Join KuCoin

Shares of Sony (SNE) plunged on Monday after the company reported weaker profits in the PlayStation business and cut its annual revenue forecast.

The stock fell 8.1% in Tokyo on Monday, which marks the steepest fall in more than three and a half years, and has traded sideways through Tuesday’s session. The stock is now down 30% since October highs.

Sony via Google Finance

Analysts are attributing the drop to weakening demand for Sony’s PlayStation 4, as the company only sold 8.1 million PS4 consoles in 2018, down from 9 million a year ago.

“Strong profits from game software were offset by higher promotional and marketing costs aimed at driving PS4 volumes,” Damian Thong, an analyst at Macquarie Group, wrote in a report after cutting his rating to neutral. “We are moving to the sidelines until we can better assess the risks in the Games segment.”

While Sony is likely feeling the heat from an ever-increasing mobile gaming segment, the drop in demand for the consoles could be partially attributed to its reluctance to allow crossplay for the popular game titles, including Fortnite.

Sony eventually caved to demand in September, but not until after Microsoft and Nintendo recently teamed up to promote cross-play on Minecraft, which added pressure to Sony as fans began to expect the functionality.

Analysts have also pointed to the upcoming launch of the PS5, which is anticipated for the next fiscal year given the current slow in Sony’s game segment, as an additional factor that could weigh on the company’s financials in the near-term.

🚀  5 RPGs Revealed at E3 to Keep an Eye On
More: Sony Sees Biggest Drop Since 2015 on Weaker PlayStation Business
Interesting: Blockchain Gaming Is Coming to the PS4