Sony Group announced on Thursday that it is exploring the potential for a partial spin-off of its financial business, just three years after taking full control. This move comes as the conglomerate focuses more on its entertainment and image sensor divisions.
Sony is considering a time frame of two to three years for the spin-off of Sony Financial Group, which includes life insurance and banking. The plan is to list the business while retaining a stake of slightly under 20%.
According to Sony’s Chief Financial Officer Hiroki Totoki, the challenge lies in balancing the capital requirements of the financial business with investments in other growth areas, such as entertainment and image sensors.
The conglomerate aims to create synergies between its various business lines, including video games, music, and movies. It highlighted the success of hit drama The Last of Us on HBO, which drove greater interest in the game franchise and its accompanying music.
The potential partial spin-off of Sony Financial, made possible by changes in tax rules, would enable the newly listed business to maintain the Sony branding.
Mio Kato, an analyst at LightStream Research, commented that this move doesn’t drastically change Sony’s outlook but enhances its status as a pure-play entertainment company, which is generally favored by the market.
In the previous financial year, the finance business saw a 5% decline in revenue to YEN 1.45 trillion (nearly Rs. 87,190 crore). However, operating profit rose by 49% due to a one-off gain from a real estate sale.
For the current financial year, Sony expects a 40% drop in revenue for the unit due to an accounting change, along with a 20% drop in profit compared to the previous year’s one-off gains.
Sony’s share price increased by 6% in Tokyo trade following the announcement that it would repurchase up to 2.03% of its stock.
Regarding the sales of its PlayStation 5 consoles, Sony anticipates selling 25 million units this financial year as supply chain disruptions ease. This would set a record for any PlayStation device. However, the company also forecasts a decline in first-party software sales due to weaknesses in the games pipeline.
Among the games scheduled for release this year, a sequel to Sony’s popular Marvel’s Spider-Man stands out.
Rival Nintendo, with an install base of over 125 million units for its Switch console, sold more than 10 million copies of The Legend of Zelda: Tears of the Kingdom within the first three days of its launch. It has also achieved great success with The Super Mario Bros. Movie.
Sony CEO Kenichiro Yoshida revealed that he recently watched the movie in Tokyo and used to play Super Mario. He emphasized the importance of lovable characters and intellectual property (IP) as long-term investments for sustainable growth.
In conclusion, Sony Group is considering a partial spin-off of its financial business to focus more on entertainment and image sensors. The conglomerate aims to leverage synergies between its different divisions and maintain its position as a pure-play entertainment company. With projections for PlayStation 5 sales and the release of new games, Sony is striving for sustainable growth through beloved characters and intellectual property.
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Eugen Boglaru is an AI aficionado covering the fascinating and rapidly advancing field of Artificial Intelligence. From machine learning breakthroughs to ethical considerations, Eugen provides readers with a deep dive into the world of AI, demystifying complex concepts and exploring the transformative impact of intelligent technologies.
