Sony trims annual profit forecast after Bungie purchase

Sony trimmed its annual net profit forecast on Friday, partly due to acquisition expenses including the purchase of US game studio Bungie, creator of hits like "Halo" and "Destiny".

The PlayStation maker announced in February it would buy Bungie for $3.6 billion, weeks after rival Microsoft unveiled a landmark pact to acquire "Call of Duty" maker Activision Blizzard.

Microsoft says its massive merger, valued at around $69 billion, will make it the third-largest gaming company by revenue, behind Tencent and Sony -- marking a major shift in the booming gaming world.

Sony Group now predicts net profit for 2022-23 will total 800 billion yen ($6 billion), down from the 830 billion yen previously forecast.

It said the expected increase in acquisition expenses was "mainly due to the acquisition of Bungie, Inc. being completed earlier than the assumed timing".

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Lower sales of games by non-house developers will likely dent its overall sales figures this financial year, it said, but this would be "partially offset" by a weaker yen.

Exchange rates also boosted the conglomerate's movie segment, chief financial officer Hiroki Totoki told reporters.

Customer traffic at US theatres has returned to pre-pandemic levels in some weeks, and Sony Pictures is hoping to score another box-office win after the runaway success of "Spider-Man: No Way Home".

"We have high hopes for 'Bullet Train' featuring Brad Pitt," Totoki said.

The movie division expects higher sales for anime streaming, "including the impact of the acquisition of Crunchyroll", the world's largest online library of Japanese animation.

PlayStation 5 sales steady

In the April to June quarter, the Japanese conglomerate posted a three percent year-on-year rise in net profit to 218 billion yen, with sales up around two percent to 2.3 trillion yen.

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Sony has faced challenges rolling out its PlayStation 5 console, which remains difficult to get hold of more than 18 months since its launch in November 2020, in part due to pandemic supply chain disruption and the global chip shortage.

Sony sold 11.5 million PS5s last year, and in May Totoki said the firm was adapting to try and weather ongoing supply chain issues, including Covid-19 lockdowns in China.

For the PS5, "the problem is more about supply than demand. The company is also facing problems transporting its products," Hideki Yasuda, senior analyst at Toyo Securities, told AFP before the earnings release.

Meanwhile "the yen has turned lower in this quarter. This should be positive for the company," he said, adding that a US economic slowdown could open up shipping spots, even though it poses risks overall for businesses like Sony.

In the first quarter of this financial year, Sony sold 2.4 million PS5 units, similar to the same period last year when it sold 2.3 million.

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Sony also said last month it is launching a new brand that will offer PC gaming gear.

The gaming peripherals market of items used by players was valued at $3.88 billion globally in 2019 according to Grand View Research.

Source: AFP