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Sony Music Rolls to $7.7B in Annual Revenue Following 37% Jump in Streaming

Recorded music alone brought in nearly $6B over the course of Sony's fiscal year, which wrapped in late March.

Propelled by continuing growth in streaming, Sony’s music operations — which include Sony Music Entertainment, Sony Music Publishing and Sony Japan — posted a whopping 29.1% increase in sales as revenue grew to 869.11 billion yen ($7.74 billion) for the year ended March 31, 2022 as compared with the prior year’s total of 673.13 billion yen ($6.34 billion).

When its visual media/platform, which offers mobile games, animation titles and various services for music and visual products, is added on, the segment reported 210.93 billion yen ($1.88 billion) in operating income on revenue of $1.1 trillion yen ($9.8 billion); and that represents about 14.1% increase over the prior year’s total of 184.8 billion yen ($1.74 billion) on revenue that grew 18.7% from 925.25 billion yen ($8.74 billion).

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That gives the overall music segment a 19.2% operating margin, which is down slightly from the prior year’s 19.9%; and that was due to last year benefitting from the sale of shares in Pledis Entertainment; and a fourth quarter change in accounting in the prior year that resulted in a restatement for that period, as well as a decline this year in revenue at the visual Media/Platform operations. Taking into account those occurrences, on an adjusted basis, operating income is likely up well over last year.

Meanwhile, Billboard estimates that Sony’s music and visual media/platform segment produced 272.4 billion yen ($2.433 billion) in earnings before interest, taxes, depreciation and amortization, or an 18.5% growth from the prior year when EBITDA totaled almost 230 million yen. That means the company’s EBITDA margin (as a percentage of revenue) is a strong 24.8%, the same as last year.

Breaking out the music slice of revenue, recorded music reached nearly 669 billion yen ($5.96 billion) while publishing revenue for the year grew to 200.33 billion yen ($1.784 billion). Within recorded music, streaming grew 37.2% to 462.37 billion yen ($4.12 billion) from the prior year’s numbers of 337.1 billion yen ($3.18 billion). In 2020, streaming grew 22.1% over 2019’s streaming total of 276.04 billion yen, so that means Sony’s streaming growth is accelerating instead of the typical smaller increases that usually happen as the mathematical baseline gets bigger.

Other formats broke out to:

  • Downloads declined to 28.23 billion yen ($251.34 million), which means digital totaled 490.59 billion yen ($4.37 million). That’s down 10.1% from the prior year when downloads totaled 31.39 billion yen ($295.9 million) while total digital in the prior year was 368.5 billion yen ($3.5 billion)
  • Physical fell by 3.1% to 94.76 billion yen ($843.83 billion from the year-earlier total of 97.75 billion yen ($921.3 million)
  • Other income streams enjoyed a comeback to 83.425 billion yen ($742.9 million) after being impacted severely by the Covid pandemic during the year-earlier period when other revenue garnered 50.03 billion yen ($471.5 million)

As a percentage of revenue, that breaks out to streaming 69.1%, downloads 4.2% (giving digital a total of 73.3%), physical 14.2%, and other 12.5%. That compares to the prior year when streaming was 65.3%, downloads 6.1% (digital total 71.4%), while physical accounted for 18.9%, and other 9.7%.

Top sellers for the year included Adele’s 30, Doja Cat’s Planet Her and Hot Pink, The Kid LAROI’s F*ck Love 3+: Over You, Lil Nas X’s MONTERO, Harry Styles’ Fine Line, Polo G’s Hall of Fame, Luke Combs’ What You See Is What You Get, Travis Scott’s ASTROWORLD, and Rauw Alejandro’s Vice Versa. Sony Japan;’s top sellers for the year were SixSTONE’s City and four titles from Nogizaka46.

During a conference call with Wall Street analysts, a Sony executive reported that the Recorded Music business continued to generate major hits, with an average of 36 songs ranking in Spotify’s global top 100 songs during the quarter. Adele’s 30 became a historic hit, remaining No. 1 on the Billboard Top Albums chart for a consecutive 8 weeks after its release in November.

Looking at Sony’s fiscal fourth quarter, the music segment including the visual media/platform operations produced revenue of 287.4 billion yen ($2.38 billion) in revenue, up 9.1% from the prior year’s sales volume of 263.4 billion yen ($2.487 billion), while its operating income grew 39.2% to 49.85 billion yen ($429.4 million) from 35.82 billion yen ($338 billion). But that growth may have benefitted somewhat by a change in the timing of revenue recognization from certain licensing agreements.

Breaking out the segments by revenue:

  • Recorded music generated 1.176.8 billion yen ($1.523 billion), or up 15.8% from the prior year’s total of 196.95 billion ye ($1.85 billion)
  • Publishing garnered nearly 54 billion yen ($465.03 million), or a nice 25% increase from the year-earlier period when revenue totaled 43.2 billion yen ($408.02 million)
  • Visual media/platform 56.6 billion yen, $487.53 million was down 16% from the prior year’s total of 67.4 billion yen ($636.6 million)

Within recorded music:

  • Streaming was up 18.9% to 120.5 billion yen ($1.04 billion) from the year earlier total of 101.3 billion yen ($956.7 million)
  • Downloads totaled 8.42 billion yen ($72.5 million) or slightly down 0.5% from the prior year’s fourth quarter when downloads totaled 8.46 billion yen ($79.9 million). So that means overall digital totaled 1.128.8 billio yen ($1.11 billion) for the fourth quarter as compared to 109.77 $1.04 million, billion yen in the year-earlier corresponding period, which puts total digital growth at 17.4%
  • Physical fell 12.5% to20.7 billion yen ($178.4 million from 2020’s 4th quarter total of 23.68 billion yen ($223.6 million)
  • Other income streams, including merchandising, licensing and live produced 27.22 billion yen ($234.45 million), or up 41% from 19.3 billion ($182.3 billion) yen in 2020’s fourth quarter

As a percentage of revenue, that breaks out to digital 72.9% (streaming 68.1% and downloads 4.8%); physical 11.7% and other 15.4%. In the prior year, those percentages were digital 71.9% (streaming 66.3% and downloads 5.5%), physical 15.5% and other income streams 12.6%.

As for big fourth-quarter titles, in addition to most of the music cited above for the year, titles that boosted sales in the last quarter of fiscal 2021 included Tool’s Fear Inoculum, Lil Durk’s 7720, and Rod Wave’s Soulfly. In Japan, its best movers in Q4 included Nogizaka46’s Actually… and SixTONES’ Kyomei.

Looking ahead, Sony forecasts that the music segment, including the visual media/platform operation, will generate 1.24 trillion yen in its current year that began April 1 and as part of that the company forecasts operating income for the segment at 230 billion yen. Upcoming releases from 21 Savage, Arcade Fire, DJ Khaled, Future, Gavin DeDraw, George Ezra, Giveon, Harry Styles, Ozzy Osbourne, Tate McRae, Chainsmokers and Three Days Grace.

Over at Sony Music Publishing and Sony Japan publishing operation, the amount of copyrights the company administers grew to 5.46 million songs, up from 5.03 million songs at the end of the prior year.

Looking at Sony’s full corporate picture, the company’s net income fell 12.1% to 1.03 trillion ($9.17 billion) or a diluted share price of 823.77 yen ($7.34) from 1.172 billion yen in net income or 936.90 yen ($8.83) on revenues of 9.921 trillion for the year ended March 31. That represented a 10.2% increase from the prior year when Sony’s revenue was just shy of 9 trillion yen (or $84.82 billion).

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