Sony now makes more money than Samsung as PS5 and live service games trump memory market

While Samsung's Galaxy S24 phone series is seemingly selling well and the company just predicted a memory market price recovery this year, its Q4 earnings guidance isn't pretty. Samsung warned that it will register a 34% slump in operating profit, resulting in a just-released $4.93 billion number for the whole of last year.

At the same time, Sony's earnings guidance revealed that it has likely made $7.95 billion in 2023, or about $3 billion more than Samsung. This would mark a Sony earnings beat over Samsung for the first time since 1999, or a good quarter of a century.

Just five years ago, Samsung was beating Sony in annual profitability by a spread of more than $37 billion, but the semiconductor market slump made it both offer huge discounts to move inventory, and invest more in R&D to stay abreast:

In the first quarter of 2024, the Company will focus on improving profitability by increasing sales of high value-added products. The component businesses aim to meet demand for advanced products and those aimed for generative AI while the Device eXperience (DX) Division will strengthen AI features in smartphones and other consumer products. The memory market and demand for IT are expected to continue recovering in 2024, though macroeconomic uncertainties remain to be seen. The Company will meet demand for semiconductors for AI applications and expand into AI-enabled consumer product markets. At the same time, the Company will strengthen its leadership in premium products and competitiveness in advanced-node semiconductors.

A big part of Sony's success story in the past few years is that it managed to restructure its vast business empire to shift away from low-margin electronics to the more lucrative entertainment endeavors like the PlayStation 5 content or live service games. Analysts now predict a $678 million growth in Sony's gaming business revenue this year alone.

Sony's clever merger and acquisitions strategy saw it acquire Bungie and its Destiny live service franchise, but also diversify its potential hits with acquisitions like the Crunchyroll platform that can tap into the growing popularity of the anime streaming market.

In fact, these high-margin activities now account for nearly 60% of Sony's business, while the consumer electronics section dropped to just a third of Sony's empire in 2023.

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