PlayStation operating profit dips as Sony pays toward Bungie buyout, game development costs

PlayStation starts off Fiscal Year 2023 with record Q1 sales, but operating profits dip as Sony continues paying towards the $3.6bn Bungie acquisition.

1 minute & 36 seconds read time

Sony's operating profit for its PlayStation video games business drops again as the company continues paying towards the $3.6 billion acquisition of Bungie, as well as costs of games development.

PlayStation operating profit dips as Sony pays toward Bungie buyout, game development costs 436

Sony Corp's latest fiscal year earnings report shows record growth in PlayStation's Q1 net sales, but operating profit has slid -7% in to 3.6 billion yen. Based on foreign exchange conversion rates provided by Sony, this represents a -35% decrease on a USD basis to $263 million and marks the lowest quarterly operating income since Fiscal Year 2017.

PlayStation's operating income has dropped significantly partly because of the Bungie acquisition. In 2022, Sony acquired Bungie for $3.6 billion, but instead of being paid all at once, the purchase price is being expensed over multiple quarters.

PlayStation operating income on a USD basis.PlayStation operating income on a USD basis.

PlayStation operating income on a USD basis.

In its earnings report, Sony lays out the reasons for the low operating income, outlining an increase in costs and operating expenses primarily due to the Bungie acquisition. Other costs include higher amortization expenses, which refers to the cost of games development. Once a game is released, game companies like Sony typically pay off the title's total development costs over time (Sony is doing the same to pay towards the Bungie buyout).

PlayStation operating income on a yen basis.PlayStation operating income on a yen basis.

PlayStation operating income on a yen basis.

Now that Sony owns Bungie, the Games & Network Services division will likely see continued higher amortization costs as Bungie continues developing Destiny content. Live games can incur consistent costs of this nature because the ongoing content production cycle demands cyclic and recurring spending budgets.

Sony's G&NS operating income could also be affected by continued and future development of its new live games. It's likely that those costs are also starting to impact operating income as a number of PlayStation first-party studios are developing and spending on live service titles, including Naughty Dog's new The Last of Us multiplayer game, as well as other games like Marathon, Fairgames, and Concord.

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Derek joined the TweakTown team in 2015 and has since reviewed and played 1000s of hours of new games. Derek is absorbed with the intersection of technology and gaming, and is always looking forward to new advancements. With over six years in games journalism under his belt, Derek aims to further engage the gaming sector while taking a peek under the tech that powers it. He hopes to one day explore the stars in No Man's Sky with the magic of VR.

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