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Sony reiterates the start of the PS5 holidays, but gaming profits are falling

Sony again confirmed that the PlayStation 5 video game console is on the right track this Christmas. The Japanese company announced this today in a quarterly earnings report, stating that its quarterly and annual earnings for games have decreased.

Game developers and other companies in the PlayStation ecosystem that are expecting to launch will likely be relieved to see that the pandemic does not make it too difficult for Sony to launch, for which an exact date is not yet available.

“Regarding the launch of PlayStation 5, development has progressed with the launch of the console, although factors such as home-based employees and international travel constraints pose some challenges to the part of the testing process and production line qualification have scheduled for Christmas 2020, “said Sony in the report for the quarter ended March 31

and fiscal year.” At this point, there are no major problems in the pipeline for game software development for Sony’s own first-party studios or theirs Studios occurred partner studios. “

According to Sony, sales of PlayStation 4 consoles reached 110 million, a slight increase over the previous quarter.

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For the quarter, Sony didn’t really have the right game for the pandemic. It delayed its main title, The Last of Us Part II, not just once but twice and pushed it from February to June 19. In the meantime, Nintendo made a good figure with Animal Crossing, and Activision Blizzard did well with Call of Duty: Warzone.

Shelter-in-Place was only in effect in the last two weeks of March 31, so the impact was not significant in the last quarter of Sony’s fiscal year. But in the first business quarter, which ends on June 30, Sony is likely to benefit from the conditions in which games are preferred over other forms of entertainment.

Sony’s big games – The Last of Us Part II and Ghost of Tsushima (July 17) – are likely to help boost sales if the console hardware is likely to fall off a cliff while players wait for the PS5 to launch . Console sales typically move in a cycle, with the last year of a console generation typically being strong in software sales but weak in hardware sales. Sony has not given an exact forecast.

During the quarter, Sony announced that four of its factories were closed from January 24th to February 9th due to the pandemic. But since February 10, all factories have reopened, although there have been some disruptions in the supply chain. The PlayStation 4 hardware had a slight impact on deliveries, but Sony said inventory and sales were trending well.

In the meantime, sales of games downloaded from the network and from PS Plus and PlayStation Now have “increased significantly”.

What the numbers mean

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For the quarter ended March 31, the Games and Network Services division generated revenue of $ 4.0 billion, compared to $ 4.6 billion in the previous year. Quarterly operating income was $ 431.5 million, compared to $ 597.8 million in the previous year.

That’s not great, but it’s pretty good for a quarter without major game starts and just two weeks to benefit from home protection conditions. I would expect performance to improve for the quarter ending June 30, especially with the growth of PlayStation Plus or PlayStation Now subscriptions.

Sony ended the fiscal year ended March 31, at $ 14.1 billion in cash, up slightly from $ 13.7 billion in the previous year. It has short-term debt of $ 7.57 billion. This is not a bad position to start the console. This means that Sony will not experience any financial weakness as the higher marketing costs for the new generation of consoles increase.

By the end of the year, sales should pick up again as soon as the console starts and new games arrive. One of the risks of this generation is that Sony’s manufacturing costs for its machine are high or at least higher than Microsoft’s. Microsoft also has a lot more money and could afford to sell its Xbox Series X under Sony’s PS5. If Sony entered this cycle without much money or financial strength, it would be quite prone to a Microsoft low-price strategy.

But I don’t see this problem right now and that’s good for Sony, the PS5 and the general game ecosystem.

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