In a recent financial update, Sony reported on the performance of its PlayStation brand through Q3 of its FY2023. It was revealed that 8.2 million PlayStation consoles were shipped in three months, and more than 89 million games were sold across PlayStation 5 and PlayStation 4, but those stunning figures were shielding some less than fortunate news: projections for Q4 FY2023 were slashed.
Originally, Sony intended to sell 25 million PS5 consoles in FY2023, which ends next month. However, that forecast was recently cut down to 21 million units. Not only that but the firm’s operating margin in the business came under scrutiny, all of which led to a whopping $10 billion being wiped from Sony’s stock value.
‘Extremely Disappointing’
In a report published by CNBC, the state of PlayStation was discussed by an equity analyst, Atul Goyal. In his breakdown of the situation, Goyal stressed that things are ‘extremely disappointing’, addressing Sony’s flailing operating margin in the games business. In a drastic drop on the board, Sony has gone from a value of around 13% in March 2022 to just under 6% in December 2023.
Goyal explained the gravity of this:
The shipment forecast cut for PS5 … is not what is disappointing … What is disappointing is the low level of (operating margin) … Their 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.
In CNBC’s report, it was claimed that Sony’s gaming margins are ‘almost near decade lows’. It seems that increasingly expensive production budgets are one contributor to this drop, which is a theory put forward by Kantan Games’ Serkan Toto.
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