Sony Corp. (SNE, Financial) displayed healthy performance in 2016 as the stock was up approximately 14%. Moreover, the stock has continued to move upward heading into 2017. The company’s diversified business comprises electronics, entertainment, gaming, financial services and more.
Recently, Sony reported its third-quarter results. In the third quarter, the company’s Mobile Communications division reported an operating profit of $187 million, whereas its overall sales came in at $2.2 billion. Over the past year, the company sold 15 million smartphone units, which is the lowest number of devices sold since 2012.Â
However, Sony’s gaming segment accounts for one of the most significant segments as it generates a substantial portion of the company’s overall revenue. In 2016, the company’s gaming segment generated approximately 14% of its entire revenue.
The worldwide gaming market is currently governed by two players, Sony and Microsoft (MSFT, Financial). Sony is best known for its PlayStation consoles, whereas Microsoft produces the popular Xbox consoles. In 2016, Sony sold more than 12 million units of PlayStation 4, outperforming Xbox One and Xbox 360 combined sales by slightly more than 6 million units.
In the middle of 2016, Microsoft’s Xbox One sales began to overtake PlayStation 4 sales, but Sony regained its leading position after launching two new versions of its flagship console, the PS4 Pro and the PS4 Slim.
The PS4 Slim is less expensive and includes a new slimmer body and controller, whereas PS4 Pro was designed with a faster CPU and speedier RAM. Not to mention, it also has substantially more graphics processing power, supporting 4k as well as HDR outputs for games.
Since the launch of PlayStation 4 in November 2013, Sony has managed to sell more than 50 million units, making it the top-selling game console around the globe.
The majority of games are designed for both the consoles, but there are still several games created for a specific console. For instance, the “Unchartered” series is exclusively for PS4 and the “Halo” series is exclusively for Xbox One. Additionally, Naughty Dog’s "The Last of Us" series was created exclusively for PlayStations.
Naughty Dog is preparing to launch new installments of the "Unchartered" series as well as "The Last of Us." Although "Uncharted 5" will be launched toward the end of this year and no release date has been set for "The Last of Us 2," both games will have a positive impact on Sony.
Conclusion
Sony performed well in 2016 on the back of robust PlayStation 4 sales. Moreover, the company is aggressively focusing on its gaming segment as its other segments have begun slowing down.
In October 2016, Sony also launched its virtual reality headset called PlayStation VR. Although virtual reality is still in its infancy, it is projected to rapidly grow over the next few years, which will prove to be a key growth catalyst for the company. Hence, investors should consider buying Sony as its future prospects look incredible.
Disclosure: I don't hold a position in the stock mentioned in this article.
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