Sony’s music operations came roaring back in the company’s fiscal third quarter ended Dec. 31, as recorded music and music publishing operations grew 13% on a yen basis and 17.6% on a dollar basis to 187.11 billion yen ($1.79 billion) from 165.66 billion yen ($1.52 billion) in the year-earlier period.
In addition to the company’s music recording and publishing operations, Sony’s music segment financials also include the visual media/platform, which had a strong quarter so that the overall segment shrugged off the pandemic-causing economic downturn and reported total revenue of 261.72 billion yen ($2.5 billion), a 22.4% increase over the 213.86 billion yen ($1.966 billion) reported in the last three months of 2019.
Even more impressive was the improvement in the company’s profitability as the company posted 59.69 billion yen ($571.2 million) in operating income, a whopping 64.7% increase on a yen basis and a 71.4% increase on a dollar basis over the prior year’s total of 36.25 billion yen ($333.18 million). That means its operating margin grew almost six percentage points to 22.8% of revenue from 17% in the third quarter of 2019.
Breaking down the overall music segment by operation:
- Recorded music, which consists of Sony Music Entertainment and Sony Music Japan, grew 12.8% on a yen basis and 17.5% on a dollar basis to 142.1 billion yen ($1.36 billion) from 125.94 billion yen ($1.16 billion) and comprised 54% of the reporting segment
- Music publishing grew 13.3% to 45 billion yen ($430.59 million) and comprised 17.2% of the segment.
- Visual Media/Platform grew by 54.8% to 74.62 billion yen ($714 million) from 48.21 billion yen ($443.1 million), thanks to the Demon Slayer movie.
Drilling down on recorded music:
- Streaming grew nearly 21% to 88.06 billion yen ($842.71 million) from 72.8 billion yen ($669 million) and now comprises nearly 62% of recorded music.
- Downloads fell 22% to 6.62 billion yen ($63.34 million) from 8.5 billion yen ($78 million) and now comprises 4.7% of recorded music.
- Physical grew an amazing 36.6% to 35.1 billion yen ($335.8 million) from 25.7 billion yen ($236.05 million) and comprises 24.7% of recorded music revenue.
- And other income streams including merch and live were hit hard by the pandemic and fell nearly 35% to 12.34 billion yen ($118.1 million) from 18.96 billion yen ($174.3 million) and comprises 8.7% of recorded music revenue.
Previously, those formats and income streams broke out by streaming 57.8%, downloads 6.7%, physical 20.4% and other 15.1%.
Albums by AC/DC (the chart-topping Power Up), Harry Styles, Bruce Springsteen, Luke Combs, 21 Savage, Miley Cyrus, The Kid LAROI, Polo G, 24kGoldn, Francis Cabrel, LISA, and SixTONES fueled third quarter revenue, Sony said.
Moving over to music publishing, Sony/ATV Music Publishing and Sony Japan’s music publishing operation grew 13.3% to nearly 45 billion yen ($430.6 million) from 39.72 billion yen ($365 million) in the year earlier corresponding third quarter period.
Looking at the company for the first nine months of its fiscal year ended Dec. 31, revenue at Sony Corp.’s music segment and Visual Media/Platform grew to 663.88 billion yen $6.27 billion, a 5.3% increase from the first nine months of the prior year when revenue was 630.64 billion yen ($5.8 billion).
Meanwhile, operating income grew 31.6% to 147.44 billion yen ($1.39 billion) from 112.1 billion yen ($1.031 billion), which means that operating margin grew to 22.2% of revenue from 17.8% of revenue for the first nine months of 2019.
By operating unit within the segment that breaks out to:
- Recorded music at 363.52 billion yen ($3.43 billion), or a 3.8% increase from 350.1 billion yen ($3.22 billion), and comprised 54.76% of the segment’s overall income.
- Music publishing, with 113.65 billion yen ($1.07 million), a 3.2% decline from 117.41 billion yen ($1.08 billion) as the economic downturn has had a large impact on publishing performance revenue and synchronization. Overall, publishing comprises 17.12% of the segment’s revenue.
- Visual media/platform tallied 186.7 billion yen ($1.76 billion, up 14.5% from 163.13 billion yen ($1.5 billion); and comprised 28.12% of revenue.
Without visual media/platform included, Sony’s recorded music and publishing operations totaled 477.18 billion yen ($4.51 billion) and grew 2.1% from 467.5 billion yen ($4.3 billion).
Looking ahead, Sony has upped its music segment forecast to 900 billion yen ($8.5 billion) from the 850 billion yen it had projected in annual revenue for this year back in October. The company expects releases from DJ Khaled, Travis Scott, Future, 21 Savage, Zara Larsson, Foo Fighters, and Kings Of Leon among others to be the big revenue drivers in its fiscal fourth quarter and the first quarter of the next fiscal year.
This story uses an exchange rate of 104.5 yen to the U.S. dollar for the third quarter of 2020 and 108.8 yen to the dollar for the third quarter of the prior year. For the nine-month period this year, the exchange rate used is 105.9 yen to the dollar and 108.65 yen to the dollar for last year.