Sony on Wednesday raised its annual profit outlook after reporting a surprise second-quarter profit increase, as its gaming business continued to capture “nesting” demand driven by COVID-19 lockdown measures.

July-September profit reached JPY 317.76 billion (roughly Rs. 22,500 crores), up 13.9 percent from JPY 278.96 billion (roughly Rs. 19,700 crores) in the same period a year prior, the entertainment and electronics firm said in a statement.

The result compared with the JPY 197.55 billion (roughly Rs. 14,000 crores) average of 11 analyst estimates compiled by Refinitiv. Sony raised its annual profit forecast to JPY 700 billion (roughly Rs. 49,600 crores) from an earlier estimate of JPY 620 billion (roughly Rs. 43,900 crores). That compared with the JPY 672.33 billion (roughly Rs. 47,600 crores) consensus of 24 analysts.

The firm now forecasts its gaming division to post annual profit of JPY 300 billion (roughly Rs. 21,200 crores), from the previously estimated JPY 240 billion (roughly Rs. 17,000 crores).

Consumers’ shift to gaming software downloads and online subscription services during lockdown boosted profit despite the PlayStation 4 console coming to the end of its lifecycle.

Such high-margin online revenue is likely to help Sony’s gaming business stay profitable this year, outweighing massive marketing and production costs associated with the launch of the PlayStation 5 (PS5) console next month.

Sony pre-sold as many PS5 consoles in the first 12 hours in the United States as in the first 12 weeks for its predecessor PlayStation 4 device, Jim Ryan, CEO of Sony Interactive Entertainment, said in an interview.

“The demand as expressed by the level of pre-order has been very, very considerable,” Ryan told Reuters.

© Thomson Reuters 2020

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