In a significant setback for Sony Group Corp., shares plunged by as much as 8.4% in early Tokyo trading, marking the steepest intraday decline since February 2022. This decline followed Sony’s decision to slash sales projections for its flagship PlayStation 5 (PS5) gaming console, signaling challenges in the global electronics market.
On Wednesday, the tech giant revised its revenue forecast after disappointing sales of the PS5 in the December quarter. Sales fell approximately one million units below analysts’ expectations, totaling 8.2 million consoles. As a result, Sony adjusted its fiscal year sales forecast for the PS5 from 25 million units to 21 million units, raising concerns among investors about the console’s future growth potential.
Sony’s Strategic Shift: Financial Unit Spin-Off and Market Competition
Amid the PlayStation 5 sales setback, Sony revealed plans to partially spin off its financial services unit in October 2025. This strategic move is part of Sony’s broader plan to prioritize the growth of businesses such as entertainment and image sensors, reversing a $3.7 billion take-private deal concluded in 2020. Sony aims to distribute over 80% of its shares in the financial unit, SFGI, to shareholders through dividends in kind and retain slightly less than 20% post-spinoff.
However, investors remained focused on the lackluster outlook, especially in light of upcoming competition. Rivals Nintendo Co. and Microsoft Corp. are set to launch new hardware for the holiday season, intensifying the competition Sony faces. Analysts expressed concerns about the potential disruption posed by Microsoft’s well-funded subscription service, Game Pass, on Sony’s gaming business.
Sony’s Challenges Beyond Gaming: India Strategy and Overall Financial Outlook
Sony’s challenges extend beyond the gaming division, as the company faces the need to reshape its strategy in India. A planned merger between Sony’s local unit and media company Zee Entertainment Enterprises Ltd. hit an impasse due to disagreements over leadership. This deal, a key component of Sony’s push into the Indian market with 1.4 billion people, now hangs in the balance.
Looking ahead, Sony adjusted its sales forecast for the fiscal year to ¥12.3 trillion ($81.7 billion), down from the previous ¥12.4 trillion. Despite reporting quarterly revenue of ¥3.75 trillion and an operating profit of ¥463.3 billion in line with analyst estimates, Sony acknowledged the PlayStation 5 entering the latter stage of its life cycle. Senior Vice President Naomi Matsuoka emphasized a shift toward balancing profitability and sales, anticipating a decline in the annual sales pace of PS5 hardware starting from the next fiscal year.
