Sony Corporation's first-quarter financial report revealed that the entertainment group's first-quarter profits plummeted, with its movie and financial sectors performing moderately, leading to a 6% decline in the stock price of Sony Japan during Tokyo trading. Sony's operating profit dropped by 31%, and comments by Sony executives on the demand in its gaming and image sensor departments have left investors with lingering concerns.
Sony released a new gaming console, PlayStation 5, at the end of 2020, which was severely affected by supply chain issues due to the COVID-19 pandemic. Although these supply issues have now been resolved, Sony's annual sales target is 25 million units, yet sales for the April-June quarter fell below expectations. The new video game "Marvel's Spider-Man 2" will be launched in October, just before the crucial year-end shopping season.
In this quarter, Sony sold 3.3 million PS5 consoles. In comparison, 2023 marks the seventh year since the launch of the Nintendo Switch, and its latest game "The Legend of Zelda" has become widely popular, prompting sales of 3.9 million units for the console. Sony's promotional activities, starting in July, are improving PS5's sales momentum.
Serkan Toto, the founder of Kantan Games consulting firm, holds divergent views on Sony's strategy to discount PS5 sales in Western countries. He believes the company should strive to ensure that those highly anticipated exclusive games are brought to market more quickly.
Sony, being one of the leading manufacturers in the image sensor field, has decided to lower its expectations for a gradual recovery of the smartphone market due to weak demand in key markets, now expecting the market to gradually recover by 2024 at the earliest. Due to the decline in sales, Sony has lowered its annual operating profit forecast for this sector by 10%. Adjustments in purchases by smartphone manufacturers have impacted Sony's sales, profits, supply chains, and strategy.
Analyst Atul Goyal from Jefferies Group pointed out in a client report that the current fiscal year is challenging for the sensor division, but expects profit margins to improve next year.
