Sony’s Q1 Profits Boosted By Video Games

Published: 29 July 2016

So video games aren’t a waste of time after all?

The day has been saved, once again, by video games. That’s right folks. As far as Sony is concerned, whatever your parents told you about video games (for example that video games are a total and utter waste of time, energy, and money. Life too) is wrong.

It is plain wrong as far as the people who work for Sony are concerned. Video games have formed the largest slice of Sony’s financial pie of Q1 profits.

Sony reported these results two days ago and stated that the gaming department of Sony has helped the company a lot (this quarter) and is forecasted to carry the company forward to a bright future.

VentureBeat disclosed that Sony was able to generate $3.2 billion in revenues alone in the first fiscal quarter this year.

But those are not Sony’s total revenues. The gigantic figure of $3.2 billion in revenues was what Sony was able to bring about from its game and network services department alone.

As expected, this massive figure is around 14.5 percent larger than the one Sony was able to put up around this time last year.

The game and network services division’s earnings before interest and taxes were $427 million. That figure too was up by a massive 126 percent when compared to last year’s figure.

The reports from the likes of VentureBeat also revealed that the gaming section of Sony was able to make up a monstrous 78 percent of Sony’s $546 million Q1 profit totals.

Sony had stated earlier that the increase in its profits for Q1 of this year was a direct result of increased sales in games.

Sony also clarified that these profits were not achieved as a result of hardware sales (think Playstation 3, Playstation 4, PS Vita consoles. Not to mention Sony’s VR technology ) but were a result of game sales only.

With that said, some industry insiders have noticed that the reduced manufacturing cost of Playstation 4 must have helped Sony to put up greater numbers in its profit columns.

Perhaps, readers shouldn’t be swayed away by the huge profit percentages Sony has been able to achieve this year compared to the last one because overall, Sony experienced significant financial losses.

Sony reported that the company’s finances are down by 10.8 percent on a yearly basis and they amount to about $15.7 billion. But that’s nothing when you compare it to the loss Sony suffered in its profits.

Sony underwent a profit loss of 42 percent and the figure came out to be just a shade over $546 million.


Sony has reported massive losses despite increases in game sales.

In addition to those announcements, Sony also disclosed that the company has reduced its estimates for the full year revenues to $15.35 billion. That figure is about $850 million less than the earlier figure of $16.2 billion that Sony had expected.

After disclosing its profit and revenue numbers, Sony also cited events such as the decline in smartphone sales, life insurance and semiconductor sales as primary reasons for the decline in profits and revenues.

Not to mention, Sony also stated that the Kumamoto earthquake didn’t help the company’s business either.

At the moment, the gaming section of the company has been able to offset the losses incurred by other Sony businesses. Whether that would continue to happen in the future as well is a question no one can answer.

But, die hard Sony fans can rejoice in the knowledge that Sony isn’t the only company that has,after revealing its financial figures (not as a result of disclosing the figures), suffered losses.

The other gaming related company that has lost a lot of money this year is Nintendo.

Sony’s long-term rival in the gaming industry, Nintendo, also revealed huge financial losses this year in comparison to the last year.

Nintendo also,did reveal that Pokemon Go was almost a non-factor in its latest financial reports.

Nintendo divulged its financial report for the three months that end in June 2016 and the report stated that Nintendo had amassed a net loss of 24.5 billion yen this time around.

For the same period in 2015, Nintendo posted a profit of 8.2 billion yen which equals approximately $80 million.


Is anyone ready to believe in a Sony comeback after this?

Nintendo posted a revenue of 25.1 billion yen from the sales of its hardware products while it reported 34.8 billion yens from software sales alone.

Along with that, Nintendo also posted a 1.6 billion yen income from products such as smart devices and IP related services. That figure is significantly higher than last year’s 932 million yen.

It is easy to understand how Nintendo posted these miserable numbers. Nintendo had expected fireworks from titles such as Star Fox Zero, Mario, Sonic, Kirby and Shovel Knight.

But none of these titles managed to pass one million sales this cycle.

If that wasn’t enough that Nintendo had to bear further bad news as Wii U hardware sales were also reported to be down to 220,000 this year, from 470,000 last year.

Industry insiders agree that Nintendo has a fighting chance of changing their financial condition around with titles such as Zelda: breadth of the Wild, Pokemon Sun and Pokemon Moon due to launch in the coming months.

Nintendo can also bank of its NX console is expected to offer a unique mixture of power and portability and with potential titles such as the Zelda collection and Monster Hunter gaining traction in a huge market like Japan, the company can look towards a bright future indeed.Nintendo’s NX console is due for launch sometime in March 2017.

Pokemon Go’s popularity should also help Nintendo sell more of its upcoming role-playing games such as Pokemon Sun and Pokemon Moon.

Nintendo has recovered from financial losses in the past too and most of the company’s recovery is dependent on how its franchises like Pokemon/Zelda sell in the gaming market.

Some have suggested that Nintendo should pay particular attention to Pokemon Go’s financial success in the augmented reality smartphone gaming market.

Despite being a free-to-download mobile game, Pokemon Go has done extremely well in terms of downloads and revenues for its developers.

Since Nintendo missed out on that opportunity because the company simply didn’t have anything to do with the development of Pokemon Go, experts have suggested that Nintendo should try to copy that model by introducing its biggest games such as Mario, Zelda, and Pokemon to the Android market along with the PC market.

That will also help the company in terms of expanding its customer base and increasing its profit margins.




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