Gaming bails out Sony

Gaming bails out SonySony bounces back from its Q1 loss with PSP, PS2 leading the way; steady sales raise shipment forecast by 1 million units.

TOKYO--Sony formally announced its second quarter results for the period ending September 30, and it was a mixed bag. Due to waning interest in (cathode-ray tube) CRT televisions and a crippling showing for its film division in Hollywood, Sony's overall numbers are down. And the company maintains its projection for a loss in the fiscal year ending March 2006.

Fortunately for Sony, those who weren't buying TVs with 1990s tech or lining up to see box-office bomb Stealth may have been at home playing with their PlayStation 2s or PSPs.

For the second quarter ending September 30, sales and operating revenue at Sony Computer Entertainment (SCE) was 214.2 billion yen ($1.86 billion), up 79.1 percent from a year earlier. The idiom "you have to spend money to make money" holds true for SCE, as the company spent millions on marketing for the PSP and on research and development for the PlayStation 3, yet it still made a profit of 8.2 billion yen ($71 million). Last quarter it took a loss of 5.9 billion yen ($51 million).

Sony explained that shipments in both hardware and software were up for the quarter, stating "in addition to significant contribution of sales from PSP, an increase of PlayStation 2 unit sales in Europe and the US compared to the same quarter of the previous fiscal year resulted in a significant increase in sales in all geographic areas."

Sony sold a little more than 5 million PS2s this quarter, a huge leap over the 3.02 million units from the same period last year. The company also sold 3.75 million PSPs, which debuted in Japan last December during the quarter. 10 million PSP handhelds have been shipped worldwide as of October 21.

Given the favorable sales of the PS2 and PSP, Sony is once again raising its shipment goals by 1 million units per console. The two gaming machines are now scheduled to each ship 14 million units by the end of Sony's current fiscal year. This is the second time this year that Sony has decided to increase its shipment forecast for the PSP and PS2. In Q1, the company raised its shipment from 12 million units to 13 million units.

But while the PS2 console numbers were up, the shipment of PS2 games fell to 50 million units--6 million units fewer than last year's quarter. However, the overall software sales were actually up due to its shipment of 9 million PSP games. Sony reports that its revenue from software in Japan and Europe significantly increased for the quarter, while stateside it slightly decreased.

Because of the continuing success of the PS2, analyst Colin Sebastian does not foresee a price drop in the console, as some have predicted for the holiday season. "While there has been some speculation that a PS2 price cut is forthcoming this holiday season, we believe this is unlikely, particularly as PS2 unit sales remain healthy, and the Xbox 360 does not directly compete with the PS2 due to differences in price, technology and capability. We believe a PS2 price cut to $129 or $99 is much more likely in 1H06."

By Hirohiko Niizumi -- GameSpot
Posted Oct 27, 2005 11:25 am PT

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