Games/Interactive

Sony’s launch of the PlayStation (PS) VR virtual reality headset for the PS4 video game console provided a lift for the company’s Game and Network Services business in the company’s fiscal third quarter (ended Dec. 31), the company said Feb. 2. But the 5.2% sales increase that Sony reported in that segment failed to offset weakness the company saw in other businesses, most prominently in its movie business, which it took a nearly $1 billion write-down in.

PS VR was “selling in-line with expectations” since its October launch, Sony CFO Kenichiro Yoshida said on an earnings call with analysts. Sales in the game division were “strong” during the holiday season and the global installed hardware base of the PS4 reached 53.4 million units as of Jan. 1, he said.

The VR headset seemed to be providing an especially strong sales lift to the new, enhanced version of the PS4, the PS4 Pro, that shipped in November, according to Sony. Sales of the PS4 Pro were running stronger than sales of the new slimmer version of the PS4 that shipped in September, it said.

The PS4 continues to sell well and Sony still expects to sell a total of 20 million PS4 consoles globally this fiscal year, up from 17.7 million last fiscal year, it said. The company sold 9.7 million units in the third quarter, up from 8.4 million in the third quarter a year earlier.

Revenue in the game division grew 5.2% from a year ago to $5.3 billion, “primarily due” to an increase in PS4 software sales, including sales through the company’s online network, and the contribution from PS VR, Sony said in a news release. The growth was only “partially offset by the impact of foreign exchange rates as well as the impact of a price reduction” on PS4 hardware, it said. Operating income in the game division jumped 24.5% to $431 million thanks mainly to the PS4 hardware cost-cutting and increased PS4 software sales, it said.

Total Sony sales and operating revenue fell 7.1% in the third quarter to $20.7 billion, while operating income tumbled 54.3% to $796 million. Profit fell 100.5 billion yen to 19.6 billion yen ($169 million).

Sony recorded an operating loss of 106.8 billion yen ($920 million) in the film business for the quarter after reporting an operating profit of 20.4 billion yen in the same quarter a year ago. That “significant deterioration” was “primarily due” to the $962 million impairment charge of goodwill that Sony took for that business, it said in the news release. Sales in the film division decreased 5% to $1.9 billion. Operating results were hurt by weaker sales results for its movies theatrically, Sony said. The decline in sales were only “partially offset by significantly higher” sales for TV programs that was due mainly to higher subscription VOD licensing revenue, it said.

The company indicated on the call that it had no intention to sell off its film business, expressing optimism in its coming slate of movies and its intellectual property.

Sony CEO Kazuo Hirai will be taking on a larger role to oversee the film business and is going to start keeping a second office, at Sony Pictures in Culver City, Calif., starting this month, Yoshida said. He added that Hirai’s “highest priority will be to select a successor” to Michael Lynton in the role of Sony Pictures CEO and to “enhance the management of the business.”