The Sony segment containing its music operations breaks out to:
• Recorded music operations of Sony Music Entertainment and Sony Music Japan comprising 123.3 billion yen ($1.16 billion). That’s a 9.9% increase from the 2019 second quarter when recorded music tallied 112.2 billion yen ($1.045 million).
• Music publishing operations of Sony/ATV Music Publishing and Sony Music Japan’s publishing operations garnering 37.56 billion yen ($353.7 million). That’s down 2.2% from the year-earlier corresponding period when revenue totaled 48.41 billion yen ($357.61 million).
• The visual Media/Platform segment which includes mobile video games, chalking up 67.54 billion yen ($636 million), or a 2.1% increase from the year earlier total of 66.1 billion yen ($615.8 million).
Breaking out recorded music by format:
• Streaming, accounted for 63.9% of recorded music revenue by totaling 78.83 billion yen ($752.25 million) a 18% increase over the 66.8 billion yen ($622 million) recorded in the year earlier corresponding period.
• Downloads, at 7.1% of recorded music revenue, brought in 8.7 billion yen ($82 million), a 1.5% decline the prior years total of 8.84 billion yen ($82.3 million)
• So overall, digital totaled 87.53 billion yen ($824.2 million), a 15.7% increase over the prior year’s second quarter total of 75.64 billion yen ($704.2 million); and comprised 71% of recorded music.
• Physical grew 29.4% to 26.3 billion yen ($247.5 million) from 2019’s second quarter total of 20.3 billion ($189.1 billion), apparently due to releases in the Japanese market. Physical now comprises 21.3% of recorded music, up from 18.1% in the year earlier period.
• Finally, other operations, which includes merchandising and live, garnered 9.5 billion yen (89.5 million), down 41.5% from 16.25 billion yen ($151.3 million).
As a percentage of recorded music, that segment now stands at 7.7%, versus last year when it accounted for 14.5%.
Among the records driving revenue, the company cited these releases: Harry Styles’ “Fine Line;” Jawsh 685’s “Jawsh 685 Releases;” Future’s “High Off Life;” Polo G’s “The GOAT;” Travis Scott’s “Astroworld;” Dojo Cat’s “Hot Pink;” Kang Daniels’ “Magenta;” Luke Combs “What You See Is What You Get” and “This One’s For You;” Bob Dylan’s “Rough And Rowdy Ways;” Kenshi Yonezue’s “Stray Sheep;” Man With A Mission’s “Man With A ‘Best’ Mission; and Sixtones’ “Navigator.”
Moving over to half-year results, the lingering impact of this year’s first-quarter downturn is still evident as the overall Sony segment containing music operations produced revenue of 402.15 billion yen ($3.762 billion), or a 3.5% decline from the first six months of 2019 when revenue totaled 421.5 billion yen ($3.88 billion).
However, operating income still jumped 15.8% to 87.84 billion yen ($820.8 million) versus the first half of 2019 when that measurement was 75.76 billion yen ($697.3 million), Consequently gross margin — operating income as a percentage of revenue — for the six months ended Sept. 30 improved to 21.8% from 18.8% recorded for 2019’s first half.
Breaking out the segment by operation:
• Recorded music generated revenue of 221.41 billion yen ($2.07 billion), a 1.2% decline from the 224.2 billion ($2.06 billion) yen garnered in the first half of 2019. It now accounts for 55.1% of the segments overall revenue, as compared to 53.8% in year year earlier corresponding period.
• Music publishing totaled 68.66 billion yen ($642.25 million), a 11.6% decline from the 77.7 billion yen ($715.1 million) tallied in 2019’s first six months. Publishing now comprises 17.1% of the segment’s revenue, versus 18.6% last year.
• Visual Media/Platform produced 112.1 billion yen ($1.05 billion), a 2.5% drop from the prior year’s six month performance of 114.92 billio yen ($1.06 billion).
Looking at how the various recorded music formats and channels performed for the six month period:
• Streaming gathered 147.7 billion yen ($1.38 billion), a 10.8% increase from the year earlier corresponding period when the channel produced 133.3 billion yen $1.23 billion). Overall, it accounts for 66.7% of recorded music in 2020, versus 59.5% in the first half of 2020.
• Downloads stood at 16.3 billion yen ($152.7 million), a 7% decline from the 17.53 billion yen($161.4 million) in 2019’s corresponding period, which means it accounts for 7.4% of recorded music this year versus 7.8% last year.
• Overall digital now adds up to 164.04 billion yen ($1.54 billion), or 8.8% larger than last year’s total of 150.8 billion yen ($1.39 billion). Collectively that means its 74.1% of recorded music revenue at the mid-year mark, up from 67.3% in the first half of 2019.
• Physical, meanwhile, struggled to overcome the first quarter when many stores where shuttered across the globe. Its sales in the first six months totaled 39 billion yen ($365.5 million), a 7.8% decline from 42.3 billion yen ($389 million). Those amounts translated into 17.6% of recorded music so far in 2020 and 18.9% for 2019.
• And other income streams totaled 18.4 billion yen, ($172 million), down 40.8% from 31.1 billion yen ($286.3 million), which means its share of recorded music fell to 8.3% from 13.9% in the first half of 2019.
Looking ahead, Sony forecasts the segment containing music to produce revenue of 850 billion yen ($8 billion) with operating income expected to tally 152 billion yen ($1.43 billion).
In making that forecast, Sony points to second-half releases from AC/DC, Bruce Springsteen, Francis Cabrei, Future, G-Eazy, Indochine, Lil Tjay, Little Mix and Pentatonix.
The company also expects streaming revenue in recorded music to continue to shine, pointing out that while ad-supported streaming is experiencing a rebound while paid subscription streaming has remained strong. The company also cited an expected strong performance from game applications and anime in the Visual Media and Platform operations.
But even with that optimism, the company warns that the impact of the COVID-19 pandemic still lingers, saying that sales will continue to lag given some releases are being held up due to artists being unable to record new tracks or create music videos. The virus also prevents artists from carrying out traditional promotional activities, and ticketing and merchandising revenues are still suffering, as is the licensing of music in TV commercials.
For this story, Billboard used the Sony quoted exchange rate of 106. yen per dollar for the second quarter, and 106.9 yen per dollar for the six month period for 2020, while for 2019 the story uses 107.4 yen per dollar for the first quarter and 108.6 pen per dollar for the half year numbers.
Panning out to the parent company, Sony reported 692.9 billion yen in net income on revenue of 4.08 trillion yen ($38.2 billion) for the six-month period ended Sept. 30. That’s an improvement over the first half of 2019 when Sony’s results showed 340 billion yen in net income on revenue of 4.05 trillion yen.