Sony has released its financials for the second quarter ended September 30, 2019, and both sales and operating income are down in the company’s video game division.
According to the report, quarterly sales within the Game & Network Services (G&NS) division dropped by 17 percent year-on-year to 454.4 billion yen ($4.17 billion), while operating income fell by 28 percent to 65 billion yen ($596.8 million) over the same period.
Sony attributes that decline to “lower-than-expected” PlayStation 4 hardware sales, with the console selling 2.8 million units during the quarter compared to 3.9 million units last year — taking lifetime shipments to 102.8 million units.
Software also failed to meet expectations, and quarterly software revenue for both physical and digital releases dropped 255.6 billion yen ($2.34 billion) in Q2 2019 from 317 billion yen ($2.91 billion) in Q2 2018.
“Game software sales decreased primarily due to the absence of the major first-party hit title Marvel’s Spider-Man, which was released in the same quarter of the previous fiscal year, and a significant year-on-year decrease in the contribution from free to play games,” commented Sony.
Due to that drop-off in hardware sales, Sony has reduced its full-year shipment forecast for the PlayStation 4 to 13.5 million units from 15 million units.
The company has also downwardly revised its full-year fiscal forecast for the G&NS segment due to the delayed launch of The Last of Us Part II, which will now see the title launch during the next fiscal year.
As as result of that postponement, Sony now expects to see sales in the division hit 2 trillion yen ($18.4 billion) and operating income total 240 billion yen ($2.2 billion) by the end of the fiscal year on March 31, 2020.
“The three most significant reasons for the decrease in expected profit year-on-year are a decrease in first-party software sales resulting from the postponement of The Last of Us Part II that I just explained, a decrease in third-party software sales resulting from a deceleration of free-to-play titles, and the negative impact of exchange rates,” explained the company.
“PS4 hardware profit is expected to increase slightly as a decrease in unit sales is offset by hardware cost reductions. Profit from network services, primarily PlayStation Plus is expected to increase significantly due to a steady increase in subscribers.
“Since fiscal year sales are expected to decrease, we plan to constrain various costs, including marketing expenses, to a level below that of the previous fiscal year. However, operating expenses in the aggregate are expected to increase due to an increase in development costs for the next generation console PlayStation 5.”