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Sony’s Film and TV Profits Leap to $212 Million in Third Quarter

Sony (AP)

Operating profits at the ‘Pictures Division’ of Japanese electronics and entertainment conglomerate Sony leaped to $212 million in the three months from October to December 2020. That compares with a $51 million operating profit in the equivalent period in 2019.

The parent company enjoyed a 9% local currency gain in revenues, which hit JPY2.70 trillion in the period, which represents the third quarter of Sony’s 2020-2021 financial year. Net profits at the group level were up 62% to JPY 372 billion ($3.54 billion).

The group’s ‘Games & Network Services’ unit saw revenues surge from JPY632 billion ($6.02 billion) to JPY883 billion ($8.41 billion), delivering operating profits up from JPY53.5 billion ($509 million) to JPY80.2 billion ($763 million).

The ‘Music Division’ recorded a 21% increase in revenues, from JPY217 billion ($2.02 billion) to JPY265 billion ($2.52 billion). The segment’s operating profits increased JPY36.3 billion ($345 million) to JPY59.7 billion ($569 million).

The Pictures Division achieved its profits improvement, despite a 16% dollar denominated drop in sector revenues to $1.83 billion. Revenues fell due to the weakness of theatrical releases – films “Monster Hunter” and “The Last Vermeer” grossed just $14 million in the period – and lower licensing revenues for new film and TV content. The revenues fall was partially offset by increased home entertainment and licensing sales for prior year and catalog titles. A decrease in theatrical releasing costs and the weighting of catalog licensing led to the operating income gains. Sony said that it is now revising upwards its forecast for the Pictures Division’s complete financial year that runs to March 2021.

One film did however contribute significantly to the results of Sony’s music division. Record-breaking Japanese anime “Demon Slayer The Movie – Mugen Train” was co-produced and co-distributed by Toho and Sony’s Aniplex unit. Music sector sales and profits were also lifted by improved streaming revenues for recorded music and music publishing, and a strong performance for mobile games applications.

The top-selling recorded music projects in the quarter were AC/DC’s “Power Up,” Harry Styles’ “Fine Line,” and Bruce Springsteen’s “Letter to You.” At Sony Music Entertainment Japan top seller was SixTONES’ “1st,” followed by LiSA, with a track from “Demon Slayer.”

Business in Sony’s games division was juiced by the launch of the PlayStation5 console during the third quarter. The group sold 4.5 million units of the PS5, and a little changed total of 1.4 million units of the PS4. Sony said that it had failed to meet demand for the new console and was attempting to increase supply.

The games unit booked revenues increases across the board: in hardware, game software, physical software, digital software, add-on content and in network services. The group said that it had 47.4 million PlayStation Plus subscribers at the end of the quarter (up from 38.8 million at December 2019) and 114 million monthly active users on its PlayStation Network.

Nine months ago, as the impact of the coronavirus was only beginning to be felt, Sony said that it had strong financial reserves and was in a position to be acquisitive. The corporation used that financial muscle on several occasions in 2020.

It took a minority stake in Chinese video entertainment player Bilibili, and July took a stake in Epic Games. It also bought up the minority interest in Sony Financial Holdings, making it a wholly-owned subsidiary. In December 2020, Sony Pictures announced the purchase of anime streamer Crunchyroll.

The day before Wednesday’s third quarter results announcement, Sony Music Entertainment announced it has entered into a definitive agreement with Kobalt Music Group to acquire Kobalt’s recorded-music operations, including AWAL, and Kobalt Neighboring Rights. The acquisition is priced at $430 million.

AWAL and Neighbouring Rights will become a new division within SME’s suite of independent artist and label services offerings and will be enhanced by the technology and network of SME’s independent music distribution company, The Orchard, according to the announcement. AWAL has released music by Billie Eilish’s brother and collaborator Finneas, Nick Cave and the Bad Seeds, Little Simz and others.

The acquisition is subject to regulatory clearance before completion and is not expected to have an impact on Sony’s financial results for the year to March 2021.

Sony shares, traded in Tokyo, closed at JPY10,465 apiece on Tuesday, a gain of 3% on the day. On Wednesday, ahead of the results announcement, they made further ground, moving up to JPY10,635.

Variety's Patrick Frater contributed to this post.

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