What pandemic? Streaming helps Sony Music rebound in fiscal Q2
After a 12.4% drop in income in its fiscal first-quarter, Sony Music Entertainment has managed to confound expectations in Q2, the quarter ending on September 30.
Strong performances from superstar acts, as well as an 18% YoY jump in streaming and 29.4% growth in the physical format, saw revenue growing 5.3% to 230.8 billion yen (AU$3 billion) from 219.3 billion yen ($2.87 billion).
Growth was fuelled by the continued success of Harry Styles, Jawsh 685, Future, Polo G, Travis Scott, Dojo Cat, Daniels, Luke Combs, Bob Dylan, Kenshi Yonezue and Man With A Mission.
With new and upcoming releases from AC/DC, Bruce Springsteen, Future, G-Eazy and Little Mix, it has revised its yearly forecast by almost $1 million.
Operating income grew 41% YoY to 52.85 billion yen from 37.48 billion yen ($492.5 million).
Recorded music operations were up 9.9% to123.3 billion yen, while streaming made up 63.9% of the division’s revenues, totalling in the quarter 78.83 billion yen.
Downloads now constitute 7.1% after a 1.5% decline to 8.7 billion yen.
Physical continues to be strong in Japan, accounting for a 29.4% YoY rise to 26.3 billion yen and now constituting 21.3% of share and rising from 18.1% in Q2 2019.
Music publishing operations of Sony/ATV and Sony Music Japan slipped 2.2% to 37.56 billion yen.
The visual media/platform segment, rose 2.1% to 67.54 billion yen.
“Other” operations including live and merchandising were the one real reflection of the pandemic’s impact, falling 41.5% from 16.25 billion yen to 9.5 billion yen.
Sony fully addressed the pandemic impact in its report:
“Regarding the impact from the spread of COVID-19, the release of some new music is being delayed around the world despite a gradual recovery in music recording, as a portion of artists are still unable to record songs and music videos and carry out promotional activities.
“Ticket and merchandising revenues are also decreasing, as concerts and other events are being restricted in Japan and other areas.
“Due to a global reduction in advertising spending, revenue from the licensing of music in TV commercials is decreasing.
“Although it also has been impacted by the reduction in advertising spending, revenue from advertising-supported streaming services is beginning to show signs of recovery due to a gradual recovery in advertising spending.”
Despite some gloom, the stronger performance in Q2 has seen Sony Corp revise its forecast for music for its fiscal 2020 ending March 31, 2021.
It now expects it to generate 850 billion yen ($11.5 billion) after setting it at 790 billion yen ($10.6 billion) in August.
Sony executives told investors that the reset forecast was “due to an expected increase in streaming revenues in recorded music” and the expected strong performance of other income.