Sony Q3 2025 Sony Group Corp Earnings Call | AllMind AI Earnings | AllMind AI
Q3 2025 Sony Group Corp Earnings Call
Speaker #1: It's now time to begin the Sony Group Corporation earnings announcement. I am Ishii from the department, and I will be your moderator, Corporate Communications. Today, Lin Tao, Corporate, today.
Namiko Ishi: It's now time to begin the Sony Group Corporation earnings announcement. I am Ishi from the Corporate Communications Department, and I will be your moderator today. Today, Lin Tao, Corporate Executive Officer and CFO, will present the FY 2025 Q3 results and full-year forecast followed by a Q&A session. The entire session is expected to last 65 minutes. To ensure our international audience can hear the presentation in Ms. Tao's own words, the English-language earnings presentations will be delivered via a prerecorded video.
Namiko Ishii: It's now time to begin the Sony Group Corporation earnings announcement. I am Ishi from the Corporate Communications Department, and I will be your moderator today. Today, Lin Tao, Corporate Executive Officer and CFO, will present the FY 2025 Q3 results and full-year forecast followed by a Q&A session. The entire session is expected to last 65 minutes. To ensure our international audience can hear the presentation in Ms. Tao's own words, the English-language earnings presentations will be delivered via a prerecorded video.
Speaker #1: The executive officer and CFO, Hiroki Totoki, will present the FY 2025 third quarter results and the four-year forecast, followed by a Q&A session. The entire session is expected to last 65 minutes.
Speaker #1: To ensure our international audience can hear the presentation in Ms. Tao's own words, the English language earnings presentations will be delivered via a pre-recorded video.
Speaker #1: Today, I will explain the content shown here. Sales of continuing operations in FY25 Q3 increased 1% compared to the same quarter of the previous fiscal year, to ¥3,713.7 billion.
Lin Tao: Today I'll explain the content shown here. Sales of continuing operations in FY 2025 Q3 increased 1% compared to the same quarter of the previous fiscal year to JPY 3,713.7 billion, and operating income increased 22% to JPY 515 billion. Both were record highs for the third quarter. Net income increased 11% to JPY 377.3 billion. The financial results by segment are shown here. We upwardly revised our full-year sales forecast from the previous forecast 3% to JPY 12,300 billion, operating income 8% to JPY 1,540 billion, and net income 8% to JPY 1,130 billion. We increased our forecast for operating cash flow 9% to JPY 1,630 billion. The forecast for each segment is shown here. Now I will turn to an overview of each business. First is the G&NS segment. FY 2025 Q3 sales decreased 4% year-over-year, primarily due to lower hardware unit sales.
Lin Tao: Today I'll explain the content shown here. Sales of continuing operations in FY 2025 Q3 increased 1% compared to the same quarter of the previous fiscal year to JPY 3,713.7 billion, and operating income increased 22% to JPY 515 billion. Both were record highs for the third quarter. Net income increased 11% to JPY 377.3 billion. The financial results by segment are shown here. We upwardly revised our full-year sales forecast from the previous forecast 3% to JPY 12,300 billion, operating income 8% to JPY 1,540 billion, and net income 8% to JPY 1,130 billion. We increased our forecast for operating cash flow 9% to JPY 1,630 billion. The forecast for each segment is shown here. Now I will turn to an overview of each business. First is the G&NS segment. FY 2025 Q3 sales decreased 4% year-over-year, primarily due to lower hardware unit sales.
Speaker #1: And operating income increased 22% to ¥515 billion. Both were recognized for the third quarter. Net income increased 11% to ¥377.3 billion. The financial results by segment are shown here.
Speaker #1: We upwardly revised our four-year sales forecast from the previous forecast, 3% to ¥12 trillion 300 billion, operating income 8% to ¥1 trillion 540 billion.
Speaker #1: And net income increased 8% to ¥1 trillion 130 billion. We increased our forecast for operating cash flow by 9% to ¥1 billion. The forecast for each segment is shown here.
Speaker #1: Now, I will turn to an overview of each business. First is the GNNS segment. FY25 Q3 sales decreased 4% year-on-year, primarily due to lower hardware unit sales.
Speaker #1: Operating income increased 19% year on year, primarily due to the positive impact of foreign exchange rates and the impact of increased sales in network services and first-party software.
Lin Tao: Operating income increased 19% year-on-year, primarily due to the positive impact of foreign exchange rates and the impact of increased sales and network services and first-party software, setting a record for the third quarter in this segment. We upwardly revised our FY 2025 sales forecast 4% from the previous forecast to JPY 4,630 billion, and our operating income forecast 2% to JPY 510 billion. User engagement trended well during the quarter, with the number of monthly active users across all of the PlayStation in December increasing 2% compared to last December to a record high of 132 million accounts, and total playtime for the quarter increased 0.4% year-on-year.
Lin Tao: Operating income increased 19% year-on-year, primarily due to the positive impact of foreign exchange rates and the impact of increased sales and network services and first-party software, setting a record for the third quarter in this segment. We upwardly revised our FY 2025 sales forecast 4% from the previous forecast to JPY 4,630 billion, and our operating income forecast 2% to JPY 510 billion. User engagement trended well during the quarter, with the number of monthly active users across all of the PlayStation in December increasing 2% compared to last December to a record high of 132 million accounts, and total playtime for the quarter increased 0.4% year-on-year.
Speaker #1: Setting a record for the third quarter in this segment. We upwardly revised our FY25 sales forecast 4% from the previous forecast to ¥4 trillion 630 billion, and our operating income forecast 2% to ¥510 billion. Engagement trended well during the quarter, with the number of monthly active users across all of PlayStation in December increasing 2% compared to last December to a record high of 132 million accounts.
Speaker #1: And total playtime for the quarter increased 0.4% year-on-year. Although conditions in the console hardware market during the year-end selling season were more challenging than expected, we were able to steadily expand our PS5 in-store base in line with our original plan and exceeded 92 million units on an accumulative selling basis.
Lin Tao: Although conditions in the console hardware market during year-end selling season were more challenging than expected, we were able to steadily expand our PS5 install base in line with our original plan, and exceeded 92 million units on a cumulative selling basis. While PS5 hardware unit sales have decreased moderately in latter half of the console cycle, software revenue from the PlayStation Store reached a record high during the quarter, primarily driven by the contribution of major third-party franchise titles and new hit releases. PlayStation Plus significantly contributed to the results of the quarter as the shift to higher tiers of the service continued. As for securing a supply of memory, we are already in a position to secure the minimum quantity necessary to manage the year-end selling season of next fiscal year.
Lin Tao: Although conditions in the console hardware market during year-end selling season were more challenging than expected, we were able to steadily expand our PS5 install base in line with our original plan, and exceeded 92 million units on a cumulative selling basis. While PS5 hardware unit sales have decreased moderately in latter half of the console cycle, software revenue from the PlayStation Store reached a record high during the quarter, primarily driven by the contribution of major third-party franchise titles and new hit releases. PlayStation Plus significantly contributed to the results of the quarter as the shift to higher tiers of the service continued. As for securing a supply of memory, we are already in a position to secure the minimum quantity necessary to manage the year-end selling season of next fiscal year.
Speaker #1: While PS5 hardware unit sales have decreased moderately in the latter half of the console cycle, software revenue from the PlayStation Store reached a record high during the quarter.
Speaker #1: Primarily driven by the contribution of major third-party franchise titles and new hit releases. PlayStation Plus significantly contributed to the results of the quarter, as the shift to higher tiers of the service continued.
Speaker #1: Memory, we are already in a position to secure the minimum quantity necessary to manage the year-end selling season of next fiscal year as for securing a supply.
Speaker #1: Going forward, we intend to further negotiate with various suppliers to secure enough supply to meet the demand from customers. Given the stage of our console cycle, our hardware sales strategy can be adjusted flexibly, and we intend to minimize the impact of the increased memory cost on this segment going forward by prioritizing monetization of the installed base to date and striving to further expand our software and network service revenue.
Lin Tao: Going forward, we intend to further negotiate with various suppliers to secure enough supply to meet the demand of our customers. Given the stage of our console cycle, our hardware sales strategy can be adjusted flexibly, and we intend to minimize the impact of the increased memory cost on this segment going forward by prioritizing monetization of the install base to date and striving to further expand our software and network service revenue. In the studio business, Ghost of Yōtei, a ten-part title we released in October, exceeded the sales of the previous title in the same period of time and significantly contributed to the financial results of the quarter. Our established live service titles like Helldivers 2 and MLB: The Show also contributed stable recurring revenue.
Lin Tao: Going forward, we intend to further negotiate with various suppliers to secure enough supply to meet the demand of our customers. Given the stage of our console cycle, our hardware sales strategy can be adjusted flexibly, and we intend to minimize the impact of the increased memory cost on this segment going forward by prioritizing monetization of the install base to date and striving to further expand our software and network service revenue. In the studio business, Ghost of Yōtei, a ten-part title we released in October, exceeded the sales of the previous title in the same period of time and significantly contributed to the financial results of the quarter. Our established live service titles like Helldivers 2 and MLB: The Show also contributed stable recurring revenue.
Speaker #1: In the studio business, Ghost of Yotei, a title we released in October, exceeded the sales of the previous title in the same period of time and significantly contributed to the financial results of the quarter.
Speaker #1: Our established live service titles like Helldivers 2 and MLB: The Show also contributed stable, recurring revenue. We expect that Marathon, which is scheduled to be released on March 5th, will be enjoyed by many users thanks to Bungie having strengthened the gaming experience.
Lin Tao: We expect that Marathon, which is scheduled to be released on 5 March, will be enjoyed by many users thanks to Bungie having strengthened the gaming experience. Next fiscal year, we plan to release new titles such as Saros and Marvel's Wolverine, and we intend to enhance our effort to increase the revenue of our studio business. Next is the music segment. Primarily due to an increase in live events sales and streaming revenue in recorded music, FY 25 Q3 sales increased 13% year-on-year. Operating income increased 9%, reaching a record high for the third quarter excluding one-time items. On a US dollar basis, streaming revenues for the quarter increased 5% year-on-year in recorded music and 13% in music publishing. We upwardly revised our sales forecast 4% from the previous forecast to JPY 2,050 billion, and our operating income forecast 16% to JPY 445 billion.
Lin Tao: We expect that Marathon, which is scheduled to be released on 5 March, will be enjoyed by many users thanks to Bungie having strengthened the gaming experience. Next fiscal year, we plan to release new titles such as Saros and Marvel's Wolverine, and we intend to enhance our effort to increase the revenue of our studio business. Next is the music segment. Primarily due to an increase in live events sales and streaming revenue in recorded music, FY 25 Q3 sales increased 13% year-on-year. Operating income increased 9%, reaching a record high for the third quarter excluding one-time items. On a US dollar basis, streaming revenues for the quarter increased 5% year-on-year in recorded music and 13% in music publishing. We upwardly revised our sales forecast 4% from the previous forecast to JPY 2,050 billion, and our operating income forecast 16% to JPY 445 billion.
Speaker #1: Next fiscal year, we plan to release new titles such as Saros and Marvel's Wolverine, and we intend to enhance our effort to increase the revenue of our studio business.
Speaker #1: Next is the music segment. Primarily due to an increase in live event sales and streaming revenue in recorded music, FY25 Q3 sales increased 13% year-on-year.
Speaker #1: Operating income increased 9%, reaching a record high for the third quarter, excluding one-time items. On a US dollar basis, streaming revenues for the quarter increased 5% year on year in recorded music and 13% in music publishing.
Speaker #1: We upwardly revised our sales forecast 4% from the previous forecast to ¥2 trillion 50 billion, and our operating income forecast 16% to ¥445 billion.
Speaker #1: We incorporated a remeasurement gain of approximately ¥45 billion from the acquisition of an additional equity interest in Peanuts Holdings in the forecast for operating income.
Lin Tao: We incorporated a remeasurement gain of approximately JPY 45 billion from the acquisition of an additional equity interest in Peanuts Holdings in the forecast for operating income. SMG artists delivered hits during the quarter, and the sales of SMG continued to increase by double digits year-on-year, like in the previous quarter. Rosalia's new album Lux reached number one globally in its first week on Spotify, and Peso Pluma's collaborative album Disdasia is one of the most streamed on Spotify. These global successes and global hit artists are the result of SMG's strategic focus on discovering local artists and supporting their musical endeavors. Many SMG artists and songwriters received accolades and nominations at the 68th Annual Grammy Awards held in the US earlier this month, with Bad Bunny winning Album of the Year for Debbie Díaz Más Fotos, as Beyoncé did last year.
Lin Tao: We incorporated a remeasurement gain of approximately JPY 45 billion from the acquisition of an additional equity interest in Peanuts Holdings in the forecast for operating income. SMG artists delivered hits during the quarter, and the sales of SMG continued to increase by double digits year-on-year, like in the previous quarter. Rosalia's new album Lux reached number one globally in its first week on Spotify, and Peso Pluma's collaborative album Disdasia is one of the most streamed on Spotify. These global successes and global hit artists are the result of SMG's strategic focus on discovering local artists and supporting their musical endeavors. Many SMG artists and songwriters received accolades and nominations at the 68th Annual Grammy Awards held in the US earlier this month, with Bad Bunny winning Album of the Year for Debbie Díaz Más Fotos, as Beyoncé did last year.
Speaker #1: SMG artists delivered hits. SMG continues to increase by double digits year on year, like in the previous quarter. Rosalia's new album, Lux, reached number one globally in its first week during the quarter, and the sales on Spotify, and Peso Pluma's collaborative album, Disgracia, is one of the most streamed on Spotify.
Speaker #1: These global successes and global hit artists are the result of SMG's strategic focus on discovering local artists and supporting their musical endeavors. Many SMG artists and songwriters received accolades at the 68th Annual Grammy Awards held in the US earlier this month.
Speaker #1: With Bad Bunny winning Album of the Year for 'Debi Dirasmas Fotos', as Beyoncé did last year. In visual media and platform, the theatrical release of 'Demon Slayer: Kimetsu no Yaiba: The Movie Infinity's Castle', which has exceeded ¥100 billion in global box office revenue.
Lin Tao: In visual media and platform, the theatrical release of Demon Slayer: Kimetsu no Yaiba – The Movie: Infinity Castle, which has exceeded JPY 100 billion in global box office revenue, continued to contribute, and the mobile game Fate/Grand Order, which celebrated its 10th anniversary in July 2025, contributed more from the contribution of the blockbuster film Venom: The Last Dance and licensing revenue from other theatrical released films. Our forecast is unchanged from the previous forecast. In January, SPE signed a new pay-one licensing agreement with Netflix. Through this agreement, Netflix will stream on a global basis SPE's future theatrical films in the pay-one window, the initial window within long TV licensing periods that follows the theatrical and home entertainment periods. This agreement is an industry-first global licensing deal that will enable SPE to secure an even more stable revenue base during the period of the deal.
Lin Tao: In visual media and platform, the theatrical release of Demon Slayer: Kimetsu no Yaiba – The Movie: Infinity Castle, which has exceeded JPY 100 billion in global box office revenue, continued to contribute, and the mobile game Fate/Grand Order, which celebrated its 10th anniversary in July 2025, contributed more from the contribution of the blockbuster film Venom: The Last Dance and licensing revenue from other theatrical released films. Our forecast is unchanged from the previous forecast. In January, SPE signed a new pay-one licensing agreement with Netflix. Through this agreement, Netflix will stream on a global basis SPE's future theatrical films in the pay-one window, the initial window within long TV licensing periods that follows the theatrical and home entertainment periods. This agreement is an industry-first global licensing deal that will enable SPE to secure an even more stable revenue base during the period of the deal.
Speaker #1: Continued to contribute, and the mobile game Fate/Grand Order, which celebrated its 10th anniversary in July 2025, contributed. Blockbuster film Venom: The Last contributed more, from the contribution of the Dance, and licensing revenue from other theatrical release films.
Speaker #1: Our forecast is unchanged from the previous forecast. In January, SPE signed a new pay-one licensing agreement with Netflix. Through this agreement, Netflix will stream, on a global basis, films in the pay-one window—the initial window within the long TV licensing period that follows the theatrical and home entertainment periods.
Speaker #1: This agreement licensing deal will enable SPE to secure a deal. Furthermore, the signing of this agreement is proof of SPE's excellent, even more stable revenue production capabilities, and is an industry-first global IP.
Lin Tao: Furthermore, the signing of this agreement is proof of SPE's excellent production capabilities and the power of its appealing IP. As an independent production company, we will continue to pursue other licensing opportunities with a wide range of distribution partners beyond the pay-one window. Now, I will explain our additional investment in Peanuts IP, which we announced in December as an initiative that spans our music and picture segments. Through this transaction, Sony will gain ownership of 80% of Peanuts worldwide, which owns the rights and manages the business of Peanuts IP, one of the world's leading evergreen IPs. While closely collaborating with the family of Mr. Schulz, the creator of Peanuts, which owns the remaining 20%, we aim to further grow the scale of the business and further increase the value of the brand over the long term by leveraging the strengths of the Sony Group.
Lin Tao: Furthermore, the signing of this agreement is proof of SPE's excellent production capabilities and the power of its appealing IP. As an independent production company, we will continue to pursue other licensing opportunities with a wide range of distribution partners beyond the pay-one window. Now, I will explain our additional investment in Peanuts IP, which we announced in December as an initiative that spans our music and picture segments. Through this transaction, Sony will gain ownership of 80% of Peanuts worldwide, which owns the rights and manages the business of Peanuts IP, one of the world's leading evergreen IPs. While closely collaborating with the family of Mr. Schulz, the creator of Peanuts, which owns the remaining 20%, we aim to further grow the scale of the business and further increase the value of the brand over the long term by leveraging the strengths of the Sony Group.
Speaker #1: As a power of its appealing independent production company, licensing opportunities with we will continue to pursue other a wide range of distribution partners beyond the pay one window.
Speaker #1: Now, I will explain our additional investment in Peanuts IP, which we announced in December, as an initiative that spans our Music and Pictures segments.
Speaker #1: Through this transaction, Sony will gain ownership of 80% of Peanuts worldwide, which owns the rights and manages the business of Peanuts IP, one of the world's leading evergreen IPs.
Speaker #1: While closely collaborating with the family of Mr. Schwartz, the creator of Peanuts, which owns the remaining 20%, we aim to further grow the scale of the business and further increase the value of the brand over the long term by leveraging the strengths of the Sony Group.
Speaker #1: Specifically, we aim to grow the music, video, and event business by leveraging Peanuts IP and collaborating with SMEJ to enhance SMEJ's artists and content. Furthermore, by utilizing SPE's production capabilities and distribution network, we aim to make Peanuts IP more accessible to a wider audience and share its charm with the world.
Lin Tao: Specifically, we aim to enhance SMEJ's music, video, and event business by leveraging Peanuts IP and collaborating with SMEJ's artists and content. Furthermore, by utilizing SPE's production capabilities and distribution network, we aim to make Peanuts IP more accessible to a wider audience and share its charm with people all over the world. The transaction is expected to close during the current fiscal year, subject to certain closing conditions, including regulatory approvals by the relevant authorities. Next is the ET&S segment. FY 25 Q3 sales decreased 7% year-over-year, and operating income decreased 23% year-over-year, primarily due to the impact of lower sales, partially offset by an improvement in operating expenses. Our full-year forecast remains unchanged from the previous forecast.
Lin Tao: Specifically, we aim to enhance SMEJ's music, video, and event business by leveraging Peanuts IP and collaborating with SMEJ's artists and content. Furthermore, by utilizing SPE's production capabilities and distribution network, we aim to make Peanuts IP more accessible to a wider audience and share its charm with people all over the world. The transaction is expected to close during the current fiscal year, subject to certain closing conditions, including regulatory approvals by the relevant authorities. Next is the ET&S segment. FY 25 Q3 sales decreased 7% year-over-year, and operating income decreased 23% year-over-year, primarily due to the impact of lower sales, partially offset by an improvement in operating expenses. Our full-year forecast remains unchanged from the previous forecast.
Speaker #1: The transaction is expected to close during the current fiscal year, subject to certain closing conditions, including regulatory approvals by the relevant authorities.
Speaker #1: Next is the ETNS segment. FY 25 Q3 sales decreased 7% year on year and operating income decreased 23% year on year primarily due to the impact of lower sales partially offset by an improvement in operating expenses.
Speaker #1: Our full year forecast remains unchanged from the previous forecast. Despite a continued decline in sales in China due to reduced government subsidies and weakness in the overall markets during the shopping season for Singles' Day, demand in the global interchangeable lens camera market remains strong year on year, mainly in Asia.
Lin Tao: Despite a continued decline in sales in China due to reduced government subsidies and weakness in the overall markets during the shopping season for Singles' Day, demand in the global interchangeable lens camera markets during the quarter remains strong year-over-year, mainly in Asia. The Alpha 7 V, released in December, has been selling well as a new product for the volume zone of the full-frame mirrorless single-lens reflex camera market, and we expect it will continue to contribute to sales in the fourth quarter ending 31 March 2026. Regarding the impact of the situation in the market for memory, we are almost in a position to secure the quantity we need through the year-end selling season for next fiscal year. We will continue to monitor the situation while working to minimize the impact on profitability.
Lin Tao: Despite a continued decline in sales in China due to reduced government subsidies and weakness in the overall markets during the shopping season for Singles' Day, demand in the global interchangeable lens camera markets during the quarter remains strong year-over-year, mainly in Asia. The Alpha 7 V, released in December, has been selling well as a new product for the volume zone of the full-frame mirrorless single-lens reflex camera market, and we expect it will continue to contribute to sales in the fourth quarter ending 31 March 2026. Regarding the impact of the situation in the market for memory, we are almost in a position to secure the quantity we need through the year-end selling season for next fiscal year. We will continue to monitor the situation while working to minimize the impact on profitability.
Speaker #1: The Alpha 7 Mark V, released in December, has been selling well as a new product for the volume zone of the full-frame mirrorless single-lens reflex camera market.
Speaker #1: And we expect it will continue to contribute to sales in the fourth quarter, ending March 31, 2026. Regarding the impact of the situation in the market for memory, we are almost in a position to secure the quantity we need through the year-end selling season for next fiscal year.
Speaker #1: We will continue to monitor the situation while working to minimize the impact on profitability. On January 20, Sony signed an MOU with TCL aimed at forming a strategic partnership in the home entertainment field.
Lin Tao: On 20 January, Sony signed an MOU with TCL aimed at forming a strategic partnership in the home entertainment field. In the MOU, both companies agreed that a joint venture between the two companies would operate Sony's home entertainment business, and we are negotiating the details with the intention of executing a definitive agreement by the end of March. By leveraging Sony's high definition and high fidelity technology, brand strengths, and operational management capability, while utilizing TCL's advanced display technology, cost competitiveness, and vertical supply chain strength, the joint venture aims to further strengthen the competitiveness of this business and realize sustainable growth. Last is the I&SS segment. FY 25 Q3 sales increased 21% year-on-year, and operating income increased 35%, both of which were record highs for the third quarter for the segment. These are primarily due to an increase in sales volume and unit prices of mobile image sensors.
Lin Tao: On 20 January, Sony signed an MOU with TCL aimed at forming a strategic partnership in the home entertainment field. In the MOU, both companies agreed that a joint venture between the two companies would operate Sony's home entertainment business, and we are negotiating the details with the intention of executing a definitive agreement by the end of March. By leveraging Sony's high definition and high fidelity technology, brand strengths, and operational management capability, while utilizing TCL's advanced display technology, cost competitiveness, and vertical supply chain strength, the joint venture aims to further strengthen the competitiveness of this business and realize sustainable growth. Last is the I&SS segment. FY 25 Q3 sales increased 21% year-on-year, and operating income increased 35%, both of which were record highs for the third quarter for the segment. These are primarily due to an increase in sales volume and unit prices of mobile image sensors.
Speaker #1: In the MOU, both companies agreed that a joint venture between the two companies would operate Sony's home entertainment business, and we are negotiating the details with the intention of executing a definitive agreement by the end of March.
Speaker #1: By leveraging Sony's high-definition and high-fidelity technology, brand strength, and operational management capability, while utilizing TCL's advanced display technology, cost competitiveness, and vertical supply chain strength, the joint venture aims to further strengthen the competitiveness of this business and realize sustainable growth.
Speaker #1: Last is the INSS segment. FY25 Q3 sales increased 21% year-on-year, and operating income increased 35%. Both of which were record highs for the third quarter for the segment.
Speaker #1: These are primarily due to an increase in sales volume and unit prices of mobile image sensors. We upwardly revised our sales forecast 5% to ¥2 trillion 80 billion and our operating income forecast 13% to ¥350 billion.
Lin Tao: We upwardly revised our sales forecast 5% to JPY 2,080 billion and operating income forecast 13% to JPY 350 billion, primarily driven by the increase in sales volume and sensors for mobile devices and the impact of foreign exchange rates. Mobile image sensor sales during the quarter increased significantly year-on-year due to a gradual recovery in the smartphone market, strong shipments for new products from our major customer, and a higher die-sized sensor. Because recent orders are stable, we believe that the supply chain concerns we mentioned at the previous earnings announcement have receded, and we have upwardly revised our annual shipment forecast for mobile image sensors. Going forward, we think that the impact of the situation in the memory market will become more apparent, mainly in the form of fewer smartphones made, primarily for the low-end market.
Lin Tao: We upwardly revised our sales forecast 5% to JPY 2,080 billion and operating income forecast 13% to JPY 350 billion, primarily driven by the increase in sales volume and sensors for mobile devices and the impact of foreign exchange rates. Mobile image sensor sales during the quarter increased significantly year-on-year due to a gradual recovery in the smartphone market, strong shipments for new products from our major customer, and a higher die-sized sensor. Because recent orders are stable, we believe that the supply chain concerns we mentioned at the previous earnings announcement have receded, and we have upwardly revised our annual shipment forecast for mobile image sensors. Going forward, we think that the impact of the situation in the memory market will become more apparent, mainly in the form of fewer smartphones made, primarily for the low-end market.
Speaker #1: Primarily driven by the increase in sales volume and sensors for mobile devices, and the impact of foreign exchange rates. Mobile image sensor sales during the quarter increased significantly year on year due to a gradual recovery in the smartphone market.
Speaker #1: Strong shipments for new products from our major customer and a higher die-sized sensor. Because recent orders are stable, we believe that the supply chain concerns we mentioned at the previous earnings announcement have receded.
Speaker #1: And we have upwardly revised our annual shipment forecast for mobile image sensors. Going forward, we think that the impact of the situation in the memory market will become more apparent, mainly in the form of fewer smartphones made primarily for the low-end market.
Speaker #1: Since Sony's image sensors are primarily for the high-end market, at this time we think the impact will be relatively small. We will continue to monitor the situation while keeping in close contact with our customers.
Lin Tao: Since Sony's image sensors are primarily for the high-end market, at this time, we think the impact will be relatively small. We will continue to monitor the situation while keeping in close contact with our customers. In addition, we are continuing to take action to address low-margin business, as we mentioned at the previous earnings announcement. As a part of that, we have incorporated additional expenses for resource and assets optimization of the relevant business in our forecast for FY 2025 Q4. We will continue to focus on improving our business portfolio and raise our profitability. To summarize, the G&NS, music, and I&SS segment achieved record high operating income and are driving the profit growth of the Sony Group overall this quarter. We believe that the structural profitability of the group is further improving.
Lin Tao: Since Sony's image sensors are primarily for the high-end market, at this time, we think the impact will be relatively small. We will continue to monitor the situation while keeping in close contact with our customers. In addition, we are continuing to take action to address low-margin business, as we mentioned at the previous earnings announcement. As a part of that, we have incorporated additional expenses for resource and assets optimization of the relevant business in our forecast for FY 2025 Q4. We will continue to focus on improving our business portfolio and raise our profitability. To summarize, the G&NS, music, and I&SS segment achieved record high operating income and are driving the profit growth of the Sony Group overall this quarter. We believe that the structural profitability of the group is further improving.
Speaker #1: In addition, we are continuing to take action to address low-margin business, as we mentioned at the previous earnings announcement. As a part of that, we have incorporated additional expenses for resource and asset optimization of the relevant business in our forecast for FY25 Q4.
Speaker #1: We will continue to focus on improving our business portfolio and raising our profitability. To summarize, the GNNS Music and INSS segment achieved record-high operating income and are driving the profit growth of the Sony Group overall this quarter.
Speaker #1: We believe that the structural profitability of the Group is further improving. Given the continued uncertain business environment, we plan to carefully manage our business and consistently produce results as we approach the fiscal year-end.
Lin Tao: Given the continued uncertain business environment, we plan to carefully manage our business and consistently produce results as we approach the fiscal year-end. We intend to take actions this fiscal year to get off to a good start next fiscal year. As for shareholders' returns, today we increased the maximum of our share repurchase facility established in November 2025 from JPY 100 billion to JPY 150 billion. This concludes my remarks.
Lin Tao: Given the continued uncertain business environment, we plan to carefully manage our business and consistently produce results as we approach the fiscal year-end. We intend to take actions this fiscal year to get off to a good start next fiscal year. As for shareholders' returns, today we increased the maximum of our share repurchase facility established in November 2025 from JPY 100 billion to JPY 150 billion. This concludes my remarks.
Speaker #1: We intend to take actions this fiscal year to get off to a good start next fiscal year. As for shareholders' returns, today we increased the maximum of our share repurchase facility established in November 2025 from ¥100 billion to ¥150 billion.
Speaker #1: This concludes my remarks. That was Ms. Tao. Following the presentation, we will have a Q&A session for the media at 4:20 p.m., and for investors, an analysis at 4:45 p.m.
Namiko Ishi: That was Ms. Tao. Following the presentation, we will have a Q&A session for the media at 4:20PM and for investors and analysts at 4:45PM. Each Q&A session is scheduled to last approximately 20 minutes. For those who have pre-registered to ask questions, please click the Join Webinar link and stay online while you wait. Regarding the procedure and precautions for asking questions, please refer to the invitation sent to you in advance. Please wait. The session will resume shortly. Thank you for waiting. We'd like to begin the media Q&A session shortly. Please wait a few moments. Thank you for waiting. We'll start the Q&A session. First, we would introduce you to today's speakers: Chief Financial Officer CFO Corporate Executive Officer Lin Tao, Senior Vice President in Charge of Accounting Hiroki Totoki, Senior Vice President in Charge of Corporate Planning and Control Naoya Hori.
Namiko Ishii: That was Ms. Tao. Following the presentation, we will have a Q&A session for the media at 4:20PM and for investors and analysts at 4:45PM. Each Q&A session is scheduled to last approximately 20 minutes. For those who have pre-registered to ask questions, please click the Join Webinar link and stay online while you wait. Regarding the procedure and precautions for asking questions, please refer to the invitation sent to you in advance. Please wait. The session will resume shortly. Thank you for waiting. We'd like to begin the media Q&A session shortly. Please wait a few moments. Thank you for waiting. We'll start the Q&A session. First, we would introduce you to today's speakers: Chief Financial Officer CFO Corporate Executive Officer Lin Tao, Senior Vice President in Charge of Accounting Hiroki Totoki, Senior Vice President in Charge of Corporate Planning and Control Naoya Hori.
Speaker #1: Each Q&A session is scheduled to last approximately 20 minutes. For those who have pre-registered to ask questions, please click the 'Join Webinar' link and stay online while you wait.
Speaker #1: Regarding the procedure and precautions for asking questions, please refer to the invitation sent to you in advance. Please wait. The session will resume shortly.
Speaker #1: Thank you for waiting. We'd like to begin the media Q&A session shortly. Please wait a few moments. Thank you for waiting. We'll start the Q&A session.
Speaker #1: First, we'll introduce you to today's speakers: Chief Financial Officer (CFO), Corporate Executive Officer, Lin Tao; and Senior Vice President in Charge of Accounting, Hiroki Kotenaga.
Speaker #1: Senior Vice President in charge of Corporate Planning and Control, Naoya Hori. We'll take questions from the media. Please keep questions up to two per person.
Namiko Ishi: We'll take questions from the media. Keep questions up to two per person. Please click the Raise Hand button on the Webex screen if you have questions. The first question is from Toyo Keizai Umegaki-san. Yes, I'm Umegaki from Toyo Keizai. Can you hear me? Yes. All right. So I'd like to ask two questions. The first question is about Marathon, and it's going to be released on March 5th, I understand. And it has been delayed. And what kind of considerations did you have until you decided to have this? And, well, in the past, there were several cases that have been stopped short. But what kind of learning did you have? And for the live service game, what is the strategic significance of having this kind of platform, I think?
Namiko Ishii: We'll take questions from the media. Keep questions up to two per person. Please click the Raise Hand button on the Webex screen if you have questions. The first question is from Toyo Keizai Umegaki-san.
Speaker #1: Please click the 'Raise Hand' button on the Webex screen if you have questions. The first question is from Toyo Keizai, Umegaki-san. Yes, I'm Umegaki from Toyo Keizai.
[Analyst 1]: Yes, I'm Umegaki from Toyo Keizai. Can you hear me?
Speaker #1: Can you hear me? Yes. All right. So I'd like to ask two questions. The first question is about Marathon, and it's going to be released on March 5th, I understand.
Namiko Ishii: Yes.
[Analyst 1]: All right. So I'd like to ask two questions. The first question is about Marathon, and it's going to be released on March 5th, I understand. And it has been delayed. And what kind of considerations did you have until you decided to have this? And, well, in the past, there were several cases that have been stopped short. But what kind of learning did you have? And for the live service game, what is the strategic significance of having this kind of platform, I think? But to have quite a number of platforms, what is the significance for the group to have such platforms?
Speaker #1: And it has been delayed. And what kind of considerations did you have until you decided to have this? And, well, in the past, there were several cases that have been stopped short.
Speaker #1: But what kind of learning did you have? And for the live service game, what is the strategic significance of having that? And this kind of platform, I think.
Speaker #1: But to have quite a number of platforms, what is the significance for the group to have such platforms? Yes. Thank you for your question.
Namiko Ishi: But to have quite a number of platforms, what is the significance for the group to have such platforms? Yes, thank you for your question. As for the Marathon, well, it has the user tests, and then from the users, had feedback for Marathon and in the game. So what was a good point and not good point, and such kind of feedback we had taken into consideration, and we had modified. This time around, so after the modification, we are very confident to release it on 5 March. Live service, the game's significance, you ask. But here, what is most important for us is that the live service is a recurring revenue. Recurring revenue means that the hit-driven and if it comes a hit, then for a year, it can bring revenue. If not become a hit, then no revenue. So it's such a.
[Company Representative] (Sony Group Corporation): Yes, thank you for your question. As for the Marathon, well, it has the user tests, and then from the users, had feedback for Marathon and in the game. So what was a good point and not good point, and such kind of feedback we had taken into consideration, and we had modified. This time around, so after the modification, we are very confident to release it on 5 March. Live service, the game's significance, you ask. But here, what is most important for us is that the live service is a recurring revenue. Recurring revenue means that the hit-driven and if it comes a hit, then for a year, it can bring revenue. If not become a hit, then no revenue. So it's such a.
Speaker #1: Has the user tested it, and then, from the users, had feedback for Marathon? And in the game, what was a good point and what was not a good point?
Speaker #1: And such kind of feedback we had taken into consideration, and we had modified. And this time around, so after the modification, we are very confident to release it on March 5th.
Speaker #1: And live service games, significance, you ask. But here, what is most important for us is that the live service is a recurring revenue. And recurring revenue means that it's hit driven, and if it becomes a hit, then for a year, it can bring revenue.
Speaker #1: If not, it becomes a hit. If then, no revenue. So it's such a—but not the volatility high studio, but it's going to give us a constant amount of revenue.
Namiko Ishi: But not the volatility high studio, but it's going to give us a constant amount of revenue every year. So that's the merit of having a hit live service. But, well, it's not that we want to have too many of them. It's not what we want to have. So the ideal is that so-called AAA and live service game would become integrated into a portfolio management style. That's it for me. And the second question is about your stock price. And you had announced your earnings results, and it was JPY 3+, but it's almost flat. So that the market variation is quite severe, I think. And the stock performance is not good because the memory had risen. But it's rather the Sony Group; it seems that there has been a harsher view on the Sony Group. So what do you see as a CEO?
[Company Representative] (Sony Group Corporation): But not the volatility high studio, but it's going to give us a constant amount of revenue every year. So that's the merit of having a hit live service. But, well, it's not that we want to have too many of them. It's not what we want to have. So the ideal is that so-called AAA and live service game would become integrated into a portfolio management style. That's it for me.
Speaker #1: Every year. So that's the merit of having a hit live service. But, well, it's not that we want to have too many of them.
Speaker #1: It's not what we want to have. So the ideal is that so-called triple-A and live service games would become integrated into a portfolio management style.
Speaker #1: That's it for me. And the second question is about your stock price. You had announced your earnings results, and it was a 3 yen plus.
[Analyst 1]: And the second question is about your stock price. And you had announced your earnings results, and it was JPY 3+, but it's almost flat. So that the market variation is quite severe, I think. And the stock performance is not good because the memory had risen. But it's rather the Sony Group; it seems that there has been a harsher view on the Sony Group. So what do you see as a CEO? You have announced the share buyback, but the market capitalization, in order to raise the market capitalization, do you have any continuous way to keep that going up?
Speaker #1: But it's almost flat, so the market valuation is quite severe, I think. And the stock performance is not good because the memory had risen.
Speaker #1: But it's rather the Sony Group; it seems that there has been a harsher view on the Sony Group. So, what do you see as a CEO?
Speaker #1: And you have announced the share buyback. But the market capitalization—in order to raise the market capitalization, do you have any continuous way to keep that going up?
Namiko Ishi: You have announced the share buyback, but the market capitalization, in order to raise the market capitalization, do you have any continuous way to keep that going up? All right. Thank you for your question. About the stock price, so we had several information revisions, but it's not performing well. So I think you have various thoughts about that. But one thing is that the memory, the concerns for the memory supply. And as the industry, yes, that is one concern. And the other is the entertainment stock. Generally speaking, it's because the capital, AI-related, would go to the AI-related. So I think that's why. And then for us, what we can do is that as a business, we would look at the fundamentals to make it even stronger. And the profitability, we would improve so that the portfolio can be optimized.
Speaker #1: All right. Thank you for your question. And about the stock price, so we had several information revisions. But it's not performing well. So I think you have various thoughts about that.
[Company Representative] (Sony Group Corporation): All right. Thank you for your question. About the stock price, so we had several information revisions, but it's not performing well. So I think you have various thoughts about that. But one thing is that the memory, the concerns for the memory supply. And as the industry, yes, that is one concern. And the other is the entertainment stock. Generally speaking, it's because the capital, AI-related, would go to the AI-related. So I think that's why. And then for us, what we can do is that as a business, we would look at the fundamentals to make it even stronger. And the profitability, we would improve so that the portfolio can be optimized.
Speaker #1: But one thing is that memory—the concerns for the memory supply—and as the industry, yes, that is one concern. And the other is the entertainment stock. Generally speaking, it's because the capital, AI-related, would go to the AI-related.
Speaker #1: So I think that's why. And then, for us, what we can do is that, as a business, we will look at the fundamentals to make it even stronger.
Speaker #1: And the profitability we would improve, so that the portfolio can be optimized. And for us, Sony long-term strategy, we would believe in that, so that we would implement that.
Namiko Ishi: For us, Sony, long-term strategy, we would believe in that so that we would implement that so that the business performance can be improved. And such measures would be communicated, messaged to the stock market so that the stock market would value our approach. And we are going to put our efforts into it. That's all for me. The AI, well, excuse me, but that's the end of your two questions.
[Company Representative] (Sony Group Corporation): For us, Sony, long-term strategy, we would believe in that so that we would implement that so that the business performance can be improved. And such measures would be communicated, messaged to the stock market so that the stock market would value our approach. And we are going to put our efforts into it. That's all for me.
Speaker #1: So that the business performance can be improved, and such measures would be communicated—messaged to the stock market—so that the stock market would value our approach.
Speaker #1: And we are going to put our efforts into it. That's all from me. The AI—well, excuse me, but that's the end of your two questions.
[Company Representative] (Sony Group Corporation): The AI, well, excuse me, but that's the end of your two questions.
Speaker #2: Next question. Yoshino-san from Nikkei, please. Yoshino from Nikkei, can you hear? Yes, we hear. I also have two questions. First, about ET&S structural reform.
Lin Tao: Next question. Yoshida-san from Nikkei, please. Yoshida-san from Nikkei, can you hear? Yes, we hear. I also have two questions. First, about ET&S structural reform. Today, you have mentioned that the TV business, you're going to move to a joint venture with TCL. And you talked about synergies. So separating the TV business, what's the intent of that? And home entertainment, what's the scope? I'm sure that the details are being still discussed. So to the extent possible, can you describe the range that this covers? And also, smartphone also positioned as a structural reform business. And you have hitherto explained that they will be continued. Has there not been any change to that status? Is an option to collaborate with an external source? Thank you. For the smartphone, we don't have such plans. So with TCL, we have a strategic partnership for home entertainment.
Namiko Ishii: Next question. Yoshida-san from Nikkei, please. Yoshida-san from Nikkei, can you hear?
[Analyst 2]: Yes, we hear. I also have two questions. First, about ET&S structural reform. Today, you have mentioned that the TV business, you're going to move to a joint venture with TCL. And you talked about synergies. So separating the TV business, what's the intent of that? And home entertainment, what's the scope? I'm sure that the details are being still discussed. So to the extent possible, can you describe the range that this covers? And also, smartphone also positioned as a structural reform business. And you have hitherto explained that they will be continued. Has there not been any change to that status? Is an option to collaborate with an external source? Thank you.
Speaker #2: Today, you have mentioned that the TV business—you're going to move to a joint venture with TCL. And you talked about synergies. So, separating the TV business, what's the intent of that?
Speaker #2: And home entertainment, what's the scope? I'm sure that the details are still being discussed. So, to the extent possible, can you describe the range that this covers?
Speaker #2: And also, smartphones are also positioned as a structural reform business. And you have hitherto explained that they will be continued. Has there not been any change to that status?
Speaker #2: Is an option to collaborate with external source? Thank you. For the smartphone, we don't have such plans. So TC with TCL, we have strategic partnership for home entertainment.
[Company Representative] (Sony Group Corporation): For the smartphone, we don't have such plans. So with TCL, we have a strategic partnership for home entertainment. This is about the review of portfolio. We are constantly doing that to deal with the changing business environment. Optimizing that is the management mission. Sony has assets that we have accumulated over many years. We're combining that with the strengths of TCL. Home entertainment business, including TV, can grow more through this partnership. That is the background to this partnership. What's the scope of what business to be covered? Hori will explain.
Speaker #2: So this is about the review of portfolio, and we are constantly doing that to deal with the changing business environment. So, optimizing that is the management mission.
Lin Tao: This is about the review of portfolio. We are constantly doing that to deal with the changing business environment. Optimizing that is the management mission. Sony has assets that we have accumulated over many years. We're combining that with the strengths of TCL. Home entertainment business, including TV, can grow more through this partnership. That is the background to this partnership. What's the scope of what business to be covered? Hori will explain. Thank you for the question. This strategic partnership, the scope of that, as you point out, it's TV and home audio. Those are the areas that we assume will be included. As you point out, the details are still being discussed. At an appropriate timing, we would like to communicate to you. At this point of time, TV and home audio will be included in the scope.
Speaker #2: So, Sony has assets that we have accumulated over many years, and we're combining that with the strengths of TCL. And so, the home entertainment business, including TV, can grow more.
Speaker #2: Through this partnership—that is the background to this partnership. And the scope of what business to be covered, Hori will explain. Thank you for the question.
Hiroki Totoki: Thank you for the question. This strategic partnership, the scope of that, as you point out, it's TV and home audio. Those are the areas that we assume will be included. As you point out, the details are still being discussed. At an appropriate timing, we would like to communicate to you. At this point of time, TV and home audio will be included in the scope.
Speaker #2: So, this strategic partnership, the scope of that, as you point out, it's TV and home audio. Those are the areas that we assume will be included, as you point out.
Speaker #2: The details are still being discussed, so at an appropriate timing, we would like to communicate to you. At this point in time, TV and home audio will be included in the scope.
Speaker #2: Thank you. Second question, about the game business. So, this was mentioned in the previous question. With the surging memory price, you have secured the next supply until the year-end campaign.
Lin Tao: Thank you. Second question about the game business. This was mentioned in the previous question. With the surging memory price, you have secured the supply until the next year-end campaign. You maybe have secured the supply, but would there be impact of the rising prices? For example, PS5, any price increases or the successor, the timing that it will be introduced, and what will be the impact to the next fiscal year? Can you give us your assumptions, please? PS5, next fiscal year and onwards, what will be the impact there? For the business results for next fiscal year, we would like to inform you at that appropriate time. But our thinking is what we like to share with you. That is, PS5, since launch, it's in the sixth year. 92 million units installed base on a sell-in basis, we already have established.
Hiroki Totoki: Thank you. Second question about the game business. This was mentioned in the previous question. With the surging memory price, you have secured the supply until the next year-end campaign. You maybe have secured the supply, but would there be impact of the rising prices? For example, PS5, any price increases or the successor, the timing that it will be introduced, and what will be the impact to the next fiscal year? Can you give us your assumptions, please? PS5, next fiscal year and onwards, what will be the impact there? For the business results for next fiscal year, we would like to inform you at that appropriate time. But our thinking is what we like to share with you. That is, PS5, since launch, it's in the sixth year. 92 million units installed base on a sell-in basis, we already have established.
Speaker #2: So you maybe have secured the supply. But would there be impact from the rising prices? For example, PS5—any price increases, or with the successor?
Speaker #2: The timing that it will be introduced, and what will be the impact to the next fiscal year? Can you give us your assumptions, please?
Speaker #2: So, PS5, next fiscal year and onwards, what will be the impact there? So, for the business results for next fiscal year, we would like to inform you at the appropriate time.
Speaker #2: But our thinking is what we’d like to share with you. That is, PS5, since launch, it’s in the sixth year. So, 92 million units in store base.
Speaker #2: On a sell-in basis, we already have established. So, we have been able to develop a very robust ecosystem this fiscal year as well.
Lin Tao: So we have been able to develop a very robust ecosystem. And this fiscal year as well, the majority of the sales is software contents and network service. And these areas, next fiscal year onwards, are going to continue to make significant contributions. And that will be the part that will not be impacted by the memory price. Now, as for the new PlayStation hardware sales, due to cost increases, there will be some impact. However, it's in the latter part of the life cycle. So that means that in terms of hardware sales, it's been expected all along that it will gradually decline or slow down. So there are several or a wide range of choices or options that we can take. So that's our basic thinking there.
Hiroki Totoki: So we have been able to develop a very robust ecosystem. And this fiscal year as well, the majority of the sales is software contents and network service. And these areas, next fiscal year onwards, are going to continue to make significant contributions. And that will be the part that will not be impacted by the memory price. Now, as for the new PlayStation hardware sales, due to cost increases, there will be some impact. However, it's in the latter part of the life cycle. So that means that in terms of hardware sales, it's been expected all along that it will gradually decline or slow down. So there are several or a wide range of choices or options that we can take. So that's our basic thinking there.
Speaker #2: The majority of the sales is software contents and network service. And these areas, next fiscal year onwards, are going to continue to make significant contributions.
Speaker #2: And that will be the part that will not be impacted by the memory price. Now, as for the new PlayStation hardware sales, due to cost increases, there will be some impact.
Speaker #2: However, it's in the latter part of the life cycle. So that means that, in terms of hardware sales, it's been expected all along that it will gradually decline or slow down.
Speaker #2: So, there are several, or a wide range of choices or options that we can take. So that's our basic thinking there.
Speaker #1: Thank you. Moving on to the next question. I’m very sorry. Please, ask both of your questions at the beginning. Yomiuri Newspaper, Nakayama-san, please. Nakayama-san, do you hear me? Me?
Speaker #1: Thank you. Moving on to the next question. I'm very sorry. Please, ask both of your beginning questions. Yomiuri Newspaper, Nakayama-san, please. Nakayama-san, do you hear me?
Operator: Thank you. Moving on to the next question. I'm very sorry. Please ask both of your questions at the beginning. Yomiuri Shimbun, Nakayama-san, please. Nakayama-san, do you hear me? This is Nakayama from Yomiuri Shimbun. Do you hear me? I have two questions. Number one, about music, the streaming revenue growth rate. Do you think the music streaming service will continue to do well? We would like to hear your prospects. And about I&SS, the image sensor for mobile, do you have any background on the increase in the unit price of image sensors for mobile? I will answer the question on the music business first. The music market we see will continue to grow in the mid- to long-term. Of course, the extent of growth will differ due to the timing.
Operator: Thank you. Moving on to the next question. I'm very sorry. Please ask both of your questions at the beginning. Yomiuri Shimbun, Nakayama-san, please. Nakayama-san, do you hear me?
[Analyst 3]: This is Nakayama from Yomiuri Shimbun. Do you hear me? I have two questions. Number one, about music, the streaming revenue growth rate. Do you think the music streaming service will continue to do well? We would like to hear your prospects. And about I&SS, the image sensor for mobile, do you have any background on the increase in the unit price of image sensors for mobile?
Speaker #1: Nakayama from Yomiuri. I have two questions. Number one, about music. Do you hear the streaming revenue growth rate this—so do you—so do you think the music streaming service will continue to do well?
Speaker #1: We would like to hear your prospects. And about INSS, the image sensor for mobile, do you have any background on the increase in the unit price of image sensors for mobile?
[Company Representative] (Sony Group Corporation): I will answer the question on the music business first. The music market we see will continue to grow in the mid- to long-term. Of course, the extent of growth will differ due to the timing. But we believe there will be a constant growth to about middle to latter single digit. And there are two drivers to this. First is DSP. That is platform that we offer service on. The ARPU or RPU is going up. And also the number of users going up. So the average revenue per user and the number of users going up is driving the growth. The second point about I&SS Semiconductor, Hori will answer.
Speaker #1: I will answer the question on the music business first. The music market, we see, will continue to grow in the mid to long term.
Speaker #1: Of course, the extent of growth will differ due to the timing. But we believe there will be a constant growth to about 5 to middle to latter single digits.
Operator: But we believe there will be a constant growth to about middle to latter single digit. And there are two drivers to this. First is DSP. That is platform that we offer service on. The ARPU or RPU is going up. And also the number of users going up. So the average revenue per user and the number of users going up is driving the growth. The second point about I&SS Semiconductor, Hori will answer. So this is the background of increase in the selling price of mobile sensors. As you know, in smartphone products, the camera feature is a main reason for increase in price. So the smartphone manufacturers are working to increase the camera resolutions as well as the camera features. The image sensors that we provide to the manufacturers, we want to increase the size as well as increase the resolution and add new features.
Speaker #1: And there are two drivers to this. First is DSP, that is the platform that we offer service on. The ARPU, or average revenue per user, is going up.
Speaker #1: And also, the number of users going up and the number of users increasing is driving the second point about INSS semiconductor. Hori-san, will Hori will up. Answer.
Hiroki Totoki: So this is the background of increase in the selling price of mobile sensors. As you know, in smartphone products, the camera feature is a main reason for increase in price. So the smartphone manufacturers are working to increase the camera resolutions as well as the camera features. The image sensors that we provide to the manufacturers, we want to increase the size as well as increase the resolution and add new features. So large-scale image sensors as well as increased performance is leading to higher price. And that is really contributing to our results this year. That's all. Thank you.
Speaker #1: The sensor, so this is the background of increase in the selling price of mobile sensors. As you know, in smartphone products, the camera feature is a main reason for the increase in price.
Speaker #1: So the smartphone manufacturers are working to increase the camera resolutions as well. The camera features the image sensors that provide manufacturers—
Speaker #1: So the smartphone manufacturers are working to increase the camera resolutions as well Well the camera features the image sensors we that as provide to the We want to increase the size as well as increase the add new and resolution features to the manufacturers .
Operator: So large-scale image sensors as well as increased performance is leading to higher price. And that is really contributing to our results this year. That's all. Thank you. All right. So we have taken another question. So Hori asks, Yamamoto-san, please. Yes, my name is Yamamoto. So let me ask questions. So about the structural reform and TCL, so we have the strategic alliance. But the display to have the higher resolution. And the home entertainment, I think so you have the high resolution. I think it is contributing to that, the technology and also the common kind of R&D. Do you separate the two, the technology and the common R&D base, in order to have the next phase of development? So about the strategic alliance, would you tell us your direction or your strategy? Yes, thank you for the question. So first, so we have the basic agreement.
Speaker #1: to want We increase the size as well as increase the and add new resolution features . a large scale image sensors well as So increased as is performance leading to higher price .
Namiko Ishii: All right. So we have taken another question. So Hori asks, Yamamoto-san, please.
Speaker #1: And that is really good, contributing to our results this year. Thank you.
[Analyst 4]: Yes, my name is Yamamoto. So let me ask questions. So about the structural reform and TCL, so we have the strategic alliance. But the display to have the higher resolution. And the home entertainment, I think so you have the high resolution. I think it is contributing to that, the technology and also the common kind of R&D. Do you separate the two, the technology and the common R&D base, in order to have the next phase of development? So about the strategic alliance, would you tell us your direction or your strategy?
Speaker #2: All right. So we'll take another question. So
Speaker #2: free as Yamamoto San That's all . . Yes . My name is Yamamoto . So let me ask questions . So the about the structural reform and TCL .
Speaker #2: So we have the strategic alliance . But the display the to have the higher and resolution I think entertainment . . So you have the high resolution .
Speaker #2: I think it’s contributing to that—that the technology, and also is the kind of common R&D. Do you separate the two, the technology and the common R&D base, in order to have the next phase of development?
[Company Representative] (Sony Group Corporation): Yes, thank you for the question. So first, so we have the basic agreement. For the technology and for what kind of asset can we have to the joint venture to have the definitive contract? We are in discussion in order to aim for the final agreement. If it is confirmed, then we would tell you when it is confirmed.
Speaker #2: So strategic the alliance , would you tell us your or or your strategy ? Yes . Thank you for the question . So first , we have the basic so agreement and for the technology and for what kind of asset can we have to the joint venture to have the definitive contract .
Operator: For the technology and for what kind of asset can we have to the joint venture to have the definitive contract? We are in discussion in order to aim for the final agreement. If it is confirmed, then we would tell you when it is confirmed.
Speaker #2: So we are in discussion in order to aim for the final agreement. So, if it is confirmed, then we would tell you when it is confirmed.
Lin Tao: Running short on time. So the next one will be the last question. Shino-san of Asahi Shimbun, please. Shino-san, do you hear? Well then, we'll move on to the next person from Mainichi Shimbun, Seno-san, please. Do you hear us, Seno-san? Can you hear? Yes, we can hear you. Excuse me. This is Seno from Mainichi Shimbun. Earlier, you talked about the PlayStation 5 life cycle that you're entering the latter half of the life cycle. But last November, you talked about the Japanese dedicated model for PlayStation, a relatively cheap, lower-priced model for the Japanese market. So what's the reason for introducing this kind of model in the latter part of the life cycle? And what will be the impact to the financial results? Has there been impact from introducing this new model? Thank you.
Namiko Ishii: Running short on time. So the next one will be the last question. Shino-san of Asahi Shimbun, please. Shino-san, do you hear? Well then, we'll move on to the next person from Mainichi Shimbun, Seno-san, please. Do you hear us, Seno-san?
Speaker #3: Running time . So short on the next one will be the last question . Shino San of Asahi Shimbun , please . Shino sun , do you Well , we'll move on to the next person from then Mainichi Shimbun .
Speaker #3: San , please . Do you hear us , San ? Can you hear ? Yes , we can hear you . Excuse me .
[Analyst 5]: Can you hear?
Namiko Ishii: Yes, we can hear you.
[Analyst 5]: Excuse me. This is Seno from Mainichi Shimbun. Earlier, you talked about the PlayStation 5 life cycle that you're entering the latter half of the life cycle. But last November, you talked about the Japanese dedicated model for PlayStation, a relatively cheap, lower-priced model for the Japanese market. So what's the reason for introducing this kind of model in the latter part of the life cycle? And what will be the impact to the financial results? Has there been impact from introducing this new model? Thank you.
Speaker #3: This is Sano from Mainichi Shimbun. Earlier, you talked about the PlayStation 5 life cycle, that it is entering the latter half of the life cycle, but last November, you talked about the Japanese model for PlayStation.
Speaker #3: Relatively cheap, lower price for model the Japanese market. So, what's the reason for introducing this kind of model in the latter part of the life cycle?
Speaker #3: And what will be the impact to the financial results? Has there been impact from introducing this new model? Thank you.
Lin Tao: So the Japan model introduction, well, that was to enhance the presence of PlayStation in the Japanese market. It's one part of that effort. Compared with the global model, it was more reasonably priced. And so publishers and users appreciated that more affordable price. And after launch, in terms of sell-through, it has created an uplift. Now, so this was not a special model just for that seasonal effort. But for the mid- to long-term for the Japanese market, we think that this had the strategic significance. So we want many users to buy this so that publishers will make great games. So we think in that regard, this will have mid- to long-term impact.
[Company Representative] (Sony Group Corporation): So the Japan model introduction, well, that was to enhance the presence of PlayStation in the Japanese market. It's one part of that effort. Compared with the global model, it was more reasonably priced. And so publishers and users appreciated that more affordable price. And after launch, in terms of sell-through, it has created an uplift. Now, so this was not a special model just for that seasonal effort. But for the mid- to long-term for the Japanese market, we think that this had the strategic significance. So we want many users to buy this so that publishers will make great games. So we think in that regard, this will have mid- to long-term impact.
Speaker #3: Japan introduction model. Well, that was to enhance the presence of PlayStation in the Japanese market. It's one part of that effort, compared with the global model.
Speaker #3: It was more reasonably priced and so publishers and users appreciated that the more affordable price . And after launch , in terms of through sell , it has a created an uplift .
Speaker #3: Now . So this not a model , just for that special seasonal effort . for the But long term for the Japanese market .
Speaker #3: We think that this had the strategic significance. So we want many users to buy this so that publishers will make great games. So we think this will have, in that regard, a mid- to long-term impact.
Operator: Now it's time to conclude the Q&A session for the media. The Q&A session for investors and analysts will start from 4:45. We will be starting the Q&A sessions for investors and analysts in due course. Please wait until we resume. Okay. Thank you for waiting. We will now begin the Q&A session for investors and analysts. I am Kondo from the IR department, and I will be your moderator. The speakers will be the same three individuals as in the media session. We will now start the Q&A session. Please keep to two questions. Please ask both of the questions at the beginning. Please click the raise hand button in the WebEx screen if you have any questions. JP Morgan with Ayada-san, please. Thank you. I'm Ayada from JP Morgan. I have two questions. The first question is about gaming.
Operator: Now it's time to conclude the Q&A session for the media. The Q&A session for investors and analysts will start from 4:45. We will be starting the Q&A sessions for investors and analysts in due course. Please wait until we resume. Okay. Thank you for waiting. We will now begin the Q&A session for investors and analysts. I am Kondo from the IR department, and I will be your moderator. The speakers will be the same three individuals as in the media session. We will now start the Q&A session. Please keep to two questions. Please ask both of the questions at the beginning. Please click the raise hand button in the WebEx screen if you have any questions. JPMorgan with Ayada-san, please. Thank you.
Speaker #1: Now it's time to conclude the Q&A session for the media . The so the Q&A session will will for investors and analysts will start 4:45 .
Speaker #1: And we will be starting the Q&A sessions for investors and analysts in due course. So please wait until we resume. Okay.
Speaker #1: Thank you for waiting. We will now begin the session for investors and analysts. I am Kondo from the IR department, and I will be your moderator.
Speaker #1: The speakers will be the same three individuals as in the media session. We will now start the Q&A session. So, please keep to two questions, and please ask both of your questions at the beginning.
Speaker #1: Please click the Raise Hand button in the WebEx screen . If you questions have any . JPMorgan please . Thank you . I'm Uyeda from JP Morgan .
[Analyst 6]: I'm Ayada from JPMorgan. I have two questions. The first question is about gaming.
Operator: So what do you think about the status of playtime and spending in the holiday season? Active users have gone up 2%. But playtime is flat. And software network revenue is going up. But thinking about the price up, I think in terms of value or volume, it's more or less flat. So it seems like it's dwindling a little bit. Is it because of the economic cycle, business cycle, or console cycle? Or is this an impact from the title lineup? Or are people using time for things other than games? So we would like your take on that. Your second question, so this might be an abstract question. The impact of AI to the entertainment industry, how should we see that? For music production and game development, already 90% of creators use AI, based on the data.
Speaker #1: I have two questions . The first question is about gaming . play time The and so what do you the think about play time and the holiday season ?
[Analyst 6]: So what do you think about the status of playtime and spending in the holiday season? Active users have gone up 2%. But playtime is flat. And software network revenue is going up. But thinking about the price up, I think in terms of value or volume, it's more or less flat. So it seems like it's dwindling a little bit. Is it because of the economic cycle, business cycle, or console cycle? Or is this an impact from the title lineup? Or are people using time for things other than games? So we would like your take on that. Your second question, so this might be an abstract question. The impact of AI to the entertainment industry, how should we see that? For music production and game development, already 90% of creators use AI, based on the data.
Speaker #1: Active users have gone up 2%, but play is flat. The status of spending in revenue is going up. But thinking about the price up, I think in terms of value or volume, it is more or less flat.
Speaker #1: It so seems like it's dwindling a little bit. Is it because of the economic cycle, business cycle, or console cycle, or is this an impact from the title lineup, or people using for time things other than games?
Speaker #1: So we would like your take on that are . second question . So this might be an abstract question impact of . The AI to the entertainment industry , how should we see that the for music production and game development , already 90% of creators use AI .
Operator: So by the creators using AI, if there's more content, that would be a very positive effect on platforms such as PlayStation and Crunchyroll. Or if users use more of their casual more time in casual content using AI, would that be negative? So I think the repercussions will be different, whether it's music, anime, games, or video production. So please share your view. Thank you for the question. About the engagement of games in the holiday season, I think this is transitioning quite well. Of course, the playtime. I think there are many factors influencing the playtime. But I think the biggest factor, I think, is whether there are hit games. Up till now, the games maybe the large-scale games, which everyone has been playing up till now, the engagement has gone down. And instead, the players are playing new games. As a platform, we see a momentum.
[Analyst 6]: So by the creators using AI, if there's more content, that would be a very positive effect on platforms such as PlayStation and Crunchyroll. Or if users use more of their casual more time in casual content using AI, would that be negative? So I think the repercussions will be different, whether it's music, anime, games, or video production. So please share your view.
Speaker #1: So the based on data . So for by the creators AI , if there is more content . would be That positive effect on as platforms such PlayStation and Crunchyroll or if users use their more time in casual content using would that be casual , negative ?
Speaker #1: So I think the repercussions will be different . Whether it's music , anime , games , or video production . So please share your view .
[Company Representative] (Sony Group Corporation): Thank you for the question. About the engagement of games in the holiday season, I think this is transitioning quite well. Of course, the playtime. I think there are many factors influencing the playtime. But I think the biggest factor, I think, is whether there are hit games. Up till now, the games maybe the large-scale games, which everyone has been playing up till now, the engagement has gone down. And instead, the players are playing new games. As a platform, we see a momentum.
Speaker #1: Thank you for the question. About the engagement of games in the season holiday, the transitioning is quite this. I is. Of course, the playtime.
Speaker #1: well there are many think factors I think influencing the playtime , but I think the biggest I is factor think , whether there's are games up till now , the games , maybe the large scale games which everyone has been up till playing now , the engagement has gone down and instead the players are playing new games as a .
Operator: But depending on the game title, how that is played, and the playtime will be different. Towards the next fiscal year, the large-scale titles will be launched. So I'm very optimistic about this. And about how we see AI, as you say, music, game, and animation, how AI is used or the positioning of AI is different. There is high affinity between AI, game, and animation. In the long term, I think it's a very positive thing that there will be more content. But there would be impact in many areas, especially how you develop and produce. So this process from idea to game, I think, would be changing. But it's still early in the day to say what the impact would be and what would be the impact on the cost. So at this point of time, it's difficult to really say.
[Company Representative] (Sony Group Corporation): But depending on the game title, how that is played, and the playtime will be different. Towards the next fiscal year, the large-scale titles will be launched. So I'm very optimistic about this. And about how we see AI, as you say, music, game, and animation, how AI is used or the positioning of AI is different. There is high affinity between AI, game, and animation. In the long term, I think it's a very positive thing that there will be more content. But there would be impact in many areas, especially how you develop and produce. So this process from idea to game, I think, would be changing. But it's still early in the day to say what the impact would be and what would be the impact on the cost. So at this point of time, it's difficult to really say.
Speaker #1: platform We see a momentum , but depending on the title game , how that is played and the playtime will be different . Towards the next fiscal year , the scale large titles be will launched .
Speaker #1: So very optimistic about this and about I'm how we see AI . As you say , music , game and animation . A the how AI is used or the positioning of AI is different .
Speaker #1: There's high affinity between AI and games and animation in the long term. I think it's a very positive thing that will be more there, but content there would be impact in many, especially areas, how you develop and produce.
Speaker #1: So, the process from this idea to game—I think we would be changing, but it's still early in the day to say what the impact is and what would be the impact on the cost.
Operator: But what we can say right now is to use a lot of AI. So we promote using AI, especially in game production. And if that disrupts the existing process, we should be the one disrupting rather than the one being disrupted. That's all. Thank you.
[Company Representative] (Sony Group Corporation): But what we can say right now is to use a lot of AI. So we promote using AI, especially in game production. And if that disrupts the existing process, we should be the one disrupting rather than the one being disrupted.
Speaker #1: At this point of, so, time, it's difficult to really say, but what we say right now is to lot of AI we.
Speaker #1: So, especially in game production, using AI can be useful. And if it disrupts the existing process, we should be the one disrupting rather than the one being disrupted.
[Analyst 6]: That's all. Thank you.
Hiroki Totoki: Thank you. All right. So next question from BofA Securities, Ms. Hirakawa. Yes. BofA Securities. My name is Hirakawa. So first question is, well, it's rather an abstract question. But this is the second year of the midterm business plan. But the operating profit growth is like 10% average as you go. And then this year, it has progressed very smoothly. And the concern from the market is that the next year, the profit level, because of the memory or the untransparent price movements, then it might not be so smooth. Then what I want to ask you here is now in the midterm business plan, so what kind of a certainty do you have? And what kind of risk factors do you have in achieving? Or what kind of upside do you have? So if you can allude to that, that is the first question.
Operator: Thank you. All right. So next question from BofA Securities, Ms. Hirakawa.
Speaker #1: That's all. Thank you.
[Analyst 7]: Yes. BofA Securities. My name is Hirakawa. So first question is, well, it's rather an abstract question. But this is the second year of the midterm business plan. But the operating profit growth is like 10% average as you go. And then this year, it has progressed very smoothly. And the concern from the market is that the next year, the profit level, because of the memory or the untransparent price movements, then it might not be so smooth. Then what I want to ask you here is now in the midterm business plan, so what kind of a certainty do you have? And what kind of risk factors do you have in achieving? Or what kind of upside do you have? So if you can allude to that, that is the first question.
Speaker #2: Thank . All you right . So next question from eBay securities . Miss Hayakawa . Yes , Baba Securities , my name is Hirakawa .
Speaker #2: So first question is . Well , it's a rather abstract question , but this is the second year of the mid-term business plan .
Speaker #2: the But operating profit growth is like 10% average as you go . And then this has year it progressed very smoothly . And the concern market from the is that the next year , the profit level , because of the memory or the and price movements , then it might not be so smooth .
Speaker #2: Then what I ask you here is, now mid-term, the business plan. So what kind of certainty do you have, and what kind of risk factors do you have in achieving, and what kind of upside do you have?
Hiroki Totoki: And the second question is about what you have said. So image sensor, I&SS. So what I have heard is high-end. So ASP rise and the volume expansion, you can have both. So that, I think, was the main thing that you wanted to message to us. Okay. Thank you for the question. And about the midterm plan, so the second year, and we are going on quite smoothly. Yes. That is the feeling we have. About the memory price surge, we can understand the concern from the market about this. And these earnings results for the next year, I think we can go into this more deeper. But basically speaking, we would have the momentum very strong here. And the memory cost rise, so we have to manage that. And that's the kind of a direction we have. And the profitability, of course, we have in mind.
[Analyst 7]: And the second question is about what you have said. So image sensor, I&SS. So what I have heard is high-end. So ASP rise and the volume expansion, you can have both. So that, I think, was the main thing that you wanted to message to us.
Speaker #2: So if you can allude to that, 'want to' is the first question. Second question, and then about what you have said, image sensor.
Speaker #2: So what I've heard is a high end is, so ASP rise and the volume both, can expansion you have. So that, I was thinking the main you wanted thing that to message, okay.
[Company Representative] (Sony Group Corporation): Okay. Thank you for the question. And about the midterm plan, so the second year, and we are going on quite smoothly. Yes. That is the feeling we have. About the memory price surge, we can understand the concern from the market about this. And these earnings results for the next year, I think we can go into this more deeper. But basically speaking, we would have the momentum very strong here. And the memory cost rise, so we have to manage that. And that's the kind of a direction we have. And the profitability, of course, we have in mind.
Speaker #2: to us . Thank you for the question the mid-term plan . the second year and the year going on So quite smoothly . Yes , that is the feeling we have about the price surge .
Speaker #2: We can understand the concern from the market about this. And this is the earnings results for the next year. I think we can go into this more deeply, but speaking, we would have the momentum very strong here and the memory cost.
Speaker #2: Rise . So we have to manage that . And that's a kind of a direction we have . the And profitability , of course , we have in mind .
Hiroki Totoki: For the attainment of the midterm plan, how certain we are or how confident we are, so it depends on each business segment. But let's say game and Sony Pictures, so next year's software lineup is quite good. So for those segments, I think we have quite a positive kind of an outlook. And for the detail, I don't think I can go into here. So for the earnings results for the 2025 fiscal year, I can maybe tell you more about it. And the ET&S and the semiconductor and the volume. Okay. For this question, I would like to ask Hori-san to answer. All right. Thank you for the question. So in the speech, we have said that this year, what we have seen this year. Okay. And what we are seeing, I&SS and the volume, also we have a momentum.
[Company Representative] (Sony Group Corporation): For the attainment of the midterm plan, how certain we are or how confident we are, so it depends on each business segment. But let's say game and Sony Pictures, so next year's software lineup is quite good. So for those segments, I think we have quite a positive kind of an outlook. And for the detail, I don't think I can go into here. So for the earnings results for the 2025 fiscal year, I can maybe tell you more about it. And the ET&S and the semiconductor and the volume. Okay. For this question, I would like to ask Hori-san to answer.
Speaker #2: And for the mid-term plan , how certain attainment of the we are or how confident we are . depends So it on each business segment .
Speaker #2: But let's say game and Sony Pictures. So next year's software is quite good. So for those segments, I think we have quite a positive kind of outlook. And for the detail, I outlook.
Speaker #2: I don't think I can go into that here. So, when the earnings results for the 2025 fiscal year are released, I can maybe tell you more about it.
Speaker #2: And the ESP, the semiconductor, and the volume. Okay. For this question, I would like to ask Harrison to— All right.
Speaker #2: and So Thank you in the speech we have said that this year what we have seen this year okay . And what we are seeing , SP and the volume also , we have a momentum .
Hiroki Totoki: All right. Thank you for the question. So in the speech, we have said that this year, what we have seen this year. Okay. And what we are seeing, I&SS and the volume, also we have a momentum.
Hiroki Totoki: So for next year, it's like a launchpad, let's say, that it's in a good position. So I think we can say that we are in a positive position. And having said that, in the semiconductor business, there's other businesses like game or I&SS. And so memory market condition effect. And let's say the selection or the options range is different, is what I feel. So the final product manufacturers, well, so what kind of measures would they be taking because of this memory market condition? And we would like to have close contact communication with the customers so that we can have a good understanding of each of the customers we have. And that's the procedure we take. But I think we are rather in a passive mode concerning this because of this kind of a characteristic business.
Hiroki Totoki: So for next year, it's like a launchpad, let's say, that it's in a good position. So I think we can say that we are in a positive position. And having said that, in the semiconductor business, there's other businesses like game or I&SS. And so memory market condition effect. And let's say the selection or the options range is different, is what I feel. So the final product manufacturers, well, so what kind of measures would they be taking because of this memory market condition? And we would like to have close contact communication with the customers so that we can have a good understanding of each of the customers we have. And that's the procedure we take. But I think we are rather in a passive mode concerning this because of this kind of a characteristic business.
Speaker #2: So for next year it's like a launch pad . Let's say that it's in a good position . think we So I can say that we are in a positive position and having said in that , the semiconductor business , there's other businesses like a game icon or and so memory market condition effect and let's the selection or the options range is different is what I feel .
Speaker #2: So, say the final product manufacturers will—so what kind of measures would they be taking because of this memory market condition? And we would like to have a close contact communication with the customers so that we can have a good understanding of each of the customers.
Speaker #2: We have. And that's the procedure we take. But I think we are rather in a passive mode concerning this because of this kind of a characteristic business for next year. I think we have a good launch pad.
Hiroki Totoki: For next year, I think we have a good launchpad in place. That's exactly as what you have pointed out. Thank you.
Hiroki Totoki: For next year, I think we have a good launchpad in place. That's exactly as what you have pointed out. Thank you.
Naoya Hori: Next from Mizuho Securities, Nakane-san, please. Thank you. Can you hear? Yes. We hear you. Thank you. Two questions. First, so expanding the share buyback. So before you used it up, the facility is being expanded. I think this is the first time you're doing that. You have higher cash flow. Stock price is low. I think those are the backgrounds. So talk about what discussions you had in the board meeting. And what's the message of expanding this facility in addition to what's in the release? That's the first question. Second, about the home entertainment separation. So from development, design, manufacture, that part, I think it's easy to separate cleanly. But for sales, you have the common platform. And domestic and overseas, I think it's still quite a huge size. I understand that the details are still to be worked out.
Operator: Next from Mizuho Securities, Nakane-san, please. Thank you. Can you hear? Yes. We hear you.
Speaker #2: You have exactly that in place. And that's what you pointed out. Thank you.
Speaker #3: Next , from Mizuho Securities . Nakano San . Please you . Thank you . Can hear ? we hear Yes , you . you .
Speaker #3: Next , from Mizuho Securities . Nakano San . Please you . Thank you . Can hear ? we hear Yes , you . Thank Two questions .
[Analyst 8]: Thank you. Two questions. First, so expanding the share buyback. So before you used it up, the facility is being expanded. I think this is the first time you're doing that. You have higher cash flow. Stock price is low. I think those are the backgrounds. So talk about what discussions you had in the board meeting. And what's the message of expanding this facility in addition to what's in the release? That's the first question. Second, about the home entertainment separation. So from development, design, manufacture, that part, I think it's easy to separate cleanly. But for sales, you have the common platform. And domestic and overseas, I think it's still quite a huge size. I understand that the details are still to be worked out.
Speaker #3: First . So the expanding share buyback . used it facility , the is being expanded , up I think this is the first time you're doing that .
Speaker #3: You have a higher price low. I think those are the backgrounds. So, stock—talk about what discussions you had in the board meeting, and what's the message of expanding this facility in addition to what's in the release?
Speaker #3: That's the first question . Second . home About the entertainment separation . So from development design , manufacture , that part , I think it's easy to separate cleanly .
Speaker #3: But for sales you have the common , common platform and domestic and overseas . I think it's still a huge quite size . I understand that the details are still to be worked out , but for the next fiscal year , in terms of sales .
Naoya Hori: But for the next fiscal year, in terms of sales, how is it going to be handled? And on the ET&S side, inclusive of structural reform, is there a possibility of some adjustments to be made? Give us some clues, please. Thank you for the questions. First, about increasing the facility to repurchase shares. So as you say, the business results and the cash flow is better than anticipated. So we want to increase our returns based on that. But in terms of the window, that is up until middle of May. So JPY 50 billion increase is what we've decided on this time. So the company's momentum of earnings and the fundamentals, we are confident about that. That is the message that we would like you to take from this increase in the facility. About the ET&S, for next fiscal year, basically, ET&S will continue to operate.
[Analyst 8]: But for the next fiscal year, in terms of sales, how is it going to be handled? And on the ET&S side, inclusive of structural reform, is there a possibility of some adjustments to be made? Give us some clues, please.
Speaker #3: How is it going to be handled and on the Eaton's side , inclusive of structural reform , is there a possibility of adjustments to be some made ?
[Company Representative] (Sony Group Corporation): Thank you for the questions. First, about increasing the facility to repurchase shares. So as you say, the business results and the cash flow is better than anticipated. So we want to increase our returns based on that. But in terms of the window, that is up until middle of May. So JPY 50 billion increase is what we've decided on this time. So the company's momentum of earnings and the fundamentals, we are confident about that. That is the message that we would like you to take from this increase in the facility. About the ET&S, for next fiscal year, basically, ET&S will continue to operate.
Speaker #3: Give us some clues , please . Thank you for the questions . First , about increasing the facility repurchase shares . So as you say , the business results and the cash flow is better than anticipated .
Speaker #3: So, to increase our—based on that. But of the window, that is up until middle of May. So, a ¥50 billion increase is what we've decided on this time.
Speaker #3: So, the company's momentum of earnings and fundamentals, we are about that. That is the message that we would like you to take from this increase in the facility.
Naoya Hori: It will have its budget in the same way. And we will communicate in that way. For the joint venture, it's to start from April of fiscal 2027. So in terms of the additional structural reform for the portfolio, it's always dynamic. So looking at the business situation, it's our job to optimize that. It's one of our main missions. As of now, nothing has been decided yet. That's all. Thank you.
[Company Representative] (Sony Group Corporation): It will have its budget in the same way. And we will communicate in that way. For the joint venture, it's to start from April of fiscal 2027. So in terms of the additional structural reform for the portfolio, it's always dynamic. So looking at the business situation, it's our job to optimize that. It's one of our main missions. As of now, nothing has been decided yet.
Speaker #3: the About Etns for next fiscal year , Etns will continue to operate . It will have its budget in the same . Basically way .
Speaker #3: And we will communicate in that way for the joint venture . It's to start from April of . Fiscal 27 . So in terms of the additional structural reform portfolio , it's dynamic .
Speaker #3: So, looking at the business situation, it's our job to optimize that. It's one of our main missions. As of now, nothing has been yet.
[Analyst 8]: That's all. Thank you.
[Analyst] (SMBC Nikko Securities): Thank you very much. SMBC Nikko Securities, Katsura-san, please. So I'm Katsura from SMBC Nikko Securities. I have two questions on game and semiconductor. About the gaming question, this quarter, how we see the profit, the third quarter, so compared to the real profitability of first and second quarters, I think the third quarter profit has gone down. This is about the domestic version of hardware and you did also promotion activity. And also, the procurement side, there has been maybe you purchased a memory in order to secure the inventory. So the landing of the third quarter and also the full year, so the postponement of first-party title might be a negative factor. So these numbers seemed a little bit low. So maybe you have included some of the countermeasures towards the next term. And the second point is I&SS.
Operator: Thank you very much. SMBC Nikko Securities, Katsura-san, please.
Speaker #3: All right. Thank you. That's all.
[Analyst 9]: So I'm Katsura from SMBC Nikko Securities. I have two questions on game and semiconductor. About the gaming question, this quarter, how we see the profit, the third quarter, so compared to the real profitability of first and second quarters, I think the third quarter profit has gone down. This is about the domestic version of hardware and you did also promotion activity. And also, the procurement side, there has been maybe you purchased a memory in order to secure the inventory. So the landing of the third quarter and also the full year, so the postponement of first-party title might be a negative factor. So these numbers seemed a little bit low. So maybe you have included some of the countermeasures towards the next term. And the second point is I&SS.
Speaker #1: very much Thank you . SMBC Nikko Corporation , please Securities . So Katsura from SMBC Nikko Securities . I have two questions on I am game and semiconductor about the gaming question .
Speaker #1: This quarter . The we see how the profit . The third quarter . So the compared to the real profitability of second and third quarter , first and second quarters , I think the third quarter profit has gone down is about about the domestic hardware .
Speaker #1: And you did also promotion version of activity and procurement also the side. There has been maybe you purchased a memory in to secure the inventory.
Speaker #1: So the landing of the third quarter and also the full year. So the postponement of first-party title might be a negative factor.
Speaker #1: So these numbers are seemed a little bit low . So maybe you have included some of the countermeasures towards the next term . And the second point is I and SS , you said you will be taking measures in the fourth quarter .
[Analyst] (SMBC Nikko Securities): You said you will be taking measures in the Q4. So if you can say, we would like you to share us the scale of this measure. So my question is about your plan towards the next year. Thank you for the question. About the Q3 profitability for gaming going down compared to the Q1 and Q2. So the main reason was the end-of-the-year sale promotion of the hardware. In addition to the Japan domestic model, we did global promotion. And that led to many users purchasing the console. And due to that, the profit went down in the Q3. But this will contribute to the mid- to long-term lifetime value. And towards the end of the fiscal year, as of now, the inventory, we do not have any plans to do anything extraordinary on the inventory.
[Analyst 9]: You said you will be taking measures in the Q4. So if you can say, we would like you to share us the scale of this measure. So my question is about your plan towards the next year.
Speaker #1: So, if you say, we would like you to share with us the details of this measure scale. So, my question is about your plan.
[Company Representative] (Sony Group Corporation): Thank you for the question. About the Q3 profitability for gaming going down compared to the Q1 and Q2. So the main reason was the end-of-the-year sale promotion of the hardware. In addition to the Japan domestic model, we did global promotion. And that led to many users purchasing the console. And due to that, the profit went down in the Q3. But this will contribute to the mid- to long-term lifetime value. And towards the end of the fiscal year, as of now, the inventory, we do not have any plans to do anything extraordinary on the inventory.
Speaker #1: Towards the next year. Thank you for the question about the foregoing profitability, first down in the third quarter compared to the second quarter.
Speaker #1: So there, the main reason was the last year's sale of the hardware. In addition, in the domestic Japan model, we did global promotion.
Speaker #1: And that led to many users purchasing console. And that the due to the went down that, in the third profit quarter.
Speaker #1: But this will contribute to the mid to long term lifetime value . And towards the end of the year fiscal , as now of .
Speaker #1: The inventory—we do not have any plans to do anything extraordinary on the inventory. I and SS, in fact, have factored that in this quarter.
[Analyst] (SMBC Nikko Securities): I&SS, we have factored in part of that into the fourth quarter. Hori will respond. So as we have explained, the business balance within I&SS segment and some of the asset depreciation amortization done in acceleration. So this type of treatment is currently being processed. And about the scale, about JPY 20 billion. So this one-time cost of JPY 20 billion will be factored into the fourth quarter. Thank you.
[Company Representative] (Sony Group Corporation): I&SS, we have factored in part of that into the fourth quarter. Hori will respond. So as we have explained, the business balance within I&SS segment and some of the asset depreciation amortization done in acceleration. So this type of treatment is currently being processed. And about the scale, about JPY 20 billion. So this one-time cost of JPY 20 billion will be factored into the fourth quarter. Thank you.
Speaker #1: the fourth into Will respond . So as we have . explained The business balance within and segment Ince some of the assets . Depreciation amortization done in acceleration .
Speaker #1: So this type treatment is currently being processed . And about the scale . About 20 billion . So this one time cost of really factored 20 billion is quarter .
Hiroki Totoki: All right. So we have not much remaining time. So the next question is going to be the last. Excuse us, but please keep your question just to one. So Ms. Munakata from Goldman Sachs, please. Yes. My name is Munakata from Goldman Sachs. Thank you very much for giving me this opportunity to ask a question. I think you have been saying about generative AI. I'd like to ask a question about that. And so last week, so Project Genie was announced. And basically speaking, so generative AI, I think, has an opportunity and also a threat. So in the stock market, so the generative AI, so the creation might be done by that so that a very interesting game can be made in an instant. So I think a threat is more strong here.
Operator: All right. So we have not much remaining time. So the next question is going to be the last. Excuse us, but please keep your question just to one. So Ms. Munakata from Goldman Sachs, please.
Speaker #1: Thank you .
Speaker #2: All right. So we do not have much time, so the remaining next question is going to be the last. Excuse us, but please keep your question to just one.
[Analyst 10]: Yes. My name is Munakata from Goldman Sachs. Thank you very much for giving me this opportunity to ask a question. I think you have been saying about generative AI. I'd like to ask a question about that. And so last week, so Project Genie was announced. And basically speaking, so generative AI, I think, has an opportunity and also a threat. So in the stock market, so the generative AI, so the creation might be done by that so that a very interesting game can be made in an instant. So I think a threat is more strong here.
Speaker #2: So Mr. Nakata from Goldman Sachs please . Yes . My name is from our government Thank you very much Sachs . for giving this to ask question .
Speaker #2: you have I think been saying about the AI . generative I'd ask a question about opportunity that . And last So Genie announced so and basically speaking so general AI , generative think as AI , I opportunity and also threat .
Speaker #2: So in the stock market . the AI so the creation might be generative done by that . So that very interesting be made in an instant .
Hiroki Totoki: But in the game creation, so there have been some comments that to have it in a positive manner. But with the generative AI becoming developing, so what is the strength of your game studios and game development? What is your strength in that? So I appreciate you to answer this question. Thank you. Well, but the generative AI, so in various ways, there are trials going on. And now it's in a test stage, I think. And there are very interesting things that's happening. But I think it's before the commercialization. And as for game, it's not just game, but so AI, I think it can be in a toolbox that there's a very strong tool in the toolbox. That's kind of a feeling we have against AI. So tool itself, it's not going to be a business.
[Analyst 10]: But in the game creation, so there have been some comments that to have it in a positive manner. But with the generative AI becoming developing, so what is the strength of your game studios and game development? What is your strength in that? So I appreciate you to answer this question. Thank you.
Speaker #2: I think a so-called threat is more present. Strong games can be made here. But in the game creation process, there have been some comments, and it has been discussed in a positive manner.
Speaker #2: But with generative AI becoming So what is the strength of your game developing . studios and development ? the game What is your strength in that ?
[Company Representative] (Sony Group Corporation): Well, but the generative AI, so in various ways, there are trials going on. And now it's in a test stage, I think. And there are very interesting things that's happening. But I think it's before the commercialization. And as for game, it's not just game, but so AI, I think it can be in a toolbox that there's a very strong tool in the toolbox. That's kind of a feeling we have against AI. So tool itself, it's not going to be a business.
Speaker #2: So appreciate you to ask to answer this question . Thank you . Well , but the generative AI a very in so various ways , there on .
Speaker #2: trials going And now it's in a test are think I . And very things that's there are happening . interesting But before I think it's before the commercialization and for game , it's not just but game , so AI .
Speaker #2: I think it can be in that toolbox, there's a very strong tool in the toolbox to have against AI. So, the tool itself is not going to be a business.
Hiroki Totoki: So I think we need the sensitivity of artists and the tool to integrate in order to have another business chance or to have entertainment. So that's the kind of understanding we have. In that sense, AI, I don't think it's a threat. But so that the creators can use AI fast way, and then we are going to help them make it the commercial product. So I think that's Sony's mission. Thank you.
[Company Representative] (Sony Group Corporation): So I think we need the sensitivity of artists and the tool to integrate in order to have another business chance or to have entertainment. So that's the kind of understanding we have. In that sense, AI, I don't think it's a threat. But so that the creators can use AI fast way, and then we are going to help them make it the commercial product. So I think that's Sony's mission. Thank you.
Speaker #2: So, I think we need the sensitivity of artists, and the tool to integrate, in order to have another business chance or to have entertainment.
Speaker #2: So sense , AI kind of have . In , I we don't think it's understanding a threat , but so that the creators can use AI .
Speaker #2: Fast way then going to . And we are them make it into commercial products . So I think that's the Sony's mission . Thank you .
Naoya Hori: With that, we would like to conclude the earnings announcement of Sony Group. Thank you very much for joining.
Naoya Hori: With that, we would like to conclude the earnings announcement of Sony Group. Thank you very much for joining.
