PlayStation profit jumps 83% even as PS5 shipments fall 35%

Sony's gaming division is called Game & Network Services. In the quarter it earned 220.1 billion yen in operating income. A year earlier it earned 120.4 billion yen.

Operating income is the money left after the costs of running the business, before taxes and interest. Revenue rose 9% to 1,208.5 billion yen.

Here is the quarter next to the same quarter last year:

First-party games are the ones made by Sony's own studios. Network services means things like PlayStation Plus subscriptions and online purchases.

Sony shipped 2.6 million PS5 consoles, down from 4.0 million. That is a 35% fall. It is up from 1.6 million in the previous quarter, so the trend inside the year is better than the headline.

Sony counts consoles on a "sell-in" basis. That means consoles shipped to stores, not consoles bought by shoppers. For the first half of the fiscal year, shipments came to 4.2 million, compared with 6.5 million a year earlier.

Hardware revenue slipped from 230.9 billion yen to 219.7 billion yen. That is a smaller drop than the unit count, which suggests each console sold for more money.

The catch: the likely cause is supply, not shoppers losing interest. Memory chips have become expensive, tariffs add cost, and the PS5 Pro is reportedly so popular that some retailers have used lotteries to decide who gets one.

Sony said earlier that it had secured enough memory to meet its sales plan for the fiscal year, which ends in April 2027. More recently it reportedly told distribution partners that "temporary market supply constraints and high demand" would keep limiting retailer stock until next year.

Three things helped, and only one of them is about gaming.

• Software: full-game sales grew by 7.9 million copies. First-party sales rose to 8.2 million.
• Digital: 78% of full-game sales were downloads, up from 72%. Digital software revenue rose from 268.3 billion yen to 330.8 billion yen.
• Subscriptions and add-ons: network services revenue grew to 218.3 billion yen, and add-on content revenue rose from 299.8 billion yen to 313.1 billion yen.

Add-on content is anything you buy after the game, such as a new level or a cosmetic item. It is small per purchase but adds up across 127 million monthly users.

In real life think of a coffee shop that sells fewer espresso machines but more beans and more monthly coffee subscriptions. The machine brings you in. The beans pay the rent.

Two money details matter here, and neither is about how well games sold.

First, the yen was weaker. It averaged 159.3 to the US dollar, compared with 147.4 a year earlier. Sony earns in many currencies and reports in yen, so a weaker yen makes foreign sales look bigger. Sony says currency added 73.0 billion yen to revenue.

Second, last year's quarter carried two one-off costs. One was a 31.5 billion yen write-down on Bungie, the studio behind Destiny. The other was an 18.3 billion yen correction to development costs. A write-down, or impairment, means Sony lowered the value of something it owns on its books. Those costs did not repeat, so this year's comparison looks better.

Why it matters: the 83% headline is real, but part of it is a weaker yen and the absence of last year's charges. Games and online services still grew on their own.

Sony estimates that Marvel's Wolverine, made by Insomniac Games, sold about 2.4 million copies to players by November 4. That is roughly 50 days after its September 15 launch. The count leaves out add-on content.

For comparison, Ghost of Yotei sold 3.3 million copies in Sony's earlier update. Wolverine is a hit, though it is running behind that number.

The count also shows how Sony reports things. Hardware is counted when it ships to stores. This game figure counts copies sold through to consumers.

Yes, upward. Sony raised its full-year outlook for the gaming division.

• Revenue: from 4,540 billion yen to 4,830 billion yen.
• Operating income: from 660 billion yen to 700 billion yen.

Sony credits stronger third-party software sales, lower costs and growing network services. It also said that a change to the release date of one first-party game would partly offset those gains.

Across the whole company, quarterly revenue rose 10% to 3,429.4 billion yen. Operating income climbed 45% to 622.3 billion yen. Sony raised its full-year operating income forecast from 1,720 billion yen to 1,870 billion yen.

The first quarter of the fiscal year, April to June, looked different. Gaming revenue was about flat at 937.1 billion yen, and operating income rose 37% to 54.1 billion yen. Sony credited a favorable exchange rate and refunds linked to US tariffs.

This quarter, revenue grew and profit nearly doubled. So the second quarter was a stronger step up than the first, even with fewer consoles.

Software shows the shift clearly. Sony's game software sales came to 708.5 billion yen, up from 629.3 billion yen a year earlier. Network services grew 19.5%.

• Spring: 1.6 million consoles, against 2.5 million a year before.
• Summer: 2.6 million consoles, against 4.0 million a year before.
• Total so far: 97.9 million PS5 consoles shipped since the launch in June 2020.

Digital downloads have been a hot topic for Sony this year. Players who prefer discs may not love the 78% figure, but it explains why software profit keeps growing: a download has no disc, no box and no shipping.

Grand Theft Auto VI launches on November 19, in two weeks, on PS5 and Xbox Series X and S. Pre-orders are said to have already reached about $750 million.

That is why the supply question matters. A big game pulls in new console buyers, and stores may not have enough consoles to meet them. Sony is also closing in on 100 million PS5 consoles shipped. It stands at 97.9 million and should pass the mark in the holiday quarter.

The earlier numbers give a sense of the slowdown. In the first quarter of this fiscal year Sony shipped 1.6 million consoles, against 2.5 million a year before. The second quarter fell by more, but it also improved on the first.

• If you want a PS5: expect thin stock and possible lotteries or waitlists, especially around GTA VI.
• If you buy games: digital is now 78% of full-game sales, so more of your library lives on your account, not on a shelf.
• If you subscribe: online services are growing fast, so expect Sony to keep pushing them.
• If you are waiting for a deal: with demand high and supply tight, big console discounts look unlikely this holiday.