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In its third-fiscal quarter earnings today, Sony reported that its game revenues slipped in the quarter versus a year ago, and it lowered its forecast for PlayStation 5 sales in the coming quarter due to chip shortages.

In the quarter December 31, Sony reported revenues of $7.09 billion for its game and networking services division, down from $7.703 billion a year ago. Operating income was higher, at $810 million, compared with $704 million a year ago.

In the quarter, software sales for games were flat at $3.77 billion, while hardware sales dropped to $2.28 billion from $2.94 billion a year ago, when the PS5 first went on sale.

Sony Chief Financial Officer Hiroki Totoki said in an analyst call that the market demand for PS5 is very high, but he said that partners supplying components are strapped because of various chip shortages. He said he expects to see continued component shortages in the coming year.

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“We can’t say exactly for sure what is the demand for next year,” Totoki said.

For the fourth fiscal quarter ending March 31, Sony lowered its revenue estimate for games by 6% due to the shortages and an expected decrease in PS5 hardware sales. Gradually, Sony is building up inventory, but it expects shortages in the first half. Totoki said that demand seems strong and steady and not affected by the pandemic.

During the quarter, Sony completed the sale of Game Show Network, a division of Sony Pictures, to Scopely for $1.008 billion. Of that amount, Sony received $508 million in cash and $500 million in preferred stock for Scopely. Sony will see a gain of $617 million on its investment.

This week, Sony agreed to buy Destiny maker Bungie for $3.6 billion, a big acquisition in response to Microsoft’s pending $68.7 billion acquisition of Activision Blizzard. Totoki said about a third of the purchase price is deferred for the sake of retaining employees. He said Sony has lots to learn from Bungie about its skill with live services revenue and its ability to work across multiple platforms. And he said Bungie will be able to leverage its intellectual property across Sony’s properties such as movies and music.

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