Sony Pictures Quarterly Profit Falls to $300 Million

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Theatrical revenue was hard hit by the coronavirus pandemic but demand for Sony's new PlayStation 5 helped boost the company's full-year forecast.

Sony Corp. reported Wednesday in Tokyo that Sony Pictures saw its fiscal second-quarter operating earnings fall to $299 million as the novel coronavirus pandemic continued to weigh on the theatrical film business and hit advertising revenues.

The results represent a slide of 18.3 percent from the studio's profit of $366 million in the same period of 2019. Revenue at Sony Pictures fell $615 million in the quarter, a 25 percent year-on-year decline. Sony attributed the slide to a slew of negatives related to the pandemic: "Significant decrease in theatrical revenues due to theater closings; lower advertising revenues for media networks; and lower revenues from fewer deliveries of TV shows due to production shutdowns."

Countervailing forces limiting losses were higher TV and film licensing revenues due to increased demand for home entertainment, and much lower marketing costs in the motion picture unit. Sony Pictures left its full-year sales forecast unchanged, but revised its operating income projection upwards by 7 billion yen, reflecting the increase in licensing demand for the studio's content.

At the group level, Sony Corp. reported a healthy 13.9 percent increase in second-quarter operating profit and raised its full-year earnings outlook in response to robust demand for its PlayStation 5 gaming console, which releases in November.

Sony boosted its annual profit forecast to 700 billion yen from an earlier estimate of 620 billion yen. The conglomerate now forecasts its gaming division to post annual profit of 300 billion yen, a revision of a prior 240 billion yen estimate.

The earnings slip at Sony Pictures Entertainment comes amid a major restructuring at the studio. The company announced on Tuesday that it would be merging its domestic film and TV marketing divisions under one umbrella, a testament to the blurring of the line between theatrical and streaming as the twin tectonic forces of the pandemic and a consumer shift towards online consumption continue to reshape the industry. Some 35 Sony Pictures staffers are expected to be laid off as part of the plan.