Sony Group Corporation expects sales in its gaming division to decline this year as aging PlayStation 5 hardware and soaring memory chip prices continue to pressure the industry.

The Japanese entertainment and technology giant forecast a 6% drop in annual gaming sales to 265.7 billion yen ($1.69 billion), reflecting slowing demand for the PS5 nearly six years after its launch. Sony said hardware sales are being constrained both by the console’s maturity and by rising costs tied to global memory shortages, News.Az reports, citing Reuters.

Despite weaker console sales, Sony still expects gaming profits to rise 30%, helped by stronger first-party software performance and the absence of the impairment losses that weighed on results a year earlier.

The company’s outlook highlights growing concern across the gaming and electronics industries over surging memory chip prices and supply chain instability linked to the ongoing Iran war. Analysts say rising component costs are squeezing margins for major tech firms, including rivals such as Nintendo.

Sony revealed it sold just 1.5 million PS5 units during the fourth quarter, a sharp 46% drop compared with the same period a year earlier. The slowdown comes after the company raised PS5 prices earlier this year, including a $100 increase in the United States — the second major price hike in less than 12 months.

Executives said future hardware sales will depend heavily on Sony’s ability to secure enough memory chips at “reasonable prices” ahead of the crucial holiday shopping season.

Even as hardware demand weakens, many analysts believe Sony could receive a major boost later this year from the launch of Grand Theft Auto VI, one of the most anticipated video games in history.

Industry observers expect the blockbuster title to drive significant engagement across the PlayStation ecosystem through software sales, subscriptions and online spending. Some analysts argue investors are underestimating how much the game could reignite PS5 momentum.

Sony also announced a major shareholder-friendly move, unveiling plans for a share buyback worth up to 500 billion yen ($3.2 billion). The news helped the company’s stock recover losses and move higher in Tokyo trading.

Beyond gaming, Sony said it expects stronger profits in its film and semiconductor businesses, while forecasting weaker performance in music. The company continues to expand its global entertainment footprint, particularly through anime, which has become one of its fastest-growing international businesses.

At the same time, Sony appears to be narrowing its long-term ambitions in other sectors. The company confirmed it has abandoned plans to launch electric vehicles with Honda Motor Co., signaling a renewed focus on entertainment, gaming and semiconductor technologies as its core growth engines.

News.Az 

By Aysel Mammadzada