:max_bytes(150000):strip_icc()/INV_SonyPlayStation5-f776f32e9c624eca9c11a3ffbe077d7c.jpg "Sony Unveils Plan for Financial Unit IPO Amid Sluggish PlayStation 5 Sales")
Key Takeaways
- Sales of Sony’s PlayStation 5 missed the company’s fiscal third-quarter sales target, leading Sony to cut its full-year sales projection.
- Sony’s Financial Services segment delivered a strong performance, and the entertainment giant said it plans to list the unit with an initial public offering in October 2025.
- American depositary receipts of Sony fell in intraday trading Wednesday following the news.
Sony Group Corp.’s American depositary receipts (ADRs) (SONY) tumbled over 4% in intraday trading Wednesday after the Japanese entertainment giant lowered sales projections for its PlayStation 5 console and said it would list its Financial Services unit next year.
Sony reported fiscal 2023 third-quarter PlayStation 5 hardware sales of 8.2 million units Wednesday. Although the number marked a record high for quarterly unit sales of the console, it still fell short of the company’s target. Sony also revised its full-year sales projection down to 21 million from 25 million units.
The company said it won’t release “any new major existing franchise titles” for the console in the coming fiscal year. Reports that Microsoft Corp. (MSFT) could bring Xbox-exclusive titles to the PlayStation 5 and the Nintendo (NTDOY) Switch might help Sony’s software revenue from PlayStation 5 owners, but may do little to encourage new customers to purchase a Sony console.
That’s bad news for Sony, as the profitability of the PlayStation 5 declines. Sales in Sony’s Game & Network Services segment in the third quarter rose 16% from a year ago, boosted by third-party software sales, but operating income declined 26% as promotions for PlayStation 5 hardware ate into profits.
A bright spot in Sony’s earnings was the strength of its Financial Services unit, with projected full-year revenue increasing 90 billion yen (about $600 million) to 1.3 trillion yen, a 7% upward revision. Having obtained government approval for a partial spinoff, the Japanese company is aiming for an initial public offering (IPO) for the unit in October 2025.
Music segment sales increased by 16% compared with the year-ago quarter, with solid growth in streaming revenue supported by the company’s holiday music catalog, including the 29-year-old Mariah Carey Christmas album.
The company’s film segment grew sales by 10%, although the impact of last year’s writers’ strikes continues to delay some productions, Sony reported. It estimates a cost of roughly 20 billion yen ($133 million) on the current fiscal year’s balance sheet as a result.
However, anime streaming platform Crunchyroll continued to drive growth, with more than 13 million paying subscribers and plans for international expansions into Brazil, India, and Southeast Asia.
Sony ADRs were 4.7% lower at $90.93 as of 3 p.m. ET Wednesday. They’ve gained about 3.4% over the last year.