Exploding PlayStation 5 Sales Push Record Profit At Sony But It Comes With A Warning

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Even in the midst of exploding PlayStation 5 sales, Sony casts a conservative outlook on the current fiscal year. The company warns that a global slump in spending on electronics and entertainment will impact future profits.

It wasn't that long ago that it was next to impossible to find a PlayStation 5 console. The pandemic had many tech companies scrambling during a time when parts to build electronics, such as a next-gen console, were hard to come by. While those dark times for gamers are over, many seem to be holding on to their money in light of an unsettled economy. That new outlook amongst consumers has Sony tempering the expectations of its investors.

"We expect a clear slowdown in the European economy and feel strong uncertainty on the Chinese economy," Chief Operating Officer Hiroki Totoki told Bloomberg during an interview. "We're not optimistic about the outlook and remain vigilant especially on the US market, which has the largest impact on our business."

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Sony expects its operating income to be 1.17 trillion Yen ($8.7 billion) in the year ending March 2024, a bit below analyst estimates of 1.27 trillion Yen. This is in large part due to a reduction in fewer sales of PlayStation Studios games this fiscal year.

The company sold an estimated 19.1 million PS5 units in 2023, beating its own forecast of 18 million. It expects to sell 25 million units in the current fiscal year, which would be a record for the PS5. However, with new competitors entering the console arena, such as the Asus ROG Ally, it will be interesting to see if they have any ramifications on sales of the PS5 in the upcoming fiscal year.

"Sales of the hardware are increasing on par with Sony's plan, but the momentum of software, the lucrative part of the game business, remains weak. This shows PlayStation users are not buying new games," remarked Hideki Yasuda, a Tokyo Securities analyst.

Analysts are also concerned that the earlier PS5 shortage is having lingering effects on the software side of the business for Sony. Industry analyst Serkan Toto is also wondering where PlayStation mobile and live-service games are.