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)
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Updated 28 October 2020

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.

SAMA to become Saudi Central Bank, with full independence

Updated 25 November 2020

SAMA to become Saudi Central Bank, with full independence

  • New central bank to be linked directly to king but its president independent of government
  • Bank’s core responsibilities to maintain monetary reserves, boost confidence, trust in financial sector

RIYADH: The Council of Ministers on Tuesday approved a new law which includes changing the name of the Saudi Arabian Monetary Authority (SAMA) to the Saudi Central Bank.

Under the legislation, the new Saudi Central Bank will be linked directly to the monarch and will enjoy full financial and managerial independence.

The Saudi Central Bank Law set out three core objectives for the new institution namely, to maintain cash stability, boost confidence and trust in the financial sector, and support economic growth.

The new legislation states that the central bank is responsible for setting and managing monetary policy and it outlines the relationship between the bank, the government, and other international important organizations and bodies. It also sets a framework to govern the bank’s operations and decisions.

Fadhel Al-Buainain, an economic expert and member of the Shoura Council, said one of the important aspects of the Saudi Central Bank Law was that it was linked directly to the king.

“This enhances its full independence with respect to setting the monetary policy and the bank’s relationship with the government and global organizations,” he added.

The law states that the abbreviation SAMA, which was established in 1952, would remain unchanged due to its historical importance domestically and internationally.

“The fact that the bank will keep the SAMA abbreviation unchanged is important and reflects a wise decision because the abbreviation is widely-known,” Al-Buainain said.

While the SAMA acronym will remain, Hassan Alwatban, an economic consultant, outlined the differences between the monetary authority and the central bank.

For the central bank to perform its duties properly, he said it needed to be fully independent when it came to decision-making, especially decisions related to managing state funds.

Another difference was that the president of the central bank would not be under the state’s authority and their nomination would be made by a legislative authority. The government or state could not appoint or remove the president except by the most supreme judiciary authority.

Thirdly, he added, a government agency could not interfere in the bank’s affairs because the bank enjoyed full monetary power.

Alwatban told Arab News: “Therefore, changing the monetary authority to a central bank is healthy for the national economy.

“The tasks of the Ministry of Finance, which is responsible for financial policies, will be set apart from the tasks of the central bank, which is responsible for setting the monetary policies. Before the change, the tasks of the Ministry of Finance and SAMA overlapped.

“Besides, the Ministry of Finance was in charge of the financial policy and the monetary policy at the same time, a fact that made SAMA focus on serving the banks’ interests more than focusing on serving the interests of citizens,” he added.