, Nicolas Cage, Kathryn Hahn, Liev Schreiber
Director
Bob Persichetti, Peter Ramsey, Rodney Rothman
Producer
Avi Arad, Amy Pascal, Phil Lord, Chris Miller, Christopher Miller, Christina Steinberg

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