Sony Pictures Profits Slip by 10% Despite Marginal Sales Gain

Hollywood strike impact is calculated at $115 million, but is set to increase in current year.

Sony Group Corporation saw its sales climb by 19% to JPY13.0 trillion in its financial year to March 2024, boosted by a sharp depreciation of the Japanese currency. Net profits for the group were down 3% to JPY971 billion.

(At current rates of exchange those figures translate as $83.3 billion of revenues and $6.66 billion on new profits.)

It was a similar scenario at Sony’s ‘pictures division,’ which comprises theatrical film, TV networks and television content production. Net profits were down by 10% in dollar terms at $808 million, compared with $895 million a year earlier. That was despite sales that were up 2% to $10.3 billion.

But in the Japanese parent group’s accounts, which are expressed in Japanese Yen, the greater value of the unit’s dollar profits showed as a much smaller decline. Net profits for the pictures division in 2023-24 came in at JPY118 billion, compared with JPY119 billion a year earlier.

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Sony said that pictures division revenues were boosted by increased theatrical releases and by higher revenues from anime streaming and distribution unit Crunchyroll. But that they were held back by a decrease in series deliveries which it blamed on last year’s twin Hollywood strikes. Operating profits, viewed as essentially flat, were dented by higher marketing spend in support of the theatrical titles.

The unit release 17 theatrical films between April last year and the end of March 2024. Its biggest earners were: “Spider-Man: Across the Spider-Verse” with $691 million gross theatrical revenue worldwide; followed by “Napoleon” with $221 million; and “Anyone But You” with $218 million.

For the current financial year (April 2024 to March 2025), Sony has scheduled 13 theatrical releases. These include “Bad Boys: Ride or Die” in June, “Venom: The Last Dance” in October and “Paddington in Peru” in January 2025.

On a subsequent conference call, Sony management said that the Hollywood strikes had cost the unit approximately JPY18 billion ($115 million) in 2023-34. The spokesman said that the impact will peak in the current year at some JPY34 billion, or $218 million.

The key games and network services segment produced JPY290 billion of operating income, compared with JPY250 billion in the previous financial year. Revenues were higher at JPY4.27 trillion, compared with JPY3.64 trillion.

The games sector sales decline came despite a significant currency gain and increased sales of third-party titles and add-ons. Games’ operating income was dented by increased losses on hardware and promotions and reduced performance by in-house games titles.

Management said that some 20.8 million PlayStation consoles were sold in the financial year. While that figure is forecast to slip to 18 million in the current year, total PS5 installations are expected to overtake those of the PS4. “The business model of PlayStation has changed significantly, since PS4, management said.” That is due to non-console-users also using the PlayStation network, management explained on a conference call.

The music segment saw operating income increase from JPY263 billion to a record JPY301 billion. Sales increased from JPY1.38 trillion to JPY1.62 trillion.

Music revenues were lifted by higher revenues from streaming music and paid subscriptions as well as gains by recorded music and music publishing. There were also currency gains and higher revenues from merchandize and live music. Operating income was boosted by new accounting policies for a subsidiary company and depressed by litigation settlements.

Top music titles in the 2023-24 financial year were SZA’s “SOS,” Travis Scott’s “Utopia” and 21 Savage’s “American Dream.” Beyonce’s “Cowboy Carter” was also a hit though most of its impact fell outside the financial year.

President, COO and CFO Totoki Hiroki explained that a new medium range plan for the group remains firmly focused on the three entertainment divisions along with the image sensor business. The financial services unit is to be spun off in October next year.

For games, the plan calls for expansion into PC gaming and for an increase of in-house games titles. Music will seek growth through expansion into emerging markets and through growth of anime and Japanese music artists. The pictures division is to grow through maximization of existing IP and through expansion of Crunchyroll.

Though management has sought to use the group’s balance sheet strength, the 2023-24 financial year was little affected by mergers and acquisition activities. In January, Sony walked away from protracted deal talks which, had they been successful, would have hugely expanded its film, TV and streaming presence in India. A dispute over liability for the deal’s failure is ongoing.

Sony is also reported to be among the bidders for Paramount Global, the Hollywood studio conglomerate, but Sony declined comment. “This is media reporting, only. Not something that Sony has announced,” said Totoki.

Ahead of the results announcement, Sony’s shares Tokyo Stock Exchange-traded shares ended trading on Tuesday at JPY11,930 apiece. The shares, traded in ADR form in New York, closed Monday at $76.15, some 20% off their 12-month high. The company announced that a share split will take place in October.