Sony reaffirms PS5 holiday launch but profits slip for games

Sony reaffirms PS5 holiday launch but profits slip for games

Sony has reaffirmed that the PlayStation 5 video game console is about to be delivered during the holiday season this year. Japanese company made the announcement in a report on quarterly results today in which he said his quarterly and annual profit had slipped for the games.

Game developers and other ecosystem companies relying on the launch are likely to breathe a sigh of relief that the pandemic doesn’t make things too difficult for Sony to successfully launch, which has no specific date yet .

“With regard to the launch of PlayStation 5, although factors such as employees working from home and restrictions on international travel have presented certain challenges with regard to the part of the testing process and the qualification of lines of production, development progresses with the launch of the console. planned for the 2020 holiday season, “said Sony in the report for the quarter and fiscal year ended March 31.” At this point, no major problems have arisen in the game software development pipeline for Sony owner studios or partner studios.

Sony said sales of PlayStation 4 consoles reached 110 million, up slightly from the previous quarter.

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As for the quarter, Sony didn’t really have the right game ready for the pandemic. He delayed his main title, The Last of Us Part II, not once but twice, pushing him from February to June 19. Meanwhile, Nintendo did well with Animal Crossing, and Activision Blizzard performed well with Call of Duty: Warzone.

The on-site shelter was only in effect for the last two weeks of March 31, so the impact was not significant during the last quarter of Sony’s fiscal year. But during the first fiscal quarter ended June 30, Sony will likely benefit from on-site shelter conditions that favor games over other forms of entertainment.

Sony’s big games – The Last of Us Part II and Ghost of Tsushima (July 17) – will likely help boost sales at a time when console hardware will likely fall off a cliff face as players await the launch of the PS5. Sales of consoles generally evolve during a cycle, the last year of a generation of consoles being generally strong in software sales but weak in hardware revenues. Sony has not made any specific predictions about this.

During the quarter, Sony reported that four of its factories closed from January 24 to February 9 due to the pandemic. But since February 10, all factories have reopened, although there have been disruptions in the supply chain. The PlayStation 4 hardware saw a slight impact on supplies, but Sony said it had been resolved with inventory and that sales were strong.

Meanwhile, sales of network downloaded games and PS Plus and PlayStation Now subscriber numbers have “increased dramatically”.

What do the numbers mean

Unreal Engine 5 produces continuous real-time graphics that look realistic.

The Unreal Engine 5 demo shows what a PS5 game might look like in 2021 or later. For the quarter ended March 31, the games and network services division posted revenues of $ 4.0 billion, compared to $ 4.6 billion a year earlier. Operating profit for the quarter was $ 431.5 million, down from $ 597.8 million a year earlier.

It’s not great, but it’s pretty good for a quarter without a major game kickoff and only two weeks of home shelter profit. I expect performance for the quarter ending June 30 to be better, especially with growth in PlayStation Plus or PlayStation Now subscriptions.

Sony closed the fiscal year on March 31 with $ 14.1 billion in cash, up slightly from $ 13.7 billion a year earlier. He has $ 7.57 billion in short-term debt. This is not a bad position to have in terms of launching the console. This means that Sony will not go through a period of financial weakness due to the higher marketing costs of the new generation of consoles.

By the end of the year, sales are expected to resume as the console launches and new games are launched. One of the risks of this generation is that Sony’s manufacturing costs for its machine will be high, or at least higher than Microsoft’s costs. Microsoft also has a lot more money and could afford to price its Xbox Series X under the Sony PS5. If Sony entered this cycle without much money or great financial strength, then it would be quite vulnerable to a strategy from Microsoft at low prices.

But I don’t see this problem right now, and it’s a good thing for Sony, the PS5, and the general gaming ecosystem.

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