Japanese electronics and media giant Sony Corp on Wednesday hiked its full-year profit outlook by a third as it taps surging demand for video games, music and movies as people feast on home entertainment amid COVID-19 lockdowns.
Sony now expects 940 billion yen ($8.95 billion) in operating profit in the 12 months through March compared with the 700 billion yen it previously expected. That prediction is well above an average 812.9 billion yen profit forecast from 18 analysts, Refinitiv data shows.
Third quarter operating profit for the October-December quarter jumped 20% to 359.2 billion yen from a year ago, sailing past a consensus 179 billion yen estimate from six analysts surveyed by Refinitiv.
The coronavirus has curbed travel and kept people away from bars and restaurants in many countries. With more time to kill at home amid lockdowns, many have spent instead on games or streamed content to stay entertained.
That means that like Japan’s Nintendo Co and its Switch games console, Sony is getting a boost from strong demand for its new PlayStation 5. Launched in core markets in November, the console, which sells for as much as $500, quickly sold out on online retail sites in the United States and Japan.
That shift to the new games console is also expected to encourage gamers to move to online downloads or subscription services, helping Sony boost the profitability of its gaming unit.
Historically better known for hardware like the Walkman music player and TVs, Sony has invested heavily in recent years in beefing up its entertainment content and distribution business.
In December it agreed to buy AT&T Inc’s animation business Crunchyroll, giving it 3 million subscribers across 200 countries. On Tuesday it announced the planned $430 million purchase of record label Kobalt Music Group, which specialises in independent musicians.
At the same time, Sony is streamlining its consumer electronics business, with plans this year to close a factory in Malaysia which manufactures home audio equipment, headphones and other products.