RadioandMusic
| 17 Jul 2019
FY-16: Music sales prop up sagging Sony revenues

BENGALURU:  Sony Corporation (Sony) reported a 1.3 per cent drop in sales for the year ended 31 March 2016 (FY-16, current year).  

Sony's revenue for the current year was Ñ8,105.7 billion, for the previous year it was Ñ8,215.9 billion. Sony attributes the decrease to a decline of 20 per cent in sales of its Mobile Communications (MC) segment which was offset by a 11.8 per cent increase in sales of its Games and Network Services (G&NS) segment, and a 10.4 per cent in sales from its Music segment. The increase in sales from SonyÆs G&NS segment reflects an increase in sales of its PlayStation 4 (PS4).

SonyÆs reported net income attributable to stockholders at Ñ147.8 billion for the current year as compared to a loss of Ñ126 billion yen in the previous year.

Of special significance from the India perspective was the increase in Media Networks sales which was primarily due to higher advertising revenues in India and the United Kingdom. The Media Networks is a category in Sony's Pictures segment.

Music

Sony's Music segment comprises of Recorded Music, Music Publishing and Visual Media and Platform categories. The segment reported a 10.4 percent increase in sales to Ñ617.6 billion in FY-16 from Ñ559.2 billion in FY-15. Sony says that the increase was primarily due to the depreciation of the yen versus the US dollar. There was a significant increase in Visual Media and Platform sales reflecting the continued strong performance of a game application for mobile devices. In Recorded Music digital streaming revenues significantly increased, partially offset by a worldwide decline in physical and digital download sales. The current year includes the record breaking sales of AdeleÆs new album 25. Other best-selling titles include One DirectionÆs Made in the A.M., David BowieÆs Black Star and Meghan TrainorÆs Title.

The segmentÆs operating income increased 44.1 percent in FY-16 to Ñ87.3 billion from Ñ60.6 billion in the previous year.

Mobile Communications

MC segment reported 20 percent drop in sales in FY-16 to Ñ1,127.5 billion from Ñ1,410.2 billion in the previous year. The segment reported a lower operating loss of Ñ61.4 billion as compared to an operating loss Ñ217.6 billion in the previous year. The company says that this was because of a strategic decision not to pursue scale in order to improve profitability.

Game & Network Services

G&NS segment reported an increase of 11.8 percent in sales to Ñ1,551.9 billion in the current year as compared to Ñ1,388 billion in the previous year. The above mentioned gains from PS4 were offset by a decline in PS3 hardware and software sales. Operating income in FY-16 increased 84.4 percent in the current year to Ñ88.7 billion from Ñ48.1 billion in the previous year. Sony attributes the increase to increase in PS4 software sales and PS4 hardware cost reductions as well as the absence of write down of Ñ11.2 billion in the current year of PS Vita and PS TV components that was recorded in FY-15.

Imaging Products & Solutions (IP&S)

IP&S segment reported a 1.7 percent decline in sales in FY-16 to Ñ712.2 billion as compared to Ñ723.9 billion in the previous year. Sony says that sales of video cameras and digital cameras were lower due to the contraction of the market. This segment reported a 72.1 increase in operating profit in FY-16 at Ñ72.1 billion from Ñ41.8 billion in the previous year. The increase was due to improvement in product mix of digital cameras and price reductions.

Home Entertainment & Sound (HE&S)

HE&S segment reported a 6.4 percent decline in sales in FY-16 to Ñ1,159 billion from Ñ1,238.1 billion in FY-15. Sony says that this was due to a decline in unit sales of LCD televisions and a decline in home audio and video unit sales, reflecting a contraction of the market. Television sales declined 4.5 percent in FY-16 to Ñ797.8 billion as compared to last year.

The segmentÆs operating income increased to Ñ50.6 billion in the current year from Ñ24.1 in FY-15, primarily due to cost reductions and increase in product mix.

Devices

Devices segment revenue in FY-16 was flat (increased by 0.9 percent) to Ñ735.8 billion from Ñ927.1 billion in FY-15. The segment reported an operating loss of Ñ28.6 billion in the current year as compared to an operating profit of Ñ89 billon in FY-15.

Pictures

Pictures segment sales increased 6.8 percent to Ñ938.1 billion in FY-16 from Ñ878.7 billion in the previous year. SonyÆs Pictures segment is primarily comprises of Motion Pictures, Televisions Productions and Media Networks categories. The impact of forex rates and lower sales in Motion Pictures was offset by higher sales in Televisions Productions and Media Networks. The increase in Media Networks was primarily due to higher advertising revenues in India and the United Kingdom. The increase in Television Productions sales was primarily due to higher subscription video-on-demand (VOD) revenues from Breaking Bad, The Blacklist and Better call Saul.

Operating income for the segment declined 51.9 percent in the current year to Ñ38.5 billion from Ñ58.5 billion in FY-15.

Besides the above, Sony has two other segments û Financial Services and All Other services. Numbers of these segments have not been mentioned in this report.