Sony’s profits rise as pandemic has people playing games

Sony’s profits rise as pandemic has people playing games
People walk past the logo of Japan’s Sony displayed at the company's showroom in Tokyo on October 28, 2020. (AFP)
Short Url
Updated 28 October 2020

Sony’s profits rise as pandemic has people playing games

Sony’s profits rise as pandemic has people playing games
  • Higher revenue from gaming and entertainment content gives validation to CEO Kenichiro Yoshida’s strategy to increase recurring revenue streams

TOKYO: Sony raised its annual profit outlook on Wednesday after posting a record second quarter profit, as its gaming business continued to capture “nesting” demand ahead of the launch of the next-generation PlayStation 5 (PS5) console next month.

The upward revision also reflects a robust start for Japanese animated film “Demon Slayer,” co-distributed by Sony’s music unit, which has been shattering box-office records in Japan since its Oct. 16 release.

Higher revenue from gaming and entertainment content gives validation to CEO Kenichiro Yoshida’s strategy to increase recurring revenue streams that cushion the impact of volatile hardware sales cycles.

Sony is targeting PS5 console sales of 7.6 million units or more in the year through March, chief financial officer Hiroki Totoki said at a briefing, citing the sales achieved for the PS4 when it was launched seven years ago.

But Totoki also warned of major damage to its prized image sensor business from tighter US curbs on Huawei Technologies, which banned global suppliers from selling it chips — such as Sony’s — made using US technology without a special license.

The Chinese smartphone maker was Sony’s second-largest image sensor customer after Apple, accounting for about 20 percent of its $10 billion in sensor revenue, according to analyst estimates.

Despite efforts to diversify customers, a full recovery in profitability at the image sensor business would come only in the year through March 2023, Totoki said.

“It will take considerable time until other customers adopt the trend of high-performance, large-sized sensors led by the Chinese customer,” he said.

Sony raised its annual profit forecast by 13 percent to 700 billion yen ($6.7 billion), after reporting a surprise increase in July-September profit to 317.76 billion yen, a second quarter record.

The outlook is above the 672.33 billion yen consensus of 24 analysts compiled by Refinitiv.

The firm now forecasts its gaming division will post an annual profit of 300 billion yen, up from the previously estimated 240 billion yen.

Consumers’ shift to gaming software downloads and online subscription services during coronavirus lockdowns boosted profits despite the PlayStation 4 console coming to the end of its lifecycle.

Such high-margin online revenue is likely to help Sony’s gaming business stay profitable this year, outweighing massive marketing and production costs associated with the new console launch.

Sony pre-sold as many PS5 consoles in the first 12 hours in the United States as in the first 12 weeks for its predecessor PlayStation 4 device, Jim Ryan, CEO of Sony Interactive Entertainment, said in an interview.

“The demand as expressed by the level of pre-order has been very, very considerable,” said Ryan.

For its sensor business, Sony cut the profit outlook by 38 percent to 81 billion yen, further trimmed its three-year investment through March next year by 40 billion yen to 650 billion yen, and said it may slow a production ramp-up at a new plant in Nagasaki, southern Japan.


UAE’s Mubadala Petroleum signs Red Sea oil exploration deal with Egypt

The agreement, signed by Egyptian Minister of Petroleum and Mineral Resources Tarek El-Molla, allows the company to explore in a 3,084 square kilometer area of the Red Sea. (Shutterstock/File Photo)
The agreement, signed by Egyptian Minister of Petroleum and Mineral Resources Tarek El-Molla, allows the company to explore in a 3,084 square kilometer area of the Red Sea. (Shutterstock/File Photo)
Updated 23 January 2021

UAE’s Mubadala Petroleum signs Red Sea oil exploration deal with Egypt

The agreement, signed by Egyptian Minister of Petroleum and Mineral Resources Tarek El-Molla, allows the company to explore in a 3,084 square kilometer area of the Red Sea. (Shutterstock/File Photo)
  • It will own 27 percent of the stake as part of the agreement, while Shell will own 63 percent

CAIRO: The UAE’s Mubadala Petroleum Company has signed an agreement with Egypt to explore for oil and gas in the Red Sea.

The agreement, signed by Egyptian Minister of Petroleum and Mineral Resources Tarek El-Molla, allows the company to explore in a 3,084 square kilometer area of the Red Sea and was a result of a bidding round in 2019.

It will own 27 percent of the stake as part of the agreement, while Shell will own 63 percent. Egypt’s Tharwa Petroleum Company owns the remaining 10 percent.

The agreement refers to an area known as Sector 4, located in the north of the Red Sea in an area adjacent to the Gulf of Suez Basin, which is rich in natural resources. 

Parties will commit to conducting exploration studies in this sector and collecting seismic data for the area, using three-dimensional techniques, during the first three years of the exploration phase.

“The addition of Sector 4 in the Red Sea represents a new extension of our operations in Egypt, while providing a valuable opportunity to expand our activities, and by working with a strategic partner such as Shell,” said Mubadala Petroleum CEO Bakheet Al Katheeri. “The search and exploration operations in this sector, if successful, will support our strategy of extracting and manufacturing hydrocarbons, in order to contribute to supporting the stability and expansion of the Egyptian market, while providing growth opportunities for our operations in the country.”

Mubadala Petroleum owns a 10 percent stake in the offshore Shurooq gas field concession that includes the Zohr natural gas field, in addition to 20 percent in the concession area of Noor Gas Company. Both are located in the Mediterranean Sea off the coast of Egypt.