Sony (6758) – Encouraging Indications on PSVue Subscriptions

The issue with Sony is not whether it can generate ¥500bil in OP in FY17, but whether it can generate ¥1tril in OP by FY22. Information coming out of an unattributed and unattributable report are hinting that PlayStation Vue (PSVue) may have had around 450,000 subscribers. If so, we could see subscriptions hitting the all-important 1mil level, which is when advertising income kicks in and profits kick in. 

Key Points 

• During FY16, the pick-up in PS Vue-related postings indicated a sharp rise in subscribers and we estimated that Sony may have added another 200,000 subscribers to that AGM figure during the fiscal year. This latest report suggests that the increase was actually more like 330,000 subscribers.  
• Assuming these numbers are correct, that puts the rate of net adds at 36,667/month and would imply another 700,000 adds by Christmas 2018, taking the total subscriber base over the 1mil mark.  
• The 1mil figure is hugely important for PS Vue because that is the level at which PS Vue starts to get a share of the advertising income from the TV channels.   
• Once advertising income comes in, PS Vue quickly turns around from a small loss to a sizable profit. At 2mil subscribers, PS Vue would have US$400mil in advertising income versus in-house costs of US$100mil implying a profit of US$300mil – possibly even higher, depending on how many HBO-type premium subscribers Sony can sign on.  
• If Sony can hit the 5mil subscription mark for PS Vue by FY22, then that would equate to around ¥150bil in OP.