Sony Group Corporation (NYSE:SONY) Q1 2023 Earnings Call Transcript

Unidentified Company Representative: And about the Pictures, in your second question, drama streaming, is there any — the impact of overseas market? And so overall, the business environment surrounding this area is that in overseas theatrical market, there are many tent-pole, the films released. So they become very active. But as a result of strike, the major studios, the productions have been actually delayed in major studios. And so there is some concern about advertising. So the theatrical, the business, after July, we have to pay close attention. And there is the competitive environment among the streamers. And so the content investment of those players may not decrease immediately. But as a result of the strike, there will be the change of the schedule about the production. And therefore, the future development since impact will be — will emerge. From now, we’d like to pay attention to that.

Unidentified Company Representative: Time is running short. So the next will be the last question. [Operator Instructions] [indiscernible] from Nikkei Newspaper, please.

Unidentified Analyst: Kutsumi from Nikkei. Can you hear me?

Unidentified Company Representative: Yes, we can, please?

Unidentified Analyst: One question. PS5 sales, the — you said that the actual is lower than the forecast. What is the reason for lower-than-expected sales, the sluggish personnel spending or other — the users went to other game hardware? Can you please explain the reasons?

Unidentified Company Representative: Thank you for your question. First quarter sales were 3.3 million units, slightly lower than the expectation. But from last year, 38% increase. We also believe that the demand is strong, and promotion itself was rather limited. In view of the profitability, we limited promotion activities and slightly weak. So starting from July in some regions, we have started the promotion on full-fledged basis. So the sell-through, we are looking at the sell-through, and we are seeing good signs already. So in view of the seasonality of the sales, the first quarter, slightly less than the target. But. On a fiscal year basis, especially calendar year-end, by that time, we believe that there is ample possibility for us to catch up. Especially towards the third quarter, we will be increasing the number of sales, and it’s important to increase the sales. And we will aim to achieve the target.

Unidentified Company Representative: Thank you very much. Now it is time for us to end this media Q&A session. Thank you very much. The Q&A session for the analyst and investors will start at the 4:50. Thank you very much for waiting. Let us now start this Q&A session for the investors and analysts. I would like to serve as the MC. I am of the Finance and IR Group member. The speakers are the same as the media. Session, the photos are shown on this PowerPoint slide. So I we’d like to now entertain questions and comments from the analysts and so on. [Operator Instructions]. First, from Morgan Stanley, please.

Masahiro Ono: I’m Ono of Morgan Stanley. My question is about games and the other one is I&SS. So I have 2 questions. First of all, that throughout the year that you have the annual plan for Game & Network Services systems, and the JPY7 billion is something that — JPY270 billion, so actually, that it’s only JPY10 billion. So that software, of course, the third party is a focus. So you had an analysis of flat, but you have raised that plan. And so there might be some impact, maybe the upside of this sales figure. However, this is only that level of the profitability you achieved. So maybe hardware promotion was accumulated and maybe that’s the result. But what is the size and scale you’re expecting to have some hint for the total scale you’d be achieving?