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Just three years after assuming full control, Sony Group announced on Thursday that it is considering a partial spin-off of its financial business as the conglomerate doubles down on entertainment and image sensors.
Sony Financial Group, whose operations include life insurance and banking, will be spun off within the next two to three years, according to Sony, with the goal of listing the company and keeping a stake of just under 20%.
According to Sony Chief Financial Officer Hiroki Totoki, “it is a challenge to balance this with our investment in other growth areas such as entertainment and image sensors,” given the amount of capital the business needs.
Between its various business divisions, which include video games, music, and movies, the conglomerate is pursuing synergies. It was claimed that the HBO hit drama The Last of Us was responsible for increasing interest in the game franchise and the soundtrack.
The newly listed company would be able to keep the Sony branding thanks to a partial spin-off of Sony Financial, which the group claimed was made possible by modifications to tax laws.
Mio Kato, an analyst at LightStream Research and contributor to Smartkarma, said: “It doesn’t change anything significantly in terms of the outlook for Sony but it does make it a more pure play entertainment company which the market generally likes.”
In the fiscal year that ended in March, the finance industry reported a 5% decline in revenue to YEN 1.45 trillion (nearly Rs. 87,190 crore). A one-time gain from a real estate sale helped the operating profit increase by 49%.
Due to an accounting change, Sony anticipates a 40% decrease in unit revenue for the current fiscal year and a 20% decrease in profit due to the absence of one-time gains from the prior year.
A day after the company announced it would repurchase up to 2.03 percent of its stock, Sony’s share price increased by 6 percent in Tokyo trading.
Loveable Characters
As supply chain bottlenecks ease, Sony has stated that it anticipates selling 25 million PlayStation 5 consoles this fiscal year. That would be a PlayStation device record.
But it also foresees a decline in first-party software sales, which reflects a lack of strength in the games pipeline.
Among the games slated for release this year is a follow-up to Sony’s popular Marvel’s Spider-Man title.
The Legend of Zelda: Tears of the Kingdom sold more than 10 million copies in its first three days of release, outselling rival Nintendo, whose Switch console has an installed base of more than 125 million units.
The Super Mario Bros. Movie has also been a huge hit for it.
Sony CEO Kenichiro Yoshida claimed to have seen the film recently in Tokyo and to have played Super Mario in the past.
“Loveable characters and intellectual property (IP) can live for 30, 50, or 100 years,” he asserted.
For sustainable growth, Yoshida said, “that is something we want to invest in.”
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