Tuesday, August 4, 2020

Sony Music’s streaming revenues grew 15.6% in H1 2020 – but pandemic hit calendar Q2 period | Music Business Worldwide

Sony’s recorded music streaming revenues reached $1.282bn in the first half of calendar 2020. That was up by 15.6% on the $1.109bn streaming haul the company posted in the same period of 2019, according to MBW’s calculations based on Sony Corp’s latest quarterly results.

Sony’s total recorded music streaming revenues in the H1 2020 period (including physical sales plus digital and ‘other’ income), hit $1.985bn. That was up slightly (+1.0%) on the $1.965bn posted in H1 2019.

Within these half-year results, the COVID-19 pandemic unsurprisingly affected Sony’s calendar Q2 (fiscal Q1) 2020 period, covering the three months to the end of June.

The firm’s recorded music streaming revenues grew YoY in the quarter – up 5.9% to $640m – but other income sources saw the pandemic take its toll.

Sony’s physical recorded music sales fell 41.0% YoY in calendar Q2 (to $118m), while ‘Other’ – a category that includes licensing revenue, merchandise sales as well as Sony’s income from live shows – tumbled 38.8% to $82.6m.

As a result, Sony’s streaming gains weren’t quite enough to offset its declines in other categories in calendar Q2. This resulted in total quarterly recorded music revenues of $911.6m, down 10.5% YoY.

Sony’s biggest global sellers in calendar Q2 (not including releases from Sony Music Entertainment Japan) were, in order: (i) Harry Styles (pictured), Fine Line; (ii) Future, High Off Life; (iii) Doja Cat, Hot Pink; (iv) Travis Scott, ASTROWORLD; (v) Polo G, THE GOAT; (vi) Luke Combs, What You See Is What You Get; (vii) Luke Combs, This One’s For You.

(All % figures here have been calculated using USD converted from Yen on a constant currency basis, using the prevailing rates in each respective quarterly period.)

Sony Corp’s music publishing operation – which includes Sony/ATV (incorporating EMI Music Publishing) and Sony Music Publishing Japan – posted external quarterly revenues of $289m (31.10bn Yen) in calendar Q2 / fiscal Q1 (the three months to end of June).

Again showing signs of COVID’s impact, that quarterly publishing figure was down 19.2% YoY at the US dollar level, according to MBW’s calculations.

Sony Corp now breaks out streaming-related revenues for music publishing, which in calendar Q2 2020 stood at $129m (13.91bn Yen).

Across the first half of the 2020 calendar year, Sony’s global music publishing revenues stood at $656.5m, down 3.2% year-on-year.

In an update to investors on the impact of COVID-19 on its music operation today (August 4), Sony Corp said: “Around the world, the release of new music is being delayed primarily due to some artists being unable to record songs and music videos. The impact on profitability from the delays in new music is limited at this time in the U.S. and other countries where the proportion of music that is streamed is high. However, in countries like Japan where the proportion of music that is streamed is relatively low, CDs and other packaged media sales are decreasing due to restrictions on going outside.”

Sony added: “Ticket and merchandising revenues are also decreasing, as concerts and other events are being postponed and cancelled in Japan and other areas. Due to a global reduction in advertising spending, revenue from advertising-supported streaming services and revenue from the licensing of music in TV commercials is decreasing. Additionally, delays in the production of motion pictures and TV shows are causing a decline in music licensing revenue.”

Sony’s overall music division (including recorded music, publishing and ‘Visual Media & Platform’) posted quarterly sales of $1.61bn (173.74bn Yen) in calendar Q2 / fiscal Q1, representing a fall of 11.5% year-on-year at the US dollar level.

(‘Visual Media & Platform’ is included in Sony Corp’s music results, but does not directly concern recorded music or publishing; VM&P revenue is made up of “the production and distribution of animation titles, including game applications based on the animation titles, and various service offerings for music and visual products”.)

Sony is now forecasting that its Music division (again, including recorded music and publishing, but also ‘Visual Media & Platform’) will post 790.0bn Yen in the 12 months to end of March 2021. That’s down on the 849.9bn Yen it posted in the 12 months to end of March this year.

In an update to investors regarding this forecast today (August 4), Sony Corp said that it expected sales in its Music division to “decrease year-on-year primarily due to the impact of COVID-19, partially offset by an expected increase in revenues from paid subscription streaming services”.

It added: “This is mainly due to an expected decrease in sales of physical media in Recorded Music, the expected impact of the postponement and cancellation of live events in Visual Media and Platform, and an expected decrease in music licensing revenues in Music Publishing.”

Note: MBW has calculated Sony’s financials from Japanese Yen into US dollars at the following prevailing exchange rates in each quarter, as confirmed by Sony Corp:
  • Calendar Q1 2018: 108.4 Yen per USD
  • Calendar Q2 2018: 109.1 Yen per USD
  • Calendar Q3 2018: 111.5 Yen per USD
  • Calendar Q4 2018: 112.9 Yen per USD
  • Calendar Q1 2019: 110.3 Yen per USD
  • Calendar Q2 2019: 109.9 Yen per USD
  • Calendar Q3 2019: 107.4 Yen per USD
  • Calendar Q4 2019: 108.8 Yen per USD
  • Calendar Q1 2020: 109.0 Yen per USD
  • Calendar Q2 2020: 107.6 Yen per USD

By applying these exchange figures to each applicable period, we effectively get a US-leaning constant currency picture of Sony Music’s performance.

This isn’t a perfect system; it risks overplaying Sony Music Entertainment’s global business slightly by converting a chunk of revenues from Sony Music Entertainment Japan (which would usually be straight-reported in Yen) into US dollars.

But it provides us with a cleaner reflection of the performance of New York-based Sony Music Entertainment outside of FX distortion, because the company had to convert its US currency into Yen in the first place for Sony Corp’s results. The same is true for US-based Sony/ATV, and US-based EMI Music Publishing.

MBW believes this currency exchange system is the yardstick used internally at Sony Music Entertainment’s HQ in New York.

You can see the Yen-level stats from Sony’s fiscal quarterly and annual recorded music results below:

Music Business Worldwide

[from https://ift.tt/2kVf04A]

No comments: