Sony raised its earnings outlook on Wednesday and witnessed an increase in first-quarter operating profit boosted by pandemic-induced demand for PlayStation 5 consoles, TVs, cameras, music, and movies. Data from Refinitiv showed that Sony’s operating profit for the quarter ended June 30 rose to 280.1 billion yen ($2.57 billion) from 221.7 billion yen a year earlier, surpassing the prediction of 207.96 billion by 10 analysts.
It raised its profit forecast for the year through March 2022 to 980 billion yen from 930 billion, a little bit lower than an average estimate of 1 billion yen from 25 analysts. The tech company has benefitted from the pandemic stay-at-home demand for its PlayStation 5 games console, as well as other of its products.
A global shortage of semiconductors, however, which is also affecting the likes of Apple, means Sony cannot produce enough PlayStation games consoles to meet the pressing demand. Sony had expected the increasing demand for its device to diminish, but fresh waves of COVID-19 infections around the world and inherent restrictions, have made that unobtainable.
The lack of semiconductors also poses a challenge to the production of other consumer electronics devices. “We use a lot of semiconductors and it is a source of concern,” Hiroki Totoki, Chief Financial Officer, said, adding that Sony cannot become complacent.
Sony in May said it expected to sell 14.8 million PS5 units in the fiscal year ending March 2022. The PlayStation 5 was met with massive reception by consumers after it was launched in major markets in November 2020. For Sony, the game console is a way to connect its traditional consumer electronics with its growing content business by encouraging online game downloads and sign-ups for subscription services.
While its consumer electronics business is its major focus, Sony is strengthening its entertainment content and distribution business. In December it agreed to buy AT&T Inc’s animation business Crunchyroll with 3 million subscribers worldwide. In June it bought Housemarque, the Helsinki-based studio behind PlayStation games including Returnal for the PS5, and arcade-style shooters like Super Stardust HD and Dead Nation. The company also offers movies on Walt Disney streaming service and Netflix.
In May, Sony said that it would continue to expand its content business through acquisition and added that it would spend 2 trillion yen over the next three years on strategic investments, including a push to expand subscribers to its gaming and entertainment services.