Sony Group Corporation (NYSE:SONY) Q2 2024 Earnings Call Transcript

And the second question here, so this is based on the reporting in the media, but I think it’s about Bungie. And last year, July, we acquired this Bungie and SIE, the Bungie management and testing franchise to be strengthened, and new game titles to be developed. And studios, the live science games to support development and also the studios to have the competitivity increased and made more efficient. So those has been our attempts and initiatives. And as part of that, Bungie to have the efficiency throughout the company. So the indirect divisions, we had about 100 people. We had cut as the labor so personal cut. And the impact on the profitability is already incorporated into the current forecast. So PlayStation Studios. So the indirect system, we have a review on this.

And so we had had personnel cuts regarding this. And the live service last year, in FY ’25, we have 12 titles. But this is the third question, I think, about the 12 titles. And then we are reviewing this. So the titles for the gamers’ expectations, we have not been able to meet the game’s expectations, but we are trying as much as possible that this would be played by the gamers and liked by gamers for a long time. So the 12 titles — so 6 titles would be released by FY ’25. That’s our current plan. And the remaining 6 titles, as for when to be released, we are still working on that. And the live service games and multiplay titles, that’s the total of that. So in mid- to long term, we want to end this kind of service, and that’s the unchange policy of our company, but it’s not that we stick to certain titles, but for the gamers and game titles quality should be the most important.

That’s how I feel about it. Thank you.

Unidentified Company Representative: Next, we’d like to take the next question. The Weekly Diamond, in Madasa, please?

Unidentified Analyst: I hope you can hear me?

Unidentified Company Representative: Yes, we can hear you.

Unidentified Analyst: I have two questions. The first question is about AT&S earlier in your presentation, you said that the demand on TV is going down. And as a result, you are working on the cost reduction effort. So which kind of cost are you trying to reduce? Please talk about this initiative. The second question is about imaging and sensing solution, the Slide 15. FY ’23 forecast says that the additional cost reduction. So more specifically, what is your cost reduction effort like.

Hiroki Totoki: Thank you very much for your question. First, on ET&S. So the sales and market condition will continue to be difficult. So our sales cost will be reduced and operation cost will also be cut down. So we have moved up this initiative. The sales amount will go probably go down slightly. But in terms of profitability, we believe that we can maintain the same level. So with that in mind, we will work on the cost reduction. As for I&SS, on this, the additional cost reduction that we are mentioning here, we have several points included here. The equipment, we are reviewing the equipment condition. So we are also reviewing the situation for next year, and we are reviewing the outsourced work as well. These are the main things that we are working on. That’s all.

Unidentified Company Representative: I’d like to move on to the next question. [Operator Instructions] Are there any questions? There seems to be none. So with this, we’d like to conclude the Q&A session for the media. Q&A for investors and analysts will start at 4:42.

Unidentified Company Representative: We’ll begin the Q&A session for investors, analysts shortly. Would you kindly wait until the Q&A session begins. Thank you very much for waiting. Now we’d like to entertain questions from the investors and analysts. I am Kondo of Finance and I group reserving master ceremonies. The people on the slide, so on the slide will be responding to your questions as was the case of media session. As for the operation of telephone set and attention point for attention, please look at the invitation that in advance. [Operator Instructions] We set aside about 20 minutes for Q&A session. Now we’d like to begin the question-and-answer session. [Operator Instructions] Morgan Stanley, MUFG Securities, please.

Masahiro Ono: Ono from Morgan Stanley. One question for a game and one for the films. First, game network. FY ’24, the factors for increase or decrease of revenue and profit. Can you explain these factors. For example, the small lighter Vaden will be launched, and they will have impact upon the result, the price increase of hardware and the plan change of the PlayStation Plus. About half of the year, there will be impact, simply calculated it will be in the latter half of JPY20 billion. What is your view on this? And Bungie’s acquisition cost will be significantly decreased, you said. If you can comment on the size of the impact. And first-party titles, to number of titles are pushed out to the next fiscal year, is that also a factor for increasing profit?

Are there any other factors which might impact decrease in the profit for the game sector? As for the pictures, long last, strikes are about to be complete — to be ended, and we feel relieved. Towards next year, fiscal year pipeline, and together with the release, depreciation costs might occur as well, there may be pluses and minuses for this year and next fiscal year. In the Pictures segment, is it possible to achieve increased income and increased profit? Or is that going to be difficult for next fiscal year? These are my questions.

Hiroki Totoki: Thank you for your questions. First, Game & Network Services, next fiscal year, what are the factors for pushing up or pushing down the income and profit? First, starting from PS Plus. As you pointed out, it will have full year impact from FY ’25. 12-year package, then that’s how the impact will be. True math package, which means about 60% of the users you can think in that way. And then acquisition-related cost, not only Bungie but number of acquisition-related costs occur. It — the cost peaked in FY ’23 in FY ’24, on a dollar basis as compared to this year, about 20% decrease will be the level of acquisition costs. That is about the acquisition. And then hardware-related costs, this fiscal year, in terms of selling units of volume, it is going to be the peak this year.