Variety: Sony Pictures Profits Slip to $124 Million in Second Quarter as Group Makes 75% Leap

Story from Variety:

Sony Group Corporation reported little changed revenues of JPY2.91 trillion ($19 billion) for the July to September period, representing the second quarter of its April to March financial year. But group-level net income surged by 75% to JPY3.39 trillion ($2.21 billion).

The ‘Pictures Division,’ which spans the feature film, TV channels and TV content production operations, reported revenues of $2.38 billion for the three months with operating income of $124 million and adjusted operating income of $218 million.

Each of those represented quarter-on-quarter increases, though sales and operating income were down on a year-on-year comparison. In the second quarter of last year, pictures division profits were $204 million.

The Games and Network Services division achieved sales and income gains. Revenues were JPY1.07 trillion ($6.99 billion), compared with JPY954 billion ($6.23 billion) in the same quarter last year. Operating income was JPY139 billion ($908 million), compared with JPY49 billion ($320 million).

The Music Division reported revenues of JPY448 billion ($2.92 billion), compared with JPY409 billion ($2.67 billion). Its operating income also improved to JPY90.4 billion ($590 million) compared with JPY81 billion ($529 million).

The Pictures Division continued to feel the impact of the 2023 writers’ and actors’ strikes, causing production delays and lower deliveries, Sony said. That negative was partly offset by higher revenues at Crunchyroll and the sales boost from Alamo Drafthouse Cinema. Profits in the unit were also negatively affected by higher programming and marketing costs in the group’s India media networks.

Games unit revenues increased due to higher third-party games and add-on sales and a gain from network services. Hardware (console) sales were lower, but their profitability improved. The PlayStation Network counted 116 million subscribers worldwide at the end of the quarter, compared with 107 million at the same time last year.

Music division sales were lifted by improvements in live events, merchandising, recorded music and music publishing. There was also higher revenue from music streaming. These were partially offset by higher costs. Its top music acts during the quarter were SZA with “SOS,” David Gilmour with “Luck and Strange” and Travis Scott with “Utopia.”

Sony released five theatrical films during the July-September quarter (four last year) with “It Ends With Us,” by far the highest grossing. It earned gross revenues of $149 million in North America and $194 million overseas. The current quarter includes releases of “Venom: The Last Dance” and “Kraven the Hunter,” while “Paddington in Peru” goes out in January 2025.

While there have been industry questions over the last decade about Sony’s position within, and commitment to, the entertainment business, the group itself is no longer in any doubt.

The 2024 edition of Sony’s corporate report, published in September separately from its annual financial report, included a “Creative Entertainment Vision” statement, setting out its media and entertainment strategy for the next ten years. It handily explained how the group is pivoting from delivering ‘kando’ (which loosely translates to English as ‘happiness’) through hardware such as TV sets and the Walkman music players, to creating it instead.

Taking the example of anime (Japanese animated series and films), it explained how the group should maximize intellectual property value first of all by more thoroughly exploiting its own different units. Anime, which is forecast to grow internationally, is created through Aniplex, a subsidiary of Sony Music Entertainment (Japan), and exploited through Crunchyroll, Sony’s direct to consumer streaming platform that is a joint venture between Los Angeles-based Sony Pictures Entertainment (SPE) and Aniplex.