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Games Are Bright Spot for Sony, Tencent, Though Their Results Diverge

Sony Corp ADR 20200519 22.02

Game sales during coronavirus lockdowns were a bright spot for both Tokyo-based Sony Corp. and China's Tencent Holdings Ltd., though the two companies' overall results diverged.“Demand for digital entertainment has been increasing and this trend is likely to continue for some time,” said Sony finance chief Hiroki Totoki, noting more people were downloading games and movies from its online network. But another upside, in its image-sensor business, wasn't enough to save the quarter. Net profit fell 86%, while revenue was down 18%.

And Sony said that even if business returns to normal by the end of 2020, it still sees operating income falling by at least 30% in the current fiscal year, due to slower sales of electronics and health insurance. “Sales have decreased significantly with retail stores shutting down globally,” Mr. Totoki said. Sony said it would start selling the latest version of its PlayStation game machine, the PlayStation 5, in late 2020 as previously planned.The picture was rosier at Tencent, the world’s biggest videogame company by revenue and owner of the popular Chinese social app WeChat. Quarterly profit was up 6%, while revenue jumped 26%. “The games we see with the biggest upticks are those with longer session night games and team-based in nature,” Chief Strategy Officer James Mitchell said on a conference call. “This reflects that people may miss their colleagues and one way of socializing with them is through games.” Revenue growth for the gaming segment—Tencent’s biggest source of income—hit a two-year high of 31%.As China ended lockdowns, demand for gaming began leveling off in May, Tencent said. Still, the pandemic has brought structural changes to how businesses operate. More companies will start to invest in digitizing their operational and workplace infrastructure, which would benefit Tencent’s other services such as videoconferencing and cloud computing.

Tencent Holdings Ltd 20200519 22.02

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