Sony Cuts Profit Forecast Amid Declining Performance in Gaming

Japan's Sony (NYSE:SONY) Group Corp on Friday cut its full-year profit forecast due to an expected weaker performance at its key gaming unit, which posted a sharp drop in first-quarter operating profit as consumer interest in games waned.

Sony's gaming unit posted a 37% drop in profit in the April-June quarter from a year earlier, with Chief Financial Officer Hiroki Totoki pointing to a lack of high-profile games and the easing of COVID-19 restrictions dampening stay-at-home demand. The maker of PlayStation 5 consoles cut its annual operating profit forecast for its gaming unit by 16%, citing an expected decline in game sales from external developers, while recording expenses from the earlier-than-expected closing of its deal with "Halo" creator Bungie. Sony said it aims to sell 18 million PS5 consoles this fiscal year as supply chain bottlenecks ease and production ramps up. It sold 11.5 million units in the year ended March. The group sold 2.4 million PS5s in the first quarter, only a small increase on the same period a year earlier. Among the PlayStation games Sony hopes will boost user engagement is "God of War Ragnarok", due for release in November. Sony cut its annual operating profit forecast by 4% to 1.11 trillion yen ($8.37 billion). First-quarter operating profit rose 9.6% to 307 billion yen, beating analyst estimates, driven by demand for movies and television programs. Last year, Sony posted a record profit of 1.2 trillion yen, supported by demand for entertainment content. Sony shares closed flat ahead of earnings. The group's shares have lost about a fifth of their value this year, compared with a 3% drop in the blue-chip benchmark index.