Sony Music Posts 14% Jump in Revenue From Streaming Subscriptions, Big Releases

Sony Music reported 14% revenue growth in the quarter ending last year — or total revenue of 482 billion yen ($2.72 billion) — bolstered by big releases from ATEEZ and Tyler, the Creator and subscription streaming growth across recorded and music publishing divisions, its parent company Sony Group Corp., reported Thursday (Feb. 13).

Sony Music’s operating income grew 28% to 97 billion yen ($630 million) from a year ago for the company’s third fiscal quarter ending Dec. 31. Adjusted operating income before depreciation and amortization (OIBDA), which strips out company spending on certain assets like equipment, rose 23% to 121 billion yen ($786 million).

The second-largest major music company said its “robust margins” of 25% for adjusted OIBDA benefitted from a “one-time item in recorded music related to revenue recognition” from a digital service provider (DSP). Sony declined to comment further on the nature of the one-time item but said that segment income for the quarter increased excluding the one-time item.

Sony Music — comprising Sony Music Entertainment, Sony Music Entertainment Japan and Sony Music Publishing — reported total revenue for its recorded music segment rose 10% to 315 billion yen ($2.05 billion), driven by a 12% increase in recorded streaming revenue in yen or a 9% increase in streaming income on a U.S. dollar basis.

Other revenue within recorded music — which includes merchandise, synch licensing and revenue from assets related to live entertainment industry outside of the U.S. — rose 16% to 69 billion yen ($448 million). Physical revenue declined by 4% to 30 billion yen ($195 million).

Sony Music’s publishing division reported quarterly revenue was up 11% to 95 billion yen, or up 8% to $626 million thanks to an 8% increase (in U.S. dollars) in publishing streaming income in the quarter.

Sony Music’s other revenue — a category which includes the visual media platform (VMP) business of Sony Music Entertainment Japan’s games business — rose 47% to 66 billion yen ($428 million) for the quarter. The profit contribution from the VMP portion of the larger Sony Music segment is 10%.

Sony Music raised its forecast for full-year sales from the previous quarter to 1.79 trillion yen (approximately $11.63 billion) — up from a full year forecast of 1.74 trillion yen (approximately $11.4 billion) in projected sales given last November — and projected operating income to 340 billion yen ($2.21 billion) from 330 billion yen mainly due to positive impacts from foreign exchange rates.