Sony forecasts gaming revenue decline as PS5 sales slump on memory costs
The PlayStation 5 division sold just 1.5 million units in the latest quarter, a 46 per cent drop from the previous year, following two price increases driven by global supply constraints.
Sony has reported a sharp contraction in PlayStation 5 sales, with the company selling only 1.5 million units in its fourth fiscal quarter. This figure represents a significant 46 per cent decline from the same period last year, a downturn directly attributed to a global memory shortage. The supply constraints have forced Sony to raise the price of the standard console twice in less than twelve months, with the unit reaching $650 in March 2026.
Despite the hardware struggles, the broader gaming division posted a slight revenue increase for fiscal 2025, rising to $29.9 billion. Operating income for the period also grew by 12 per cent to $2.95 billion. However, management has issued a cautious outlook for the upcoming fiscal year, forecasting a six per cent drop in revenue equivalent to $1.69 billion. Future profitability is now expected to depend heavily on the company's ability to procure memory components at reasonable prices.
The outlook for next year's profits remains contingent on the removal of impairment losses related to Bungie and its Destiny 2 franchise, alongside the anticipated launch of Grand Theft Auto VI in November. Sony expects these factors to drive a 30 per cent rise in operating income despite the projected revenue decline. The company stated that it has secured the minimum memory required to support sales through the 2026 holiday season, though this does not address long-term supply constraints.
The current pricing strategy for the PS5 presents a challenging environment for consumers, particularly given the hardware's age. The standard console is now priced $150 higher than a year ago, yet it is nearly six years old and approaching its end of life. This situation contrasts with the recent success of Nintendo, which revitalised its aging Switch hardware with the launch of the Switch 2 in June 2025.
Sony's earnings report highlights the precarious nature of the current hardware cycle. While the company plans to base its PS5 hardware sales volume for the next fiscal year on the memory it can procure, the margin for error is slim. The reliance on securing components at reasonable rates underscores the vulnerability of the division to supply chain volatility.
