Sony forecast a decline in annual sales for its gaming business as the PlayStation 5 enters a more mature stage of its life cycle and the company faces pressure from rising memory chip prices. Sony expects gaming sales to fall 6% to 4.42 trillion yen, or about $28 billion, as hardware sales slow and the broader gaming industry deals with a surge in component costs. The forecast highlights a key challenge for Sony: its PlayStation platform remains central to the company’s entertainment strategy, but console hardware is becoming a weaker growth driver.
The slowdown is already visible in console shipments. Sony sold 1.5 million PS5 units in the fourth quarter, a 46% drop from the same period a year earlier. That decline reflects the fact that the PS5 is now in its sixth year on the market, meaning many early buyers already own the console and demand is naturally shifting from hardware toward software, subscriptions, and ecosystem engagement. Sony has also raised PS5 prices, including a $100 increase in the U.S. in March, the second price hike in less than a year.
Memory costs are another major concern. Sony said its PS5 hardware sales outlook depends on how much memory it can secure at “reasonable prices.” The company expects hardware profitability to remain similar to last year, but investors are watching closely because higher memory chip costs and supply-chain disruptions can squeeze margins for electronics companies. These concerns are also affecting peers such as Nintendo.
Despite lower gaming sales, Sony expects gaming profit to rise 30%. That improvement is expected to come from higher first-party software sales and the absence of an impairment loss recorded a year earlier. The profit forecast also includes investment in Sony’s next-generation platform, showing that the company is already preparing for the post-PS5 era even while trying to keep the current console ecosystem profitable.
A major potential boost could come from Grand Theft Auto VI, which is scheduled for release in November. Analysts said the market may be underestimating how much the game could benefit Sony’s platform through high-margin software sales and greater user engagement. Because blockbuster games can drive console activity, digital purchases, subscriptions, and accessories, GTA VI could help soften the impact of weaker PS5 hardware sales.
Sony’s overall annual operating profit rose 13.4% to 1.45 trillion yen, but that still came in below the 1.56 trillion yen consensus estimate compiled by LSEG. The company also announced a share buyback of up to 500 billion yen, covering as many as 230 million shares, which helped its stock pare earlier losses and rise in Tokyo trading.
Beyond gaming, Sony expects higher profits in its pictures and chips units, but lower profit in music. The company has received praise for transforming itself into an entertainment powerhouse, with growth areas such as anime gaining a wider global audience. Still, investors remain concerned about the impact of artificial intelligence on Sony’s businesses and about the company’s lack of obvious new growth catalysts. Sony has also abandoned plans to launch electric vehicles with Honda, removing one potential future expansion path.
Overall, Sony’s outlook is mixed. The company is still profitable and has valuable entertainment assets, but its gaming division is entering a tougher phase as PS5 hardware sales decline and memory costs rise. The next test will be whether software, content, buybacks, and future platform investments can convince investors that Sony has enough growth beyond the aging PS5 cycle.
