Sony is having a great year in its gaming division, while struggling in other business segmentts like mobile and the TV business. The stock has been hammered after Sony revised its expectations downward for the year (from a profit to a loss) because of its strgulling smartphone and tablet business. Meanwhile, games are doing great for Sony, and look to be one of the company’s pillars as it reinvents itself for the future.
According to industry numbers, Sony has managed to sell over 10 million PlayStation 4 systems as of earlier this month, double the numbers of what Microsoft’s Xbox One has sold, and with a better margin than Nintendo’s Wii U with its 7.2 million userbase. Behind these numbers, Sony Computer Entertainment CEO Andrew House believes that the company’s profits can rise behind the power of PlayStation, with a possible increase in the video game division’s profit forecast.
“We raised our profit prediction and I hope that’s a trend we can continue, even within this fiscal year,” said House, speaking to Reuters.
The company raised its numbers before, increasing it from 20 billion yen to 25 billion yen earlier this year. This is heavy in contrast to the company’s struggling mobile portion, which announced a 180 billion yen impairment charge, with the sixth profit warning in two and a half years’ time.
The stock shares for the company have taken a nosedive from this, with an 8.6 percent drop in shares down to 1,940 yen. This follows a very brief rally with a 25 percent increase in the weeks before.
Still, high hopes sit behind the PS4, especially with the forthcoming holiday season. Sony CEO Kazuo Hirai hopes the system will replicate the success of the PlayStation 2, which, in its heyday of release back in the early 2000’s, generated a $1 billion annual operating profit.
There are many bright prospects in the game division that could easily increase sales of hardware and software, including forthcoming games like Bloodborne and The Order: 1886. “I do feel we have a higher opportunity to build a higher ARPU (average revenue per user) than with the PS3, and that should make a very strong profit contribution over the life-cycle,” said Hirai.
Restructuring could also play a key part with the business, according to House. “Kaz obviously comes out of the games business. He was in that for 10 years in the States and has a deep understanding of what a healthy ecosystem looks like and what we have to do,” he said. “I think (CEO Kenichiro) Yoshida coming in as CFO has been hugely beneficial to us. He comes from a network services business.”
Here’s hoping the PS4 can really turn things around for Sony, especially on the strength of such holiday releases as DriveClub and LittleBigPlanet 3.