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Sony expects better profit due to PS4 cost reductions

Hardware cost decreases ahead of schedule

Sony is making meaningful reductions to the cost of PS4 manufacture to the extent that the system's sales are contributing more profit to the business than originally anticipated, the corporation has said.

On Thursday Sony revised its annual operating income forecast for the games division, moving its prediction from £115 million to £143 million - an increase of 25 per cent.

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Sony is believed to have sold about 7 million PS4s since the system's launch in November

"Operating income is expected to be higher primarily due to PS4 hardware cost reductions," Sony said in a note to investors.

Though reductions to manufacturing expenditure are usual, the extent in which the PlayStation business has reduced PS4 costs appears to have caught Sony by surprise.

The corporation did not state that PS4 sells at a profit, suggesting that further savings are still required to break even on standalone hardware purchases.

Meanwhile, the overall sales performance of PS4 appears to have also outstripped expectations. Sony said the PlayStation unit's revenues "are expected to be higher than [our previous] forecast primarily due to the strong performance of the PS4".

The company has sold about seven million PS4s since the system first launched in November.

Though the company did not update its PS4 sales figure, it says that it shifted 3.5 million combined PS4 and PS3 units during the April-June period.

PlayStation 4's strong performance helped elevate the games division's quarterly revenue by 95 per cent year-on-year.

"This increase was primarily due to the contribution from sales of PS4 hardware which was launched in November 2013, as well as a significant increase in network services revenues accompanying the launch of the PS4."

The unit also generated an operating income of 4.3 billion yen (£25m/$42m), compared to an operating loss of 16.4 billion yen in the same quarter of the previous fiscal year.

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