Deteriorating earnings outlook for the film production business and goodwill impairment

「In fiscal 2025, Sony decided to gradually wind down the businesses operated by Pixo Holdings, Inc., a wholly owned subsidiary in the Motion Pictures segment, and its consolidated subsidiaries, collectively referred to below as Pixomondo, after fulfilling its outstanding contractual obligations, in light of the business environment. Accordingly, the company determined that the recoverable amounts of Pixomondo's property, plant and equipment of ¥5,171 million, right-of-use assets of ¥640 million, goodwill of ¥14,355 million, and other intangible assets of ¥1,944 million were zero, and recognized an impairment loss of ¥22,110 million in other operating loss (income), net.」

「Impairment of assets of Pixomondo, which operates VFX and virtual-production businesses, and costs related to winding down the business (¥27.1 billion)」

「Revenue decreased by ¥26.9 billion, or 4%, year on year to ¥693.1 billion (a decrease of 11% on a U.S. dollar basis). This substantial decrease in revenue on a U.S. dollar basis was mainly due to a decrease in the number of television programs delivered during the six months ended September 30, resulting from delays in production caused by the Hollywood strike in the previous fiscal year, and a decrease in revenue from theatrical releases during the six months ended September 30. Operating income decreased by ¥15.6 billion, or 34%, year on year to ¥29.8 billion.」

「Operating income was ¥117.7 billion, broadly unchanged from the previous fiscal year (a decrease of 10% on a U.S. dollar basis). The decrease in operating income on a U.S. dollar basis was mainly due to higher advertising and promotional expenses resulting from an increase in theatrical releases, despite the effects of the increase in revenue described above.」

「Operating income decreased by ¥16.7 billion, or 16%, year on year to ¥87.0 billion (a decrease of 23% on a U.S. dollar basis). This substantial decrease in operating income on a U.S. dollar basis was mainly due to the effects of the factors contributing to the decrease in revenue described above and higher advertising and promotional expenses resulting from an increase in theatrical releases in the current fiscal year, despite the effects of the factors contributing to the increase in revenue described above.」

「Operating income decreased by ¥32.9 billion, or 42%, year on year to ¥45.4 billion (a decrease of 46% on a U.S. dollar basis). Although higher theatrical box-office revenue had an effect, this substantial decrease in operating income on a U.S. dollar basis was mainly due to the effect of the decrease in revenue described above and higher advertising and promotional expenses resulting from an increase in theatrical releases in the current fiscal year.」

「Operating income decreased by ¥34.7 billion, or 68%, year on year to ¥16.0 billion (a decrease of 71% on a U.S. dollar basis). This substantial decrease in operating income on a U.S. dollar basis was mainly due to the effects of the decrease in revenue described above and higher advertising and promotional expenses resulting from an increase in theatrical releases in the current fiscal year.」

「Operating income decreased by ¥98.1 billion year on year to ¥119.3 billion. This substantial decrease in operating income on a U.S. dollar basis was mainly due to the ¥70.0 billion gain on disposal recognized in the previous fiscal year in connection with the disposal of GSN Games, a division of Game Show Network, LLC, and the effect of the decrease in revenue described above.」

「Operating income decreased by ¥102.6 billion, or 50%, year on year to ¥103.7 billion (a decrease of 58% on a U.S. dollar basis). This substantial decrease in operating income on a U.S. dollar basis was mainly due to the gain on disposal recognized in the same period of the previous year in connection with the disposal of GSN Games, a division of Game Show Network, LLC, and the effect of the decrease in revenue described above.」

「Revenue increased by ¥213.4 billion, or 46%, year on year to ¥678.8 billion (an increase of 20% on a U.S. dollar basis). This substantial increase in revenue on a U.S. dollar basis was mainly due to higher television licensing revenue and home entertainment revenue from films released in the previous fiscal year in film production, higher revenue from anime-focused DTC services, including the effect of the acquisition of Crunchyroll, and an increase in the number of titles delivered in television production, including the effect of the acquisition of Industrial Media.」

「Revenue increased by ¥136.6 billion, or 67%, year on year to ¥341.4 billion (an increase of 41% on a U.S. dollar basis).」

「Revenue in the Motion Pictures segment increased by ¥485.9 billion, or 65%, year on year to ¥1,238.9 billion in fiscal 2021 (an increase of 55% on a U.S. dollar basis).」

「Revenue increased by ¥373.9 billion, or 68%, year on year to ¥926.7 billion (an increase of 59% on a U.S. dollar basis). This significant increase in revenue was due to increases across all categories. Revenue from film production increased mainly due to higher theatrical box-office revenue, driven by Spider-Man: No Way Home, and higher licensing revenue from streaming services for new films and from catalog titles.」

「Revenue increased by ¥103.8 billion, or 29%, year on year to ¥465.4 billion (an increase of 25% on a U.S. dollar basis). This significant increase in revenue was due to increases across all categories.」

「In the Motion Pictures segment, the theatrical exhibition business as a whole was significantly affected by cinema closures and capacity restrictions, among other factors, and Sony continued to be unable to release theatrically most films whose production had already been completed.」

「Revenue decreased by ¥124.1 billion, or 18%, year on year to ¥558.6 billion (a decrease of approximately 16% on a U.S. dollar basis). This substantial decrease in revenue on a U.S. dollar basis was mainly due to the inability to release major films theatrically during the nine months ended December 31, primarily as a result of cinema closures caused by the spread of COVID-19, despite increases in home entertainment and television licensing revenue from films released in the previous fiscal year and catalog titles.」

「This substantial decrease in revenue on a U.S. dollar basis was due to significant decreases in revenue from film production and Media Networks. Although film production benefited from increases in digital video rentals and video sales of films released in the previous fiscal year and catalog titles, revenue decreased because major films could not be released theatrically during the nine months ended December 31, mainly due to cinema closures resulting from the spread of COVID-19.」

「Although cinemas around the world have gradually begun to reopen, many remain closed or continue to face restrictions on attendance even after reopening, affecting the theatrical exhibition business as a whole. Accordingly, Sony is generally unable to release theatrically films whose production has already been completed.」

「Operating income increased by ¥17.6 billion year on year to ¥45.1 billion. This significant increase was due to higher operating income in Media Networks resulting from the effect of the channel portfolio review initiated in the previous fiscal year, lower programming impairments and early retirement costs related to the review than in the same period of the previous year, and lower costs for sports programming and distribution fees in India, despite the effects of higher program development costs and higher production costs resulting from an increase in new programs for U.S. networks in television production.」

「Operating income increased by ¥23.8 billion year on year to ¥39.7 billion. This significant increase was due to higher operating income from the increase in worldwide theatrical box-office revenue in film production and the effect of the channel portfolio review initiated in the previous fiscal year in Media Networks, despite lower television licensing revenue from catalog titles in the United States and higher program development costs in television production, as well as lower costs for sports programming in India.」

「Operating income (loss) was income of ¥0.4 billion, compared with a loss of ¥7.6 billion in the same period of the previous year. This improvement was due to lower costs for sports programming and advertising and promotional expenses in India in Media Networks, increased home entertainment revenue at Funimation, and higher operating income in other regions as a result of the channel portfolio review initiated in the previous fiscal year.」

「Operating income increased by ¥13.5 billion year on year to ¥54.6 billion. This significant increase was due to improved profitability in film production, driven by television licensing revenue and home entertainment revenue from highly profitable titles such as Jumanji: Welcome to the Jungle and Peter Rabbit during the current year, as well as lower advertising and promotional expenses for theatrical releases than in the previous year.」

「Operating income increased by ¥18.8 billion year on year to ¥27.5 billion. This significant increase was due to improved profitability in film production, driven by home entertainment revenue and television licensing revenue from highly profitable titles such as Jumanji: Welcome to the Jungle and Peter Rabbit during the nine months ended December 31, as well as the ¥9.4 billion effect of changes in accounting standards relating to revenue arising from contracts with customers in film production and television production.」

「Operating income (loss) was income of ¥15.9 billion in the current year, compared with a loss of ¥1.8 billion in the previous year. Although the decline in revenue described above had an impact, the improvement in operating results was mainly due to the ¥9.4 billion effect of changes in accounting standards relating to licensing revenue, lower advertising and promotional expenses in the nine months ended December 31 than in the same period of the previous year, which included advertising and promotional expenses for Spider-Man: Homecoming, released in July 2017, and increases in television licensing revenue and home entertainment revenue described above.」

「The operating loss narrowed by ¥1.9 billion year on year to ¥7.6 billion. Although the decline in revenue described above had an impact, the reduction was mainly due to lower advertising and promotional expenses in the current quarter than in the same period of the previous year, which included advertising and promotional expenses for Spider-Man: Homecoming, released in July 2017, as well as improved profitability resulting from strong home entertainment revenue from Jumanji: Welcome to the Jungle in the current quarter.」

「Operating income (loss) was income of ¥41.1 billion in the current year, compared with a loss of ¥80.5 billion in the previous year. This significant improvement in operating results was due to the recognition in the previous year of a goodwill impairment loss of US$962 million (¥112.1 billion), as well as the effect of the increase in revenue described above in the current year.」

「Operating income (loss) was income of ¥8.7 billion, compared with a loss of ¥114.2 billion in the same period of the previous year. This significant improvement in operating results was due to the ¥112.1 billion (US$962 million) goodwill impairment recognized in the same period of the previous year and the increase in revenue described above.」

「Accordingly, in fiscal 2016, the company recognized an impairment loss of ¥112,069 million, representing the entire amount of goodwill attributable to Production and Distribution.」

「Accordingly, in the third quarter of fiscal 2016, the company recognized an impairment loss of ¥112,069 million, representing the entire amount of goodwill attributable to Production and Distribution. The impairment loss was included in other operating loss (income), net, in the consolidated statements of income, and was all recognized in the Motion Pictures segment.」