Sony’s stock value drop by about $10b after lowering PS5’s sales forecast for the fiscal year, analysts question near decade-low profit margin

[Gamernyc78]

Sony plunged $10 billion after its PS5 sales cut. But a bigger issue is its near decade low games margin

Around $10 billion of value was wiped off Sony's stock this week after it cut its sales forecast for its flagship PlayStation 5 console for the fiscal year.

www.cnbc.com

Sony this week announced it now expects to sell 21 million units of the PS5 in the fiscal year ending in March, compared with a previous forecast of 25 million units.The company’s shares fell after the announcement, with around $10 billion of value wiped off the stock since the forecast cut, according to a CNBC calculation using FactSet data.

But analysts were watching another key metric — the operating margin in the gaming business — which came in just under 6% for the December quarter, according to a CNBC calculation. By contrast, Sony’s operating margin was more than 9% in the December quarter of 2022.

He added that prior to the January-to-March quarter of 2022, margins at the gaming unit were around 12% to 13% in the previous four years.

The latest quarter’s single-digit margin for Sony is present “despite various tailwinds that should have driven up the margins towards 20%,” Goyal said, adding that the situation is “extremely disappointing.”

“Their rev (revenue) on digital sales, add-on-content, digital-downloads are at all time highs… And yet their margins are at decade-lows. This is just not acceptable,” Goyal said in an email to CNBC.

Toto said that part of the reason why margins are being squeezed more recently is that software production costs have been rising.

 

[Gamernyc78]

We got the talk of profit margins earlier...

Sony president wants to improve margins with releases outside console. Also Sony Says Big PS5 Price Cut Would Be 'Very Difficult'

They really following Xbox footstep lmao eh no one to blame when PS finally implodes in itself like Xbox this will effect PS6 Its literally what started it. Xbox 360 many true exclusives. Reasons to own an xbox. Xbox announces they will be releasing games day 1 on PC. Lots of comments from...

icon-era.com

 

[Nhomnhom]

PlayStation was never known to be massively profitable but has been consistently profitable since 2014 while out competing a company that made drastically more investment and was willing to run an unprofitable gaming division to remove PlayStation from the market.

Sony has not been aggressive enough with the PS5 to lead anyone to believe is would do much better than the PS4.

 

[Gamernyc78]

PlayStation was never known to be massively profitable but has been consistently profitable since 2014 while out competing a company that made drastically more investment and was willing to run an unprofitable gaming division to remove PlayStation from the market.

Sony has not been aggressive enough with the PS5 to lead anyone to believe is would do much better than the PS4.

We shall see what plans they have in store. We knew the stocks would drop following the news they failed to meet projections but thts how the stock market is, you fart a little bit of negative news and they go down.

 

[Etifilio]

go put more games on PC, it will surely help...

 

[FatKaz]

The big issue right now with ps5 sales is getting those who are still on ps4s to move over.

GTA6 will cause a massive shift, if activision decide to drop cod for ps4 that would help as well.

EA probably won't drop fifa or other sports games anytime soon for ps4.

The last fifa that came out for ps3 was 2018!

 

[Etifilio]

their profits were all time high back when they used to make Only On PlayStation a thing, since they started porting games to PC in order to make MORE money, they've been dropping in profit, the only thing they're doing by porting singleplayer games to PC is making Steam an even stronger competitor

 

[JAHGamer]

A 10 billion dollar drop in market cap is not really newsworthy lol......

 

[FatKaz]

their profits were all time high back when they used to make Only On PlayStation a thing, since they started porting games to PC in order to make MORE money, they've been dropping in profit, the only thing they're doing by porting singleplayer games to PC is making Steam an even stronger competitor

The other issue is the budget of these game are getting out of control.

But i'm sure totokis plan of putting more games on PC will solve that problem

 

[Etifilio]

The other issue is the budget of these game are getting out of control.

But i'm sure totokis plan of putting more games on PC will solve that problem

games getting cracked on day one, even less sales, go day and date Sony... trust PC gamers

 

[Etifilio]

the right thing would be to increase the games to $80, not to port them to PC, you have to milk your instal base, where you gain 100% of each first party title you sell and 30% of each third party, again, by putting these system seller singleplayer games on PC, they're making Steam/PC the best place to play, consoles need real exclusives to sell well, look at how strong the Switch sales are even after 7 years in the market.

 

[Shmunter]

Not sure if addressed, why the low profit margin? Re-investment? Amortising capital purchases like studios??

 

[Thirty7ven]

Gotta love how Sony has been pretending like PlayStation isn’t that important, it’s niche, acting a bit embarrassed by its success while acting like Sony pictures and Sony music are above it, and now the market is telling them that actually you better get your shit together with this PlayStation thing and stop fucking around.

Not sure if addressed, why the low profit margin? Re-investment? Amortising capital purchases like studios??

First party output was dog shit last year and Nintendo has proven that first party is what makes you the big bucks.

 

[Box]

This is great news, Sony Stock is cheap now. Buy a ton of stock and sell it back when the prices go up

 

[Darth Vader]

Those PS5 ports are surely increasing profitability!

 

[Nhomnhom]

their profits were all time high back when they used to make Only On PlayStation a thing, since they started porting games to PC in order to make MORE money, they've been dropping in profit, the only thing they're doing by porting singleplayer games to PC is making Steam an even stronger competitor

They are also devaluing their games by exposing them to piracy. Even a pirate had reasons to buy a PS5 since that was the only way to play many games, now that isn't the case anymore and all their single player get cracked day 1 and are a click away.

 

[Etifilio]

They are also devaluing their games by exposing them to piracy. Even a pirate had reasons to buy a PS5 since that was the only way to play many games, now that isn't the case anymore and all their single player get cracked day 1 and are a click away.

like, the AUDACITY to charge us 70 for a game, then sell a better version of the game for 60 on PC, not putting any type of protection on the release leading to the game being easily cracked just MINUTES after its release on PC, and i'm not even going to mention the fact we have to pay PS Plus to play a game like Helldivers 2 and PC players don't need to spend a cent on it to be able to play online on the *shockingly* SAME servers

 

[Nhomnhom]

like, the AUDACITY to charge us 70 for a game, then sell a better version of the game for 60 on PC, not putting any type of protection on the release leading to the game being easily cracked just MINUTES after its release on PC, and i'm not even going to mention the fact we have to pay PS Plus to play a game like Helldivers 2 and PC players don't need to spend a cent on it to be able to play online on the *shockingly* SAME servers

Then those same PC players will band together with Xbox fans to shit on Sony. I have no sympathy for Sony here, they are digging their own grave.

 

[Gamernyc78]

like, the AUDACITY to charge us 70 for a game, then sell a better version of the game for 60 on PC, not putting any type of protection on the release leading to the game being easily cracked just MINUTES after its release on PC, and i'm not even going to mention the fact we have to pay PS Plus to play a game like Helldivers 2 and PC players don't need to spend a cent on it to be able to play online on the *shockingly* SAME servers

I agree but either way paid online wouldn't work on PC or be achievable long term as PC gamers would just find a way to do their own online servers

PC games can always just skip all of the reasons for needing multiplayer infrastructure by giving the old fashioned input box of which IP you want to connect to.

This simple option makes a game able to play multiplayer with other players no matter how old it is (as long as TCP/IP is a supported protocol on the world web).

 

[JAHGamer]

First party output was dog shit last year and Nintendo has proven that first party is what makes you the big bucks.

Nintendo makes most of their money from 1st party because their game are super cheap to make and never go on sale. Conversely, Sony never really made most of their profit from 1st party, that's just the cherry on top. 1st party games are to draw people in to buy everything else, PS Plus subs, 3rd party games, dlc, mtx, controllers, headsets, etc. Which makes the PC port initiative even dumber