Sony Music Posts $1.6B in Quarterly Revenue as Streaming Jumps 35%

Sony’s global music operations — Sony Music Group and Sony Music Japan — grew 26% to 235.7 billion yen ($2.07 billion) from the prior year’s total of 187.11 billion yen ($1.79 billion), as streaming and other music income streams posted big gains for its fiscal third quarter, according to the company’s earnings report released Wednesday (Feb. 2).

During the third quarter, which ended Dec. 31, streaming in recorded music and music publishing combined was up 34% to 145.51 billion yen ($1.28 billion) from the prior year’s total of 108.55 billion yen ($1.04 billion), a gain of $240 million while other income streams. In recorded music, other music income streams, which includes live and merchandising, posted a 97.4% increase to 24.36 billion yen ($214.26 million), or nearly double the 12.34 billion yen ($118.1 million) tallied in the prior year’s fiscal third quarter, or a gain of $96 million. Those gains were slightly offset by declines in physical, downloading in recorded music.

The company’s recorded music operations — Sony Music Entertainment and Sony Music Japan — grew 29.3% to 183.79 billion yen ($1.616 billion) from the corresponding period in the prior year when revenue totaled 142.1 billion yen ($1.36 million).

Music publishing — Sony Music Publishing and Sony Japan Publishing — posted a 15.3% increase to 51.9 billion yen ($456.5 million) from the year earlier corresponding period when revenue totaled just short of 45 billion yen ($430.6 million). Within publishing, streaming totaled 26 billion yen ($229 million), or 29% growth from the prior year’s third quarter when it tallied 20.5 billion yen ($196.1 million), while other music licenses generated 25.9 billion yen ($228 million), or a 5.7% increase from 24.51 billion yen ($234.5 million).

During the year, Sony’s music operations made several significant acquisitions including buying the Bruce Springsteen recorded music and music publishing catalog; Bob Dylan’s recorded music catalog; and it acquired full ownership of Ultra Records plus a majority stake in Alamo Records. The latter deal likely is also one of the factors in the music segment’s overall growth so far this year.

Sony’s big hit albums during the quarter included Adele’s 30, Doja Cat’s Planet Her, Lil Nas X’s MONTERO,  The Kid LAROI’s F*ck LOVE, Harry Styles’ Fine Line, Mariah Carey’s Merry Christmas, Polo G’s Hall of Fame, Luke Combs’ What You See Is What You Get, Rod Wave’s SoulFly, and Little Mix’s Between Us. Sony Japan’s hit titles included  Nogizaka46’s Time Flies, SixTONES City and YOASOBI’s The Book 2.

Breaking out recorded music by formats for the third quarter, streaming increased by 35.7% to 119.5 billion yen ($1.05 billion) from 88.1 billion yen ($842.7 million), while downloads grew slightly by 4.3% to 6.9 billion yen ($60.7 million) from 6.6 billion yen ($63.4 million); physical revenue dropped to 33 billion yen ($290.4 million) from 35.1 billion yen ($335.8 million); and other income streams like synchronization, public performance revenue, merchandising and live income, grew to 24.4 billion yen  billion yen ($214.3 million), or nearly double that of  the pandemic-suffering prior year when revenue from those areas totaled 12.4 billion yen ($118 million). As a percentage of recorded music revenue that breaks out to streaming 65.02%; physical 17.97%; downloads 3.76%; and other 13.26%. In the prior year’s third fiscal quarter, those percentages, respectively were streaming 61.97%; physical 24.69%; downloads 4.66% and other 8.68%.

Visual Media/Platform — mobile video games — is also included in Sony’s grouping of music operations and its revenue fell nearly 27% to 56.68 billion yen ($498.5 million from 74.62 billion yen ($714 million), but that downturn for that operation can be attributed to going up against a strong release schedule in the year-earlier period.

Overall, when Visual Media/Platform is added with Sony’s music operations, the Sony Music segment produced 292.4 billion yen ($2.57 billion) in revenue, an 11.7% increase over the prior year’s total of 261.7 billion yen ($2.5 billion).

As a percentage of income for the overall segment, recorded music comprises 62.86%; publishing, 17.75%; and Visual Media/Platform 19.39%. In the prior year, those percentages, respectively, were 54.3%; publishing, 17.19%; and 28.51%.

Due to a stronger dollar in the third quarter this year, 113.7 yen to $1 versus a year earlier 104.5 yen to the $1, the percentage revenue gains in the dollar aren’t as strong as the yen revenue numbers.

But its operating income fell to 55.1 billion yen ($484.7 million from 59.07 billion yen ($565 million), a decline of 6.7% in yen and 14.3% in the dollar. Likewise, its yen operating margin fell to 18.7% from 22.6%. Some of that profit decline is likely attributed to the weaker mobile game release schedule.

Moving over to the nine-month period ended Dec. 31, Sony’s music operation reported 638.32 billion yen ($5.6 billion), a 33.8% increase over the prior year’s total of 477.18 billion yen  ($4.51 billion). Within that, recorded music operations garnered 491.98 billion yen ($4.33 billion), an increase of 35.3% from the prior year’s total of 363.52 billion yen ($3.43 billion).

Breaking out recorded music by formats for the nine-month period, streaming grew by 45% to 341.9 billion yen ($3 billion) from 235.8 billion yen ($2.23 billion), while downloads fell 19.5% to 19.8 billion yen ($174.2 million) from 22.9 bilion yen ($216.6 million); physical held steady at 74.05 billion yen ($651.3 million) and other income streams including synchronization, neighboring rights public performance revenue, merchandising and live income, grew to 56.2 billion yen ($494.3 million), an increase of nearly 83% over the pandemic-suffering prior year when revenue from those areas totaled 30.73 billion yen ($290 million). As a percentage of revenue, that breaks out to streaming 69.5%; physical 15.05%; downloads 4.03%; and other 11.42%. That compares with the prior year when streaming totaled 64.86%; physical 20.38%; downloads 6.31% and other 8.45%.

The music publishing operations tallied 146.34 billion yen ($1.29 billion), a 28.8% increase on a yen basis and a nearly 20% increase on a dollar basis. Again, the wide discrepancy in the percentage increase by currency is due to a stronger dollar for Sony’s nine-month fiscal period this year, with an exchange rate experienced by the company of 111.2 yen to $1 this year versus 105.9 yen to $1 for the corresponding period last year. The company says its publishing operations now handle 5.03 million songs, that’s up from the 4.86 million it oversaw at the end of the third quarter in the prior year.

When the Visual Media/Platform operation is added to the music operations, the overall segment posted 813.14 billion yen ($7.15 billion) in revenue, a 22.5% increase over the nearly 664 billion yen ($6.27 billion) recorded in the year-earlier nine-month period.

Moreover, unlike for just the fiscal third quarter, for the full nine-month period, the overall Sony segment—music and mobile games—posted a 8.1% gain in operating income to 161.1 billion yen ($1.42 billion), up from nearly 149 billion yen ($1.4 billion) tallied for the first nine-months of the prior year. However, operating margin is likewise down to 19.8% from 22.4% in the earlier nine-month period.

Looking ahead, Sony is forecasting its music segment including Visual Media/Platform will finish the year 205 billion yen ($1.8 billion) in operating income on revenue of 1.09 trillion yen ($9.6 billion). That’s up from the second quarter forecast of 200 million in operating income and revenue of 1.07 trillion yen and the increase is attributed to an expected strong schedule from the mobile games segment.

Upcoming new releases include music from 21 Savage, Black Eyed Peas, Camila Cabello, Future, Ozzy Osbourne, SZA, Three Days Grace and Giveon.