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Sony cuts full-year profit guidance after Bungie acquisition

#Sony #cuts #fullyear #profit #guidance #Bungie #acquisition

Sony slashed its annual net income guidance on Friday, in part due to acquisition costs including its purchase of US games studio Bungie, creators 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 deal 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 big shift in the booming gaming world.

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

The expected increase in acquisition costs is “primarily due to the fact that the acquisition of Bungie, Inc. was completed earlier than anticipated.”

Lower sales of games by non-home developers will likely hurt overall sales this fiscal year, it said, but this would be “partially offset” by a weaker yen.

Exchange rates also boosted the conglomerate’s film segment, CFO Hiroki Totoki told reporters.

Traffic in US theaters has returned to pre-pandemic levels in a few weeks, and Sony Pictures is hoping for another box office win following the runaway success of Spider-Man: No Way Home.

“We have high hopes for Brad Pitt’s Bullet Train,” Totoki said.

The film division expects higher revenues for anime streaming, “including the impact of the acquisition of Crunchyroll,” the world’s largest online library of Japanese animation.

– PlayStation 5 sales stable –

In the April-June quarter, the Japanese conglomerate reported a 3 percent year-over-year increase in net income to 218 billion yen on sales up about 2 percent to 2.3 trillion yen.

Sony has faced challenges launching its PlayStation 5 console, which has been hard to come by for more than 18 months since its launch in November 2020, in part due to pandemic supply chain disruptions and global chip shortages.

Sony sold 11.5 million PS5s last year, and in May Totoki said the company was adjusting to try and weather ongoing supply chain issues, including China’s Covid-19 lockdown.

For the PS5, “the problem is one of supply rather than demand. The company is also struggling with issues in shipping its products,” Hideki Yasuda, a senior analyst at Toyo Securities, told AFP ahead of the results’ release.

Meanwhile, “The yen has fallen this quarter. This should be positive for the company,” he said, adding that a slowdown in the US economy could open up supply opportunities, although overall it poses risks for companies like Sony.

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

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

The market for gaming peripherals used by gamers was valued at $3.88 billion globally in 2019, according to Grand View Research.

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#Sony #cuts #fullyear #profit #guidance #Bungie #acquisition

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