Sony financial details reveal falling revenues in games business

Further details of Sony's financial results for the year ended March 31st show that the company's games division suffered an 18.3 per cent drop in revenue during the year, although software sales increased substantially.

Sony Computer Entertainment recorded revenues of 780.2 billion Yen (just shy of 6 billion Euro) during the year, along with an operating profits of 67.7 billion Yen (517 million Euro), down 40 per cent on the previous year.

The drop in revenues is attributed to a decline in unit shipments of the PS2, as well as the lower price point of the hardware, while the operating profit decline, although influenced by slower console sales, is largely a reflection of the huge investment being made in R&D for next generation platforms including PSP and PS3.

The PlayStation 2 has undoubtedly passed its peak in terms of hardware sales - although with 70 million units sold, that's hardly a massive blow to the platform. 20.1 million PS2 consoles were sold in FY 2004, an 11 per cent fall over the previous year.

The biggest drop was experienced in the United States, where unit sales dropped by 37 per cent - indicating just how badly that market needs a price cut to the hardware. In Japan, however, a combination of price cuts, new software launches and bundling deals saw the console's sales actually rise by 40 per cent.

In software terms, however, the PlayStation 2 had a stellar year - and much of Sony CE's half billion Euro operating profit is down to performance in this area. Software sales were up 17 per cent year on year, with 222 million units sold in total during FY 2004. Almost half of those were sold in North America - about 102 million units - but it was Europe that saw the strongest growth, with sales up 31 per cent to 79 million units.

Sony also gave figures for the performance of the original PlayStation, which showed that the venerable PSone is certainly on its way out - but is still performing much more strongly than market watchers might have expected. 3.31 million hardware units were sold in FY 2004, which is a dip of 51 per cent over the previous year, but still a substantial number nonetheless.

In FY 2005, which runs through to March of next year, Sony expects PS2 shipments to decline by some 30 per cent (and price cutting will presumably drop the value of the PS2 hardware business even further), while the PSone will disappear off the radar almost entirely, with unit shipments dropping to around one million.

We reported details of Sony Corporation's overall results last week - you can find them [right here].