Goldman Sachs Predicts Sony’s Stock to Soar as Gaming-as-a-Service Expands

         

Summary: Goldman Sachs believes that Sony is well-positioned to benefit from the growth of the gaming-as-a-service (GaaS) trend and the increasing popularity of anime. The investment bank points to Sony’s recent acquisition of GaaS specialist Bungie as a key driver in expanding its live service games portfolio. With sales from gaming already accounting for 31% of Sony’s revenue, Goldman Sachs expects the company’s shares to rise by 25% in the next 12 months.

Goldman Sachs has identified Sony as a potential investment opportunity for those looking to enter Japan’s gaming industry. The bank believes that Sony is in a strong position to capitalize on emerging trends such as gaming-as-a-service (GaaS) and the growing demand for anime. GaaS refers to video games that follow a revenue model, regularly updating with new content to encourage repeated spending by players. Sony’s recent acquisition of GaaS specialist Bungie for $3.6 billion is expected to enhance its portfolio of live service games.

Goldman Sachs predicts that Sony will have 12 live service game titles by fiscal year 2028, an increase from the current single title it offers. Additionally, the investment bank anticipates that Sony’s push towards GaaS, coupled with price increases for its PlayStation multiplayer game subscription service, will lead to a greater emphasis on the entertainment portfolio within Sony’s overall business. Gaming currently accounts for 31% of Sony’s total revenues.

In addition to gaming, Sony operates divisions in electronic and imaging products, music, and financial services. The bank expects that Sony Group Corporation’s shares will rise by 25% to 16,000 yen ($107) within the next 12 months. Sony’s shares are also traded on the New York Stock Exchange, and the median price target from analysts indicates a potential upside of 26% for its Tokyo-listed shares and 29% for its U.S.-listed shares.

The increasing demand for streaming and cloud gaming has led to several mergers and acquisitions in recent years. Microsoft, the owner of Xbox, recently completed its acquisition of video game publisher Activision Blizzard. Goldman Sachs also sees growth potential in Sony’s anime streaming service, Crunchyroll, which it acquired in 2017. The bank’s report projects that overseas markets will account for 80% of Japanese anime sales by 2036. Additionally, it expects an average annual growth rate of 14% for Crunchyroll’s subscriber base, along with a 20% increase in per-subscriber fees.

As Sony’s earnings from Crunchyroll and GaaS titles become more prominent starting in fiscal year 2025, Goldman Sachs predicts an increase in consensus earnings estimates and valuation multiples.

Tags: Sony, Goldman Sachs, gaming-as-a-service, anime, investment, Bungie, revenue growth, streaming services, Cloud gaming, Crunchyroll

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