As coated by MBW earlier at this time (August 7), Sony’s international music rights operation posted double-digit development for calendar Q2 (fiscal Q1) – with revenues up 11.4% YoY.
There was, nevertheless, a fly within the ointment: Sony’s recorded music streaming revenues, on a US dollar-adjusted foundation, had been up 5.0% YoY.
This was considerably slower streaming development than we’ve come to count on from Sony. Examples: the agency’s recorded music streaming revenues grew by 10.6% YoY in calendar Q1 2024, by 12.3% YoY in calendar This fall 2023, and by 9.5% YoY in calendar Q3 2023.
This recorded music streaming development slowdown at Sony was significantly notable due to Common Music Group‘s much-discussed Q2 2024 outcomes, as revealed final month.
Inside these outcomes, UMG’s total recorded music streaming revenues (throughout ad-funded and subscription) had been up 4.1% YoY, additionally a considerably smaller quantity than we’re used to seeing from the main music firm.
(UMG’s subscription streaming revenues had been up 6.9% YoY in Q2, whereas its ad-funded streaming revenues declined 3.9% YoY. Mixed, that resulted in a 4.1% YoY rise. Sony doesn’t break down its streaming numbers into subscription and ad-funded; it solely publishes a blended determine.)
Sony Company COO/CFO, Hiroki Totoki, has beforehand mentioned the goal for Sony’s international recorded music enterprise – pushed by streaming – to develop at a price of “excessive single digits”.
So does the 5.0% YoY rise in calendar Q2 symbolize one thing of a turning level? The second when Sony’s streaming development trajectory entered a brand new, extra conservative part?
That was the query posed to Sony Company administration at this time by analyst Mikio Hirakawa from Financial institution of America. The response was unfazed.
Naomi Matsuoka, Sony Company SVP, defined that Sony had confronted comparable developments to Common Music Group in the calendar Q2 quarter, with streaming value rises now totally ‘annualized’; i.e. Sony didn’t get a bump in YoY streaming development as a result of current streaming service value rises confirmed up within the prior-year quarter.
Matsuoka additionally confirmed that, like Common, Sony had seen a small YoY decline in revenues from ad-funded streaming within the quarter, (“advert streaming service income… is declining a bit”, she stated). Clearly, this would have dragged down Sony’s complete recorded music streaming income determine.
As well as, Matsuoka defined that, whereas Sony’s music streaming revenues did certainly develop by 5.0% YoY in Q2 at a US dollar-converted degree, Sony Company had moreover calculated a extra granular fixed forex determine that was barely larger.
This, she stated, confirmed that Sony’s true YoY international recorded music streaming income development in calendar Q2 was “within the 6% vary”.
“Earlier we stated [recorded music streaming revenues grew] 5% in greenback phrases [in calendar Q2]. However in the event you look in fixed [currency] phrases, it’s larger – within the 6% vary, in response to our calculations. So total, the streaming development price is in step with our projections.”
Naomi Matsuoka, Sony Company
Commented Matsuoka: “For [music] streaming… the general development [for calendar Q2] is in step with earlier developments. It could appear as if development is slowing. The components behind which can be for [calendar Q2], over a yr in the past… the costs for a number of DSPs [were raised], so the influence of that’s now diminished. And [in terms of] advert streaming service income, that’s declining a bit.
“Nonetheless, earlier we stated [recorded music streaming revenues grew] 5% in greenback phrases. However in the event you look in fixed [currency] phrases, it’s larger – within the 6% vary in response to our calculations. So total, the streaming development price is in step with our projections.”
(Fast explainer: sometimes, to achieve a ‘fixed forex’ determine that higher displays its international music firm, Sony converts its reported financials in Yen into US {dollars} on the prevailing quarterly price. It did so for calendar Q2, ensuing within the 5.0% YoY recorded music streaming development determine for the quarter, which Sony Company confirmed. Nonetheless, as famous by Matsuoka, to get a extra correct fixed forex determine – that 6% one – the corporate seems to have moreover used a extra advanced formulation, one which takes under consideration FX in a number of territories all over the world.)
“Within the medium time period, the [global music rights] market is predicted to proceed to develop at a mid-to-high single digit common annual development price, pushed by elevated ARPU and additional development in rising markets.”
Sadahiko Hayakawa, Sony Company
Earlier on the decision, Sony Company’s finance and IR head, Sadahiko Hayakawa, defined that Sony now believes the music rights market is “anticipated to proceed to develop at a mid-to-high-single-digit common annual development price, pushed by elevated [streaming] ARPU and additional development in rising markets”.
There was really a double-digit development quantity inside Sony’s quarterly streaming outcomes at this time, by the way in which – within the agency’s music publishing division.
Sony’s international music publishing unit noticed streaming revenues up 19.6% YoY in calendar Q2 (on a USD-converted foundation).
When mixed, Sony’s recorded music and music publishing streaming revenues collectively reached USD $1.63 billion in calendar Q2, up 7.95% YoY.Music Enterprise Worldwide
