Sony earnings show recovery but the PlayStation business is in decline

Sony CEO Kaz Hirai was a man on a mission when he took control of Sony in 2012. “One Sony” was his marching order, trimming down the company’s sprawling operations and bureaucracy into the lean, mean consumer technology company that it once was. Within one week of taking control of the company, Hirai said his plan included reducing fixed costs in the struggling, crucial television business by 60-percent, flexible costs by 30-percent, cutting 10,000 jobs, an nearly halving the number of TV models in the company line.

The plan is working. Sony turned an operating profit in the October through December quarter, an impressive turnaround from the catastrophic losses of the last fiscal year and the losses of the previous two quarters. On Thursday, Sony reported a profit of $496 million, less than the nearly $773 million market analysts expected, but not a bad holiday all the same. It isn’t healthy, but it’s certainly healthier. The same can’t be said for the company’s PlayStation business, though.

Sony’s entire video game division pulled in roughly $2.9 billion in revenue, a 15-percent year-on-year drop.

“In the game business, Sony is working to expand sales and operating income through the introduction of an attractive software lineup and through offering game software on mobile devices, including smartphones and tablets,” explained Sony during its briefing.

Its efforts are slow going. The company pointed to declining PlayStation 3 and PSP sales as the biggest cause of its holiday sales dip, but also singled out the PS Vita’s “slow penetration” of the market.

Sony sold a combined 6.8 million PS3 and PS2 consoles during the holiday quarter, only a small uptick from the 5 million sold the previous quarter, and a drop from the 7.4 million sold during the same period the year before. The introduction of a new PS3 model in October should have provided a stronger performance for Sony, but the company’s refusal to drop the price of the machine probably contributed to its weak sales.

PSP and Vita sales totaled 2.4 million over the holiday, down from the 2.7 million Sony sold during the same period the previous year. During that period, though, the PSP was still the driving portable force as the PS Vita had only been out in Japan for weeks before the close of the quarter.

Sony’s PlayStation brand needs new blood, and all signs point to a reveal of the next console on Feb. 20.

Sony may be back on its feet, but the PlayStation business is still on the ground

Editors' Recommendations