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Online gaming lifts Sony to another record profit

Hit titles, Spotify and image sensors help offset smartphone slump in first half

Attendees in PlayStation VR headsets at an annual exhibition outside Tokyo in September 2017.   © Getty Images

TOKYO -- Sony is expected to report a record operating profit for the six months ended Sept. 30, with its shift to a subscription model in such fields as games and music helping to generate steady income.

The Japanese company's profit looks to have grown more than 10% on the year to about 420 billion yen ($3.75 billion), a second straight record for an interim half.

The robust earnings signal the continuation of a remarkable recovery at the home of the Walkman, which until a few years ago was bleeding red ink. Sony is expected to upgrade its full-year guidance when interim results are released on Tuesday, possibly reversing the current forecast of a drop in operating profit. Growth in annual earnings would come on top of the near septupling of net profit last fiscal year.

Unit sales of the PlayStation 4 game console, which debuted nearly five years ago, are seen declining 11% for the full year through March 2019. Yet membership has swelled for PlayStation Plus, a multiplayer-enabled online gaming service that charges the equivalent of $45 a year in Japan. Subscribers reached about 34 million at the end of June, up nearly 30% from March 2017.

The game segment's profit continues to grow, buoyed by the release of such popular titles as "Marvel's Spider-Man" and the latest installment in the "God of War" series in the April-September half.

In the music segment, the Spotify streaming service, in which Sony holds a stake through a subsidiary, gained users as well. Sales were also strong for smartphone game apps.

Production of Sony image sensors used in Apple's new iPhone kicked into gear in the July-September quarter, lifting the semiconductor segment. The addition of second cameras by smartphone makers, especially in China, has led to steady growth in sales volume of image sensors.

With Sony focusing on high-end models, televisions and digital cameras have sold well.

Meanwhile, the mobile communications segment continues to struggle with lackluster sales. Following a 10.7 billion yen operating loss in the April-June quarter, the smartphone business is likely to book an even wider loss for the three months through September.

Sony projects a 9% decline in operating profit to 670 billion yen for the current fiscal year. The revised forecast may exceed last fiscal year's record profit of 734.8 billion yen.

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