© REUTERS/Issei Kato
Sony Corporation has announced higher revenues from its global music division in the second quarter compared to the same period a year ago. Total sales were up 11.4%, despite slowing growth in its music streaming segment.
Streaming revenues accounted for most of Sony’s recorded music business and rose by only 5% year-over-year, a small increase compared with previous quarters where streaming had been growing in the range of 9.5% to 12.3%.
Sony’s weaker streaming numbers were more significant because rival UMG also saw lower growth recently. UMG’s total recorded music streaming revenues grew 4.1%, stemming from a 6.9% rise in paid subscriptions but a 3.9% decline in advertising streams.
One analyst from Bank of America questioned whether Sony management believes the 5 percent increase marked a change in their streaming momentum going forward, but Sony executives did not seem concerned.
They explained that the price increases from music providers were now fully reflected in comparisons against the prior year. Sony had benefited last year from the price rises. Ad-supported streaming revenue was also down slightly, accounting for part of the slower growth.
Importantly, Sony’s CFO noted that, on an adjusted basis allowing for currency fluctuations, streaming grew around 6%. Revenues are booked primarily in yen and dollars, but constant currency gives a better picture of global performance.
Sony remains sanguine about long-term industry growth. Management predicts the global music market will rise in the mid-to high-single digits annually on the back of higher streaming payouts and expanding international markets.
One brighter spot for Sony was music publishing revenues, including royalties, which jumped 19.6% thanks to streaming. Streaming generated a total of $1.63 billion for Sony’s recorded and publishing business, up nearly 8 percent over the second quarter last year.
