PlayStation Earnings Slips for the Quarter But Business Remains Strong

I’ve noticed a bit of mixed reports on PlayStation’s numbers, which were released yesterday as part of Sony’s overall earnings report. As Matt Perez writes for Forbes:

Sony reported Game and Network Service sales of 319.9 billion yen ($3 billion), a 11.3% decrease year-over-year. Operating income for the segment also decreased 20.6% to 19 billion yen ($181.7 million). Sony noted the weak numbers derived from the PlayStation 4 price reduction in September and the appreciating yen.

So far so good – PlayStation is still doing big numbers for Sony but revenue (sales) is down due to a price reduction on PS4 and a decrease in the value of Yen. The former was obviously expected when Sony dropped PS4 prices down to $299 by introducing the new slim model. But I do have a problem with the following:

Despite the losses, the company still moved 3.9 million units in Q2 – nearly identical to the 4 million units sold in the same period last year.

I’m no financial analyst but I don’t see any losses anywhere on PlayStation’s balance sheet. Are sales lower compared to the previous quarter from a year ago? Yes, but that’s a far cry from ‘losses’ which makes it feel like PlayStation is losing money. Instead, they didn’t make AS MUCH money and that’s a big difference.

With the quarter behind them, Sony is now chugging at full speed towards selling 50 millions PS4s by years end, having already reached nearly 45 million units sold. Between the price drop and PS4 Pro, I’d wager Sony pushing ending next quarter with 53-55 million PS4s sold. Overall, between PS4, PS4 Pro, and PS VR, Sony will likely have a great holiday/Q3 quarter.

Another bright spot for PlayStation comes via their Network services which incorporates PSN, PlayStation Now, and PlayStation Vue.

The Game and Network Services arm of Sony was one of the few bright spots in the previous quarter, boasting year-over-year increase in both sales (14.5%) and operating income (126.3%). The first half of fiscal year 2016 still shines bright for Sony’s game network, with an increase of 19.6 billion yen ($187.4 million) in operating income and a slight but stable 0.2% increase in sales; 650.3 billion yen ($6.2 billion) in total.

As for PlayStation Vita, it’s not even mentioned anymore. From Sony: