PS4 Leads Sony's Game Division; 18.7 Million Consoles Sold Among Large Losses for the Company

By Giuseppe Nelva

May 14, 2014

Sony just released its financial results for the fiscal year ending on March 31st 2014, and they are as many expected: while the company posted considerable losses (1.22 billion dollars), mostly due to the now spinned-off TV and PC divisions, the game division was led to solid results in sales by the release of PS4 and by its impact on network services.

Unfortunately even the large increase in sales for the game division (+38.5% year over year), brought by a total of 18.7 million consoles sold between PS3, PS4, PS2, PS Vita and PSP and 374 million games moved, still didn’t manage to avoid a loss of about 79 million dollars, “due to an increase in costs related to the launch of the PS4 as well as the recording of a 6.2 billion yen (60 million U.S. dollars) write-off of certain PC game software titles sold by Sony Online Entertainment.”

This increase in inflow was primarily due to the positive impact of an increase in notes and accounts payable, trade resulting from an expansion in production of PS4 hardware, compared to a decrease in the previous fiscal year. This increase was partially offset by the negative impact of increases in notes and accounts receivable and in other receivables, included in other current assets, from component assembly companies, compared to decreases in the previous fiscal year, and by the negative impact of a smaller decrease in inventories resulting from the expansion in production of PS4 hardware and its higher unit sales.

Luckily things seem to have a better outlook for the current fiscal year:

Sales are expected to increase primarily due to an increase in unit sales of PS4s and an increase in network services revenue. Operating results are expected to improve primarily due to the impact of the increase in sales and a decrease in costs related to the launch of the PS4.

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Sony predicts to sell 20.5 million consoles (between PS4, PS3, PS2, PS Vita and PSP, split between 17 million home consoles and 3.5 million portables) and to move 390 million games, generating a foretasted operating income of 20 billion yen (195.78 million dollar).

Unfortunately, despite the forecasted positive performance of the game division, the company still predict to lose 50 billion yen (just south of half a billion dollar) as a whole during the current fiscal year.

Below you can see the earnings breakdown for the full fiscal year 2013 and for the fourth quarter:

The game division posted significant sales, but did not manage to break even due to the reasons mentioned above, as shown by the table below:

And here’s a breakdown of sales by product category and the forecasts for the current fiscal year:

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Giuseppe Nelva

Hailing from sunny (not as much as people think) Italy and long standing gamer since the age of Mattel Intellivision and Sinclair ZX Spectrum. Definitely a multi-platform gamer, he still holds the old dear PC nearest to his heart, while not disregarding any console on the market. RPGs (of any nationality) and MMORPGs are his daily bread, but he enjoys almost every other genre, prominently racing simulators, action and sandbox games. He is also one of the few surviving fans of the flight simulator genre on Earth.

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