Munakata san

Munakata from Goldman Sachs asked about the GNNS segment's full-year operating profit forecast of JPY 500 billion, considering the tariff impact was not included, suggesting improved profitability. Munakata also inquired about the platform strategy, including hardware and services, competitor trends, and what future profitability drivers, such as game content or potential price revisions, Sony plans to leverage for next year and beyond.

Answer

Lin Tao, CFO, Corporate Executive Officer, stated the immediate focus for the game business is the year-end season to expand the installed base to 90 million units by next year. Lin Tao identified first-party content like Wolverine and live service games like Marathon (if launched this year) as upside drivers for next year's revenue and profitability. Lin Tao acknowledged market uncertainties regarding components and supply chain, which will influence next year's strategy, and declined to comment on price revisions.

Munakata san from Goldman Sachs asked for a detailed breakdown of the significant margin improvement in the Game & Network Services (G&NS) segment, its sustainability amid future tariff impacts, and the current status of the live service game strategy following the postponement of 'Marathon'.

Answer

Lin Tao, Corporate Executive Officer and CFO, attributed the Q1 margin improvement primarily to strong third-party software sales, network service revenue, and lower costs. She stated that future margin growth will be structurally driven by network services and first-party content. Regarding live service games, she acknowledged recent postponements but highlighted that the category has grown from nearly nonexistent five years ago to contributing about 40% of first-party software revenue in Q1.

Munakata san from Goldman Sachs inquired about the drivers behind the Game & Network Services segment's significant margin improvement in Q1, its sustainability given future tariff impacts, and the current status and challenges of Sony's live service game strategy following the Marathon delay.

Answer

CFO Lin Tao attributed the Q1 game margin improvement to strong third-party software sales, network service revenue, and lower costs. She noted that future margin sustainability depends on the growth of network services and first-party content. Regarding live service games, she acknowledged recent postponements but emphasized the strategy's long-term progress, with live service titles contributing about 40% of first-party revenue in the quarter.