Currency shifts muddle Sony figures - but industry can celebrate strong PS4 sales

Seth Barton
Currency shifts muddle Sony figures - but industry can celebrate strong PS4 sales

Sony's Game and Network Services division announced its third-quarter results today, for the key trading period up to the 31st of December. Sales for the division were up by 5.2% year-on-year to $5.3bn, though that amounted to an impressive rise of 15% on a constant currency basis.

Shifting exchange rates continue to make such year-on-year comparisons problematic. Especially for those who are more concerned with how successful the division has been in terms of retail sales, rather than simply how profitable, in its home currency. The first camp includes most partners of the PlayStation brand, as opposed to those who actually own stock.

Putting that aside, we can certainly say that PlayStation grew significantly year-on-year. Sony attributes that growth to an increase in PS4 software sales, particularly noting an increase in digital sales, which agrees with recent reports of growth in this area from both EA and Capcom.

Sony also picked out the PlayStation VR for its contribution to increased sales. Although it didn't give any exact figures on units or the hardware's contribution to the bottom line.

In line with GAME's recent Christmas figures, Sony also pointed out that console price reductions had made an impact on its results. However, for Sony these had been offset by lowered manufacturing costs for PS4 hardware, which boosted profits.

Sales of PS4 hardware were up from 8.4m units to 9.7m units, a 15% increase is unit sales year-on-year. So while software sales for retail as a whole were down in the UK, hardware (at least globally) saw a significant rise. The forecast for hardware didn't change, though, with Sony still planning on shifting 20m units for the full year.

Unlike PSVR, there was no specific mention of the PS4 Pro in the figures. The updated console should help to reverse the decline in hardware income per unit as the current console generation matures, but if that's proving to be the case then Sony isn't sharing the good news.

A quick summary of the figures. Sales and operating revenue were up from 587bn to 617bn ($5.3bn), that's your 5.2% rise. Operating income though (essentially profit before taxes) shot up by 24.5% from 40.2bn to 50.0bn ($431m).

Talking to MCV, Piers Harding-Rolls, head of games research at IHS Technology, said: "Sony's performance in terms of its Games and Network Services division was strong, validating the company's decision to launch the PS4 Pro and Slim when it did and also enter the VR market with the PS VR. With PS4 shipments up 15% year-on-year, Sony has maintained the sales volume growth rate of the platform shown in previous years at a time when it had started to soften.

"Significantly, Sony has also managed to improve operating profit margin within its games division due to three major factors - production costs savings related to hardware due to the slim remodel, sales of higher margin PS4 Pro consoles and digital content and services sales, which in general are higher margin than retail sales.

"That margin expansion is great news for the future of the business."

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