Sony’s stock took a hit after lowering its PS5 sales forecast, but analysts point to a more significant issue—the declining operating margin in its gaming business, hitting a near decade low.
1. Sony slashes PS5 sales forecast for the fiscal year from 25 million to 21 million units.
2. Around $10 billion wiped off Sony’s market value after the sales cut announcement.
3. Operating margin in Sony’s gaming business drops to just under 6% for the December quarter.
4. Analysts express disappointment over the low operating margin despite strong tailwinds.
5. High-margin products like digital game downloads and PS Plus subscription fail to boost margins.
6. Analysts question the impact of rising software production costs on Sony’s gaming margins.
7. Hardware production costs may have decreased, but increasing game development budgets contribute to margin squeeze.
