Sony boosts profit outlook ahead of PlayStation 5 debut

Wed, 28 Oct, 2020 - 16:35

Takashi Mochizuki

Sony raised its operating profit outlook by 13% to $6.7bn (€5.7bn) as its video game unit rode a surge in demand for entertainment from home-bound consumers.

The forecast surpassed the average analyst expectation and precedes the PlayStation 5’s November debut. Sony aims to sell more than 7.6 million PS5 units by the end of March, more than the PS4 managed in its first fiscal year, chief financial officer Hiroki Totoki said.

Sony’s outlook hike underscores how the entertainment giant is benefiting from a global Covid-era consumer shift. While sales of its smartphone image sensors have been hit by US-China trade tensions, the Japanese company is drawing gamers to its online services. Sony is betting that the PS5 will help it outdo Nintendo during the all-important Christmas and New Year drive growth.

Hardware sales of the new console are likely to contribute “a small minus” to Sony’s bottom line over its first few months, the CFO added, confirming expectations that it will be a loss leader to begin with.

“Sony will spend a lot of money to deliver many units of the PlayStation 5 to the US, probably by air,” said Ace Research Institute analyst Hideki Yasuda. “The hardware would be sold at a slight loss as well,” the analyst said.

Sony Interactive Entertainment chief executive Jim Ryan said the company pre-sold as many PS5 units in the device’s first 12 hours of availability as it did in the PS4’s first 12 weeks.

Covid-19 continued to weigh on Sony’s motion picture business, as many cinemas around the world remained far shy of capacity, though the company’s movie prospects may be headed for a bump in the next quarter.