Sony Group Delivers Profit Growth as SPE and Games Earnings Retreat

Profit increases from music failed to outweigh declines from film and TV and from games at Japanese electronics and entertainment giant Sony Group. But, overall, the group was able to report a 9% increase in net income for the three months to June.

In the period between April and June 2021, representing the first quarter of its 2021-2022 financial year, Sony Group enjoyed sales of JPY2.25 trillion, a gain of 15%. Net income grew from JPY194 billion to JPY212 billion. Earnings per share came in at JPY169.22.

The past year of media consolidation and the rise of direct-to-consumer streaming operations by the group’s Hollywood rivals raised multiple questions over Sony’s strategy in the streaming sector and, again, about the direction of the overall group.

The group hit back with a pair of clever rights deals that make Sony Pictures Entertainment a key content supplier to both Netflix and Disney Plus, and with a defiant stand reiterated at its investor day presentations in May.

Sony Pictures Entertainment’s film and television operations are not for sale or about to be hived off, Sony Group CEO Yoshida Kenichiro said at the May presentations. He regards the film and TV studio it as a core piece of the group mission to “fill the world with Kando (the Japanese word for ‘emotion’) through the power of creativity and technology.”

Yoshida said that while Sony is not launching a mass streaming business, it is not turning its back on D2C. “Sony plans to strengthen its initiatives in the service, mobile and social spaces to further expand these communities, and seeks to expand the number of people around the world directly connected to the Sony Group due to their desire to consume entertainment from the current number of approximately 160 million to 1 billion people,” he said according to notes.

In his May strategy notes, Yoshida said that in the three years from until March 2024 Sony plans to allocate JPY2 trillion ($18.4 billion) for “strategic investment, and investment towards growth in the IP and DTC business; technology; and share repurchases.”

He also plans on “strengthening the PlayStation Now cloud streaming game service and … investing in or partnering with external studios.” In late 2020, Sony agreed to acquire a specialist anime streaming company Crunchyroll, though that deal remains under scrutiny by U.S. regulators.

Sony’s shares tumbled on Wednesday by 3.75% in Tokyo Stock Exchange trading ahead of the group’s financial results. That left them at JPY11,050, up only 6% on the year to date.

– More to follow.

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