Sony Music Sales Down Slightly in Q4

On a constant currency basis sales actually increased 4 percent.

Sony Corp. reported that its music operations sales were 178.5 billion yen ($1.539 billion), down from the third quarter of 2015 when sales were 181.8 billion yen ($1.57 billion), a decline of 1.8 percent. It attributed that decrease due to appreciation of the yen against the dollar and strong sales in the third quarter of 2015, when Adele's 25 album was breaking sales records.

But Sony also reported that on a constant currency basis (using an average exchange rate of 116 yen to the dollar for both years), sales increased 4 percent. (Since Sony is based in Japan and Sony Music Entertainment is based in the U.S., Billboard notes that Sony's music results from the U.S. perspective -- using an average currency exchange rate of 120.4 yen to the dollar for 2015 and 106.6 yen to the dollar for 2016 -- posted an increase of 10.9 percent with music revenue at $1.68 billion in the third quarter, versus $1.51 billion reported a year ago.)

Meanwhile, Sony reported that its music divisions enjoyed a slight increase in operating income of 27.98 billion yen ($241 million), a 2.4 percent lift over 27.32 billion yen ($235.3 million).

For the nine-month period, Sony's music divisions reported revenue of 470.6 billion yen ($4.06 billion), a 4.2 percent increase from the 451.3 billion yen ($3.89 billion) reported in the same period of 2015, on a constant currency basis.

(From the U.S. perspective, that translates into revenue of $4.414 billion using an average of 106.6 yen to the dollar, versus the first nine months of 2015 when revenue was of $3.751 billion, based on an average exchange of 120.4 yen to the dollar, which represents an increase of 17.7 percent.)

Sony's music divisions produced 60.37 billion yen ($403 million,) which was down significantly from the prior nine-month period when operating income was 73.2 billion yen ($631 million on a constant currency basis). But that decrease was due to an extraordinary gain recorded in the first nine-months of 2015, due to the re-measurement of Sony Music Entertainment's equity interest in the Orchard.

RECORDED MUSIC

Within music, recorded music (of Sony Music Entertainment and Sony Music Japan) produced revenue of 294.3 billion yen ($2.54 billion) in the first nine months of the year, as compared to 311.5 billion yen ($2.69 billion on a constant currency basis) due to the Orchard re-valuation.

Best-selling music titles during the quarter included Pentatonix’s A Pentatonix Christmas, Leonard Cohen’s You Want it Darker and Nogizaka46’s Sayonara no Imi. 

Analyzing recorded music by format shows that physical produced 104.5 billion yen ($980.4 million using an exchange rate of 106.6 yen to the dollar), or 35.5 percent of revenue, while digital produced $147.85 billion yen ($1.39 billion), or 50.2 percent of revenue and other income streams produced 41.94 billion yen ($393.4 million).

While streaming grew by 31.4% to 102.8 billion yen in the nine-month period ended, Dec. 31, physical music product is still larger at 104.51 billion yen. 

Within digital, streaming produced 34.9 percent of revenue, or 102.8 billion yen, while downloads slipped to 45.04 billion yen, or 15.3 percent of revenue. Most of streaming's gain appears to have come at the expense of download sales. In the prior year, downloads accounted for 21.2 percent of revenue, while streaming was 25.1 percent. Meanwhile, physical is only down slightly from 123.4 billion yen, or 39.6 percent of revenue it had in the first nine-months of 2015.

PUBLISHING

Sony's publishing operations (Sony/ATV and the publishing operation of Sony Music Japan) produced revenue of 46.8 billion yen, $403 million in the first nine-months of 2016, versus revenue of 52.3 billion yen ($450.5 million on a constant currency basis). 

(From the U.S. perspective using 106.6 yen to the dollar for 2016 and 120.04 yen to the dollar for 2015, that translates into music publishing revenue of $439 million, versus $436 million.)

GAMES, MOBILE APPS, ETC

Finally for visual media and platform (where Sony counts revenue from cartoon, apps, and video games created mainly by the Sony Japan music division), that operation produced 117.17 billion yen, or $1.01 billion, up from 76.5 billion yen, or $659 million on a constant currency basis. The increase in revenue was attributed to to the continuing strong performance of Fate/Grand Order, a mobile game application.