• FY22 Q1 sales decreased 2% year-on-year to 604.1 billion yen primarily due to a decrease in software sales, including add-on content, partially offset by the favorable impact of foreign exchange rates. • Operating income decreased a significant 30.5 billion yen year-on-year to 52.8 billion yen primarily due to the impact of the decrease in software sales and an increase in game software development costs. • Despite the benefit of an increase in sales resulting from foreign exchange rates, FY22 sales are expected to decrease by 40 billion yen from our previous forecast to 3 trillion 620 billion yen, primarily due to a revision in the software sales forecast for the year reflecting the results of Q1. • Primarily due to a decrease in software sales, the negative impact of foreign exchange rates, and a 13 billion yen increase in expenses associated with acquisitions in FY22 resulting from the earlier-than-expected closing of the acquisition of Bungie, Inc. (“Bungie”), FY22 operating income is expected to decrease 50 billion yen from our previous forecast to 255 billion yen. The bad news doesn’t stop there. Sony revealed a 15% decline in total gameplay time for PlayStation users in Q1 FY22. In June, Sony registered a partial rebound (+3%) compared with May 2022 and a lesser decline compared to June 2021 (10%). Still, the company admitted that this is a much lower level of engagement than they had previously forecasted. Sony reckons this is due to the decelerated growth of the overall game market now that COVID restrictions have more or less been lifted everywhere in the world, incentivizing customers to spend their time in outside activities. In the second half of the fiscal year, though, Sony plans to improve user engagement levels thanks to major PlayStation releases such as God of War Ragnarök (due on November 9th for PlayStation 4 and PlayStation 5), increased PS5 hardware supply, and promotion of the overhauled PlayStation Plus. On the upside, though, Sony managed to ship 2.4 million PlayStation 5 consoles in the past quarter, slightly more than in Q1 FY21. The aggregate PS5 lifetime sales are now at 21.7 million units.
