As coated by MBW earlier right now (August 7), Sony’s international music rights operation posted double-digit progress for calendar Q2 (fiscal Q1) – with revenues up 11.4% YoY.
There was, nonetheless, a fly within the ointment: Sony’s recorded music streaming revenues, on a US dollar-adjusted foundation, have been up 5.0% YoY.
This was considerably slower streaming progress than we’ve come to anticipate 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 progress slowdown at Sony was notably notable due to Common Music Group‘s much-discussed Q2 2024 outcomes, as printed final month.
Inside these outcomes, UMG’s total recorded music streaming revenues (throughout ad-funded and subscription) have been up 4.1% YoY, additionally a considerably smaller quantity than we’re used to seeing from the key music firm.
(UMG’s subscription streaming revenues have 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 fee 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 progress trajectory entered a brand new, extra conservative part?
That was the query posed to Sony Company administration right now 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 worth rises now absolutely ‘annualized’; i.e. Sony didn’t get a bump in YoY streaming progress as a result of current streaming service worth 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 whole 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 stage, Sony Company had moreover calculated a extra granular fixed foreign money determine that was barely increased.
This, she stated, confirmed that Sony’s true YoY international recorded music streaming income progress in calendar Q2 was “within the 6% vary”.
“Earlier we stated [recorded music streaming revenues grew] 5% in greenback phrases [in calendar Q2]. However if you happen to look in fixed [currency] phrases, it’s increased – within the 6% vary, in accordance with our calculations. So total, the streaming progress fee is according to our projections.”
Naomi Matsuoka, Sony Company
Commented Matsuoka: “For [music] streaming… the general progress [for calendar Q2] is according to earlier developments. It could appear as if progress 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 affect of that’s now diminished. And [in terms of] advert streaming service income, that’s declining a bit.
“Nevertheless, earlier we stated [recorded music streaming revenues grew] 5% in greenback phrases. However if you happen to look in fixed [currency] phrases, it’s increased – within the 6% vary in accordance with our calculations. So total, the streaming progress fee is according to our projections.”
(Fast explainer: usually, to succeed in a ‘fixed foreign money’ determine that higher displays its international music firm, Sony converts its reported financials in Yen into US {dollars} on the prevailing quarterly fee. It did so for calendar Q2, ensuing within the 5.0% YoY recorded music streaming progress determine for the quarter, which Sony Company confirmed. Nevertheless, as famous by Matsuoka, to get a extra correct fixed foreign money 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 progress fee, pushed by elevated ARPU and additional progress 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 progress fee, pushed by elevated [streaming] ARPU and additional progress in rising markets”.
There was truly a double-digit progress quantity inside Sony’s quarterly streaming outcomes right now, by the best way – 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
