Sony Group’s pictures division achieved net profits of $1.3 billion in the three months to December 2021, boosted by a return to theatrical releasing and the blockbuster performance of “Spider-Man: No Way Home” in particular.
The pictures division’s $1.31 billion figure, reported Wednesday in a regulatory filing, compares with profits of $288 million in the preceding three months to the end of September 2021. It compares with net profits of $194 million in the equivalent quarter of 2020.
Parent company, Sony Group’s net profits grew by 20% in the three months to December 2021, hitting JPY461 billion ($4.15 billion at an average Dollar to Japanese Yen exchange rate of $1=JPY111). Sales were up by 13% to JPY3.03 trillion ($27.2 billion).
The bumper results, unusually, made the pictures division the largest contributor to Sony’s consolidated net profits. The pictures division, which includes the movie studios, television production and TV network operations, is now forecast to record its largest ever annual operating profits.
In commentary on the results, Sony said that it had released six movies in the quarter, compared with four in the same three months of 2020. “Ghostbusters: Afterlife” recorded a global gross box office of $181 million. “Venom: Let There Be Carnage” achieved global box office of $503 million in the quarter.
“Spider-Man” was released in mid-December 2021 and has earned $1.74 billion of GBO to date. Sony said that $1.28 billion of that was recorded in the third quarter, leaving the balance to contribute in the final quarter of the current fiscal year to March. Renewed licensing of TV series “Seinfeld” was another notable contributor to the division’s sales and profitability.
The games and network services division increased its year-on-year profitability in the quarter to JPY92.9 billion ($837 million), up from JPY80.8 billion. A weaker revenue figure reflected lower sales of hardware, peripheral devices and software, while the division’s increased profitability reflected decreased losses from the PlayStation5 console. It said that demand for the PS5 remains strong, but supply chain difficulties mean that it has revised its forecasts of the number to be shipped.
Music sector net profits slipped from JPY59.1 billion to JPY55.1 billion ($496 million) in the latest quarter. This was partly due to an unflattering comparison with the October-December 2020 quarter when Japanese movie “Demon Slayer: Mugen Train” contributed strongly to the music sector’s revenue and profits.
Adele’s album “30” was a global chart topper for several weeks and emerged as the division’s best-
selling recorded music product. It was followed by Doja Cat’s “Planet Her” and Lil Nax X’s “Montero.”
Behind the pictures and games divisions, the electronics manufacturing unit chipped in a sharply lower net contribution of JPY80 billion ($720 million).
Speaking on a conference call with media and financial analysts after the results announcement, executive deputy president and chief financial officer Totoki Hiroki, said that the group is willing deploy JPY2 trillion ($18 billion) into strategic investments in the medium term. So far it has committed JPY850 billion ($7.65 billion).
Late last year it agreed to merge its Sony Pictures Networks business in India with that of rival Zee Enterprises. Sony said that the deal will need regulatory approval and will likely only close in the second half of the next financial year.
Other strategic investments are moving faster. Already in 2022, Sony has announced moves to bulk up two of its most profitable business lines, games and semiconductors.
It agreed to invest $500 million as a minority investor in a new Japan-located chip foundry being built by Taiwanese semiconductor giant TSMC.
Sony Interactive Entertainment also announced the $3.6 billion acquisition of Bungie, a U.S.-based games developer previously responsible for the “Halo” and “Destiny” franchises.
Totoki said that roughly one third of the cost of Bungie will be made as deferred payments over several years, conditional on continued employment and other factors. He repeated recent statements saying that Bungie’s games will continue to be available on third party platforms.
The worldwide games content industry has doubled in size since 2014, Sony management said, from $81 billion in 2014 to approximately $179 billion in 2021. At the same time, the industry is becoming more competitive at a corporate level.
In recent weeks Microsoft has agreed a $68.7 billion deal to acquire Activision Blizzard, while Take-Two Interactive announced plans for a $12.7 billion takeover of casual games firm Zynga.
News of the Activision Blizzard mega-deal was seen as an escalation of the battle between Microsoft and Sony, which are both games console manufacturers and gaming network operators.
Sony’s shares, which had reached a multi-year high of JPY15,725 at the beginning of 2022, slumped by as much as 20% following Microsoft’s announcement. The stock has since perked up, but remains some 11% lower year-to-date.
On Wednesday, ahead of the results announcement, the group’s Tokyo-traded stock closed up by more than 4.5% on the day, at JPY13,400.