PlayStation profit drops 49% in Q2 due to increased game development and acquisition-related costs

Sony has issued a report for the second quarter ended September 30, 2022. Although the company’s gaming revenue continued to grow, its profit significantly declined due to increased costs and other factors.

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Sony’s gaming revenue

• The Games & Network Services (G&NS) segment reached ¥720.7 billion ($4.87 billion) in revenue in Q2 FY2022, which is up 11.6% year-over-year.
• PlayStation generated ¥179.2 billion ($1.21 billion) from hardware sales, which include revenue from PS4 and PS5 consoles.
• Game sales amounted to ¥369.9 billion ($2.5 billion).
• Add-on content (DLCs and in-game purchases) accounted for around 50.8% of this sum, followed by sales of digital (39%) and physical (10%) copies.
• Network services (PS Network, PS Plus, PS Now, and advertising revenue) reached ¥117 billion ($791 million).

Other financial results

• G&NS operating income (profit) was ¥42.1 billion ($284.7 million), which is down 49% year-over-year.
• When looking at results for the first half of the fiscal year, operating profit fell 42.7% year-over-year to ¥94.9 billion ($641 million).
• G&NS revenue increased 5% year-over-year to ¥1.32 trillion ($8.96 billion).
• The company also raised revenue forecast for the entire fiscal year ending March 31, 2023 by ¥10 billion to ¥3.62 trillion ($24.4 billion).
• The operating income forecast, however, was cut by ¥30 billion to ¥225 billion ($1.52 billion).

Why is Sony’s gaming profit falling?

When it comes to PlayStation’s operating income, the company listed several major reasons for the decline:

• Increase in costs for game development;
• ¥17.4 billion ($117.6 million) that was recorded as expenses related to acquisitions completed during the first half of FY2022, including the $3.6 billion Bungie deal;
• High ratio of US dollar-denominated costs due to foreign exchange rates;
• Decrease in sales of non-exclusive games, including DLCs.

Decrease in losses from hardware was the only positive factor cited by Sony.