The global gaming boom helps Sony increase PS5 sales by 15% and raises fiscal year profit expectations

According to the Zhitong Finance APP, Sony Group (SONY.US), a leader in Japan's technology and entertainment industry, has raised its profit and total revenue expectations, driven by continuous growth in its gaming and music business sales, especially as the gaming boom in 2025 seems stronger than in 2024, thanks to years of massive investment in content.

As Sony shifts its focus entirely to acquiring intellectual property and concentrating on entertainment assets and gaming business, its efforts as a high-tech supplier to other hardware manufacturers have stagnated. In particular, its smartphone camera sensor business continues to struggle in a long-term sluggish market.

In contrast, global gamers' demand for the PlayStation 5 (PS5) remains strong, as this hardcore gaming console enters its fifth year since launch. Sony's ADR price in the U.S. stock market has recently continued to rise, although it has not yet surpassed the historical high set during the internet bubble in 2000. However, Sony's stock price in the Japanese stock market has repeatedly hit new highs since 2025, mainly because investors are betting that the gaming boom will continue to sweep the globe in 2025, and they are optimistic about Sony, the biggest beneficiary of this trend, emerging from a "long-term bull market."

The latest financial report shows that in the third quarter of the fiscal year 2024, ending December 2024, Sony sold 9.5 million PS5 units, an increase of over 15% compared to last year. Meanwhile, Sony's game software sales grew by 7% in that quarter, and network services sales increased by nearly 30%. The number of online subscription users for PS5 reached 129 million, setting a record far exceeding any generation of Sony PlayStation gaming consoles.

Kazunori Ito, research director at Wall Street investment firm Morningstar, stated, "The PS5 has significantly enriched its game library and expanded its user base. This should ensure greater profits in the next two years."

In the fiscal quarter ending December, the Tokyo-based entertainment and gaming leader also reported an unexpected increase in operating profit, while Wall Street analysts had expected a double-digit decline. This prompted Sony to raise its fiscal year net profit forecast by 10% to 1.08 trillion yen (approximately $7 billion), slightly above analysts' general expectations. Sony also raised its total revenue forecast for fiscal year 2024 by 4% to 13.2 trillion yen and increased its operating profit forecast for fiscal year 2024 by 2% to 1.335 trillion yen, both of which are also above analysts' general expectations.

Sony's significant revenue and profit growth is also attributed to the performance of its music business, with streaming services boosting sales related to recorded music and music publishing. The company's music business, which also includes smartphone games and anime publishing, has benefited from the continued popularity of these streaming service products outside Japan.

In addition to announcing strong performance, this Japanese tech giant also announced plans to repurchase up to 30 million shares, accounting for 0.5% of the company's total share capital, with a maximum repurchase amount of 50 billion yen, valid until May 14.

In January, Sony announced the promotion of Chief Financial Officer Hiroki Totoki to Chief Executive Officer, effective April, responsible for expanding the company's entertainment and gaming product portfolio 60-year-old Yoshikazu Tanaka is responsible for Sony's business expansion beyond gaming consoles, such as PC gaming accessories. In 2024, Sony is actively pursuing mergers and acquisitions to drive significant growth in its entertainment business. Sony was a bidder for Paramount Global and expressed interest in acquiring the Japanese content company Kadokawa Corp., but ultimately shelved merger talks with India's Zee Entertainment due to leadership disagreements.

Tanaka's promotion marks Sony's continuity, and the company may further withdraw its efforts to expand live service gaming. One of its most notable projects, Concord, failed and was terminated within two weeks of its release. The company also restructured the leadership of its gaming division, with Hiroki Totoki solely responsible for key gaming and network services, while Hermen Hulst will oversee the gaming studio division.

Last quarter, Sony launched the PlayStation 5 Pro, a high-priced, high-performance version of the company's flagship gaming console. Sony stated that this helped it achieve better-than-expected console sales momentum in the December quarter.

The gaming craze continues to sweep the globe, and 2025 could be the "greatest gaming year"

In 2025, Sony will welcome several blockbuster titles, including Capcom's Monster Hunter: Wilds and Rockstar Games' highly anticipated Grand Theft Auto VI, or "GTA 6," which is expected to excite gamers worldwide.

Tanaka stated at the earnings meeting, "The many upcoming popular games will help the PS5 maintain its current strong growth momentum into the next fiscal year."

Industry insiders expect that GTA 6 could break nearly all records in the video game industry—whether in terms of player scale or sales figures. Other highly anticipated games expected to launch in 2025 include Capcom's Monster Hunter: Wilderness.

"We expect 2025 to be the greatest year in video game history, and I believe Sony will take a significant share of that," said Pelham Smithers, an analyst specializing in the gaming industry at a London investment research firm that provides reports on the Japanese stock market.

Smithers added that the compatibility of PlayStation devices with games produced by other companies gives Sony a significant advantage over its competitor Nintendo, as Nintendo's consoles are limited to its own games.

Damien Thong, head of Japanese equity research at Macquarie Capital, stated, "The gaming business is becoming a key focus for Sony again, and gaming profits appear to be sustainably growing. Moreover, Sony is undervalued, and they will achieve strong profit growth through their gaming business—this is a very good strong combination." "Sony's stock price stands out among global gaming stocks at this time, with one of its core supports being that it has not been overly negatively impacted by analysts' geopolitical concerns like semiconductor and other hardware companies."