We'd now like to begin Sony Group Corporation's earnings announcement. I'll be serving as the MC. My name is Okada from Corporate Communications. At first, Executive Deputy President and CFO, Mr. Totoki, will present the consolidated results for FY 2021 and consolidated results forecast for FY 2022, followed by Q&A. We are scheduled to end in about 70 minutes. Mr. Totoki, the floor is yours.
Today, I will start by talking about the situation in Ukraine and Russia. At first, I want to express my deepest sympathies to the victims of the conflict. I hope that the conflict will be resolved as soon as possible, and that peace will be restored. Our business scale in Ukraine and Russia was about 0.7% of consolidated sales in the fiscal year ended March 31st, 2022, FY 2021.
Although these regions have minimal impact on our financial performance, we are monitoring the impact of the situation on the global economy going forward. Now I'll discuss the following three topics. The consolidated results for FY 2021 and the consolidated results forecast for fiscal year ending March 31st, 2023. FY's consolidated sales increased 10% compared to the previous fiscal year to JPY 9,921.5 billion, and consolidated operating income increased JPY 247.1 billion to JPY 1,202.3 billion, both of which are record highs.
Income before income taxes increased JPY 119.5 billion to JPY 1,117.5 billion, and net income attributable to Sony Group Corporation's shareholders was JPY 882.2 billion, a JPY 147.4 billion decrease compared to the previous fiscal year, in which JPY 256.8 billion in reversals of valuation allowances against deferred tax assets were recorded. Please see pages four to 10 of the presentation materials for each profit metrics adjusted to exclude one-time items. Consolidated operating cash flow, excluding the financial services segment, was JPY 813.3 billion. The actual cash flow by segment is shown on the slide. This slide shows the results by segment for FY 2021.
Next, I will show the consolidated results forecast for FY 2022. Our sales are expected to be JPY 11.4 trillion, and operating income expected to be JPY 1.16 trillion. Now, this slide shows the factors leading to the change in forecasted operating income compared to the actual operating income of the previous fiscal year. Consolidated operating cash flow, excluding the financial services segment, is expected to be JPY 1.05 trillion. The assumed foreign currency exchange rates are JPY 123 to the U.S. dollar and JPY 135 to the euro.
A JPY 1 depreciation against the U.S. dollar is estimated to have an approximately JPY 1 billion positive impact on operating income for the year, and JPY 1 depreciation against the euro is estimated to have an approximately JPY 7 billion positive impact for the year. Our forecast is based on assumptions such as the projected growth rate of the global economy published by IMF in January, and it incorporates as much as possible recent major risks, such as the direct impact of the situation of Ukraine and Russia and the impact of COVID-19 in China. This slide shows our forecast by segment for FY 2022. I will now explain the situation in each of our business segments.
In Game & Network Services, FY 2021 results, the FY 2021 sales increased 3% year-on-year to JPY 2,739.8 billion. Operating income increased JPY 4.4 billion year-on-year to JPY 246.1 billion, primarily due to improvements in the profitability of PlayStation 5 hardware, despite the impact of lower sales of non-first-party software. FY 2022 sales are expected to increase a significant 34% year-on-year to JPY 3,660 billion due to an expected increase in sales in all categories. Operating income is expected to decrease JPY 41.1 billion year-on-year to JPY 305 billion.
This forecast is based on the assumption that the acquisition of Bungie, Inc., which is currently under review by the relevant authority, will close in the third quarter ending December 31st, 2022. Excluding the approximately JPY 44 billion in expenses associated with acquisitions including Bungie, operating income is estimated to be essentially flat year-on-year. In addition, we plan to increase software development expenses aimed at strengthening first-party software at our existing studios by approximately JPY 40 billion year-on-year, and we have incorporated that impact into this forecast. Our unit sales forecast for PS5 hardware is 18 million units, a number based on our current visibility into parts procurement. In order to strengthen our content development capabilities further, we entered into a definitive agreement this March to acquire Haven Entertainment Studios Inc. in addition to our acquisition of Bungie. Haven is a studio founded by Jade Raymond.
One of the primary creators of the blockbuster Assassin's Creed franchise. The studio has gathered many excellent developers in Montreal, Canada, known as a haven for game development, and it is currently developing a new game title. In addition to acquiring studios such as Bungie and Haven, in recent years, we have significantly increased our investment in content development in our existing studios. As a result, our first-party software revenue has grown at a high rate. Going forward, we aim to grow the game business by strengthening our first-party software and deploying that software on multiple platforms. Next is the music segment. Although sales of visual media and platform decreased, fiscal 2021 sales increased a significant 19% year-on-year to JPY 1,116.9 billion, mainly due to an increase in streaming revenue.
Operating income increased JPY 26.1 billion year-on-year to JPY 210.9 billion, mainly due to the impact of the increase in sales. The contribution to operating income from visual media and platform accounted for approximately 20% of the operating income of the segment for the fiscal year. Fiscal 2022 sales are expected to increase 11% year-on-year to JPY 1,240 billion, and operating income is expected to increase JPY 19.1 billion year-on-year to JPY 230 billion. In the fourth quarter and at March 31st, 2022, streaming revenue increased 32% year-on-year in recorded music and 36% year-on-year in music publishing, continuing to contribute significantly to the growth of the segment.
In recorded music, we are strengthening our ability to discover and nurture artists, expanding our roster and acquiring new labels such as Alamo Records. As a result of these efforts, our ability to continuously create hits has steadily increased, with our having an average of 36 songs in Spotify's weekly Global Top 100 songs in fiscal 2021. Moreover, new business opportunities with digital partners such as TikTok, Meta, and Roblox are steadily increasing and are expanding our base load of profitability. Next is the picture segment. With box office revenue in the U.S. recovering to approximately 50% of pre-COVID-19 levels, the operating environment for this segment is starting to return to normal, chiefly in motion pictures.
In addition, mainly due to the historic blockbuster hit, Spider-Man: No Way Home, and significant licensing revenue from the popular television series, Seinfeld, FY 2021 sales increased a significant 65% year-on-year to JPY 1,238.9 billion. Operating income increased a significant JPY 137.5 billion year-on-year to JPY 217.4 billion due to the impact of the increase in sales and recording of a JPY 70 billion gain from the transfer of GSN Games. Although motion pictures revenue is expected to decrease due to the lack of major releases on par with the previous fiscal year, fiscal 2022 sales are expected to increase 7% to JPY 1,330 billion year-on-year, mainly due to the impact of exchange rates and expected increase in media networks revenue.
Operating income is expected to decrease a significant JPY 117.4 billion year-on-year to JPY 100 billion, mainly due to our not forecasting one-time items such as in the previous fiscal year. The forecast for fiscal 2022 operating income margin for the segment is 7.5%, a decrease compared to the last two fiscal years, which benefited from lower expenses resulting from fewer releases and the licensing of films to digital distribution services. However, when compared to before the COVID-19 pandemic, the profitability of the segment has steadily improved. In this segment, we see the increase in demand for content, chiefly from video distribution services, as an opportunity, and we are strengthening our content IP as a result.
A pillar of our IP strategy is leveraging the Sony Pictures Universe of Marvel Characters, and we are following up on Venom and Morbius with the production of another Spider-Man character spinoff called Kraven the Hunter. In addition, following the success of the first movie adaptation of the popular PlayStation game title, Uncharted, in motion pictures, we are leveraging our game IP by proceeding with the adaptation of Ghost of Tsushima and The Last of Us into video content. In television production, we are pursuing strategic investments such as the acquisition of Industrial Media, which has a reputation for producing variety and documentary content, such as the popular TV show, American Idol, and the acquisition of Bad Wolf, a leading drama production studio in the U.K. Next is the Electronics Products & Solutions segment.
Fiscal 2021 sales increased 13% year-on-year to JPY 2,339.2 billion, mainly due to an increase in sales of TVs and digital cameras resulting from an improvement in product mix. Mainly due to the impact of the increase in sales, operating income increased JPY 85.1 billion year-on-year to JPY 212.9 billion. During the previous fiscal year, we faced various supply constraints, such as continued disruption of manufacturing and logistics resulting from the COVID-19 pandemic and a shortage of components, mainly semiconductors. However, we were able to overcome these issues mainly through close management of a supply chain and achieved operating income margin of over 9%.
Fiscal 2022 sales are expected to increase 3% year-on-year to JPY 2.4 trillion, mainly due to the impact of exchange rates despite a decrease in unit sales of TVs. Operating income is expected to decrease JPY 32.9 billion to JPY 180 billion. This forecast incorporates the total of an already observable impact and an estimated additional impact going forward of approximately JPY 30 billion on our supply chain due to the spread of COVID-19 in China. Going forward, due to the continued spread of infection, there is a possibility that the operation at factories in Shanghai and the surrounding region, as well as procurement of parts from the region, will be constrained. Thus, we currently expect it will take approximately three months for the situation to normalize.
With the situation in Ukraine and Russia and the slowdown of the global economy resulting from rapid inflation, we expect the demand environment this fiscal year to be even more severe than recent years. By quickly responding to the changes in the market going forward and further enhancing our resilience to changes in the environment through digitization and streamlining of our operation, we will aim to maintain and improve our profitability. Now I'd like to explain the change in the name of this segment. We have been using visual, audio communication and other technologies to deliver Kando in the form of entertainment experiences to our customers in this segment for quite some time. Going forward, we will work with creators to create the entertainment of the future by providing technology that enables new visual and audio experiences, while also providing new services such as virtual production and sports entertainment.
To further clarify the direction of these businesses, we have changed the name of this segment to Entertainment, Technology & Services. The details of the change will be explained by Mr. Maki, the head of the segment, at the business segment briefing to be held this month.
Next is the Imaging & Sensing Solutions segment. FY 2021 sales increased 6% year-on-year to JPY 1,076.4 billion, primarily due to impact of exchange rates and sales increase of sensors for digital cameras and industrial equipment. Operating income increased JPY 9.7 billion year-on-year to JPY 155.6 billion, primarily due to the impact of the sales increase. FY 2022 sales are expected to increase 37% year-on-year to JPY 1,470 billion, and operating income is expected to increase JPY 44.4 billion to JPY 200 billion. During the previous fiscal year, we achieved a certain level of success expanding and diversifying our customer base and recovering our unit market share. The business environment throughout the year was quite severe due to the stagnation of the smartphone market in China.
Recently, however, we are seeing manufacturers refocusing on increasing the size, image quality, and added value of the image sensors they are purchasing for their high-end smartphones scheduled for release in FY 2022 and beyond. Thus, we expect the growth of the mobile image sensor market to accelerate again going forward. There is also a movement to pursue better image quality even in the mid-range phones, and thus, we believe there is room for us to further increase our market share. Due to growth in sensors for mobile devices, stable growth in the market for sensors used in digital cameras and industrial applications, and a significant market expansion for automotive sensors, we have upwardly revised our forecast revenue CAGR for this segment over the course of the current Mid-Range Plan to approximately 20% per year.
To respond to this more robust demand and to ensure that we can capture growth opportunities, we plan to increase capital expenditure during this Mid-Range Plan from approximately JPY 700 billion to approximately JPY 900 billion. Primarily due to the capital expenditure increase and an increase in the R&D expenditures to maintain and expand our technological competitiveness. The timeline for improving profitability have been slightly delayed from our initial plan, but we do expect that the profit will continue to grow along with the increase in sales over the medium term. Lastly, is the financial service segment. FY 2021 Financial Services revenue decreased 8% year-on-year to JPY 1,533.8 billion, primarily due to the decrease in the net gains on investments in the separate accounts at Sony Life Insurance.
Despite the impact of an increase in insurance premium revenue at Sony Life, operating income decreased JPY 4.7 billion year-on-year to JPY 150.1 billion, primarily due to one-time loss at a subsidiary of Sony Life related to the unauthorized withdrawal funds. New policy in force at Sony Life during FY 2021 grew 3% year-on-year, driven by our success in selling insurance to corporations. FY 2022 financial services revenue is expected to increase 6% to JPY 1,440 billion, and operating income is expected to increase JPY 69.9 billion to JPY 220 billion.
The operating income forecast includes the combined impact of approximately JPY 43 billion from a gain on the real estate sales completed last month, and the impact of the recovery of the funds associated with the unauthorized withdrawal about which we recorded a loss in the previous fiscal year, both at Sony Life. Now I would like to explain the progress of our fourth Mid-Range Plan. Under the theme of Sony's Evolution, during this Mid-Range Plan, we aim to evolve Sony into a company that achieves fast and high growth through investment and business expansions in growth markets, and through further collaboration across our businesses. Sales are on a higher growth curve than originally expected, driven by growth in our four priority investment areas, the G&NS, music, pictures, and I&SS segments.
Operating income has also increased significantly compared to the previous plan, and we now expect it to exceed JPY 1 trillion per year. Based on this, we expect the three-year cumulative total adjusted EBITDA, which is our consolidated group KPI, to increase to JPY 4.9 trillion, up 14% compared to the target of JPY 4.3 trillion. Now I would like to update you on the progress of our capital allocation. The amount of consolidated operating cash flow generated during the three years of this Mid-Range Plan, excluding the financial service segment, is expected to increase by JPY 200 billion compared to the original plan to JPY 3.3 trillion or more, mainly due to the operating income improvement.
Added to this amount will be the carryover from the previous Mid-Range Plan, borrowing and asset sales, leaving a total of more than JPY 4 trillion available to be allocated. As for how this amount will be allocated, I explained earlier that we will increase capital expenditures in the I&SS segment by approximately JPY 200 billion. Thus, we have made no change to our plan to make strategic investment to JPY 2 trillion or more. A total of approximately JPY 1.06 trillion of strategic investment has been executed or decided, including JPY 97.4 billion in repurchase of Sony stock, and we believe our investment for long-term growth are progressing rapidly. Lastly, we have obtained another authorization to repurchase a maximum of JPY 200 billion of Sony stock over the next year.
These repurchases continue to be part of our strategic investments and will be implemented in a flexible manner. We believe that the external environment in FY 2022 will be quite harsh, with many risks and issues that we will have to address. As CFO, I am managing Sony with the highest sense of caution. At the same time, we will continue to take steps to achieve growth over the long term while responding swiftly to changes in the environment. This concludes my remarks.
That was the explanation by Mr. Totoki. From 4:25 P.M., we will start the media Q&A, and for 4:50 P.M., we will start the investors and analysts Q&A. Each Q&A session is scheduled to last for about 20 minutes. For those of you who have preregistered to ask questions, please connect to the designated phone number beforehand. As for the method of asking questions and other points to be noted, please refer to the information that we have provided to you beforehand. Those of you who have not preregistered, you can view the Q&A session through the internet. Please wait a while until we resume. We'll be starting the media Q&A shortly. We ask you for your indulgence. Thank you for waiting. We'd now like to take questions from the media.
Those who'll be responding will be Hiroki Totoki, Executive Deputy President and CFO, and Naomi Matsuoka, Senior Vice President in charge of Corporate Planning and Control, Support for Finance Business and Entertainment area, and Sadahiko Hayakawa, Senior Vice President in charge of Finance and IR. We'd now like to begin.
Now, please limit yourself to two questions. Those of you who have questions, please press the asterisk on your phone, followed by the number one. The first question is NHK, Shimai. Sound please. Shimai from NHK, can you hear me?
Yes. My first question, about the yen depreciation. Earlier, in the FY 2021 results, it seems that the depreciation of the yen has benefited you. Meanwhile, the raw material price is increasing and the weak yen negative impact is being talked about.
For your company, what are the negatives of the depreciation of the yen? And also, what measures do you have this year to cope with the depreciation of the yen? My second question. Earlier, you talked about COVID-19 in China and taking about three months for recovery and normalize. Other than that, there are the shortage of semiconductors as well as other shortages. Looking at the business going forward for this fiscal year, where do you think the biggest challenges exist? What measures are you contemplating?
Thank you for your question. Let me talk first about the exchange rate. After, Hayakawa will add some more explanation. First, about the exchange rate.
Well, if I talk about each of the segments, about games and network service and the EP&S and I&SS, for these segments, we estimate JPY 1 depreciation, it would be a EUR 1 billion positive of JPY 7 billion positive for our operating income. Now, for each business segment, there are different characteristics. Therefore, Hayakawa will add some more explanation.
I'd like to explain about the different business segments of, well, G&NS and ET&S. Well, the raw materials that we are purchasing mostly in U.S. dollars, and therefore, the raw material prices rise and also the adjustments we have to do in adding on to the prices, and this will undermine our profit structure.
Meanwhile, those which are yen denominated in I&SS, we think that this will be a positive for us. About music and pictures, well, basically, the business is being consolidated in U.S. dollar and converted to Japanese yen. This, therefore, the depreciation of the yen will be positive for our sales and operating income. That is about the U.S. dollar. Next, about euro. For euro, the cost that is generated in euro is limited in our business and, therefore, euro and yen, the yen depreciation is a positive for our profit. That is all. Thank you.
Thank you very much.
Basically, the exchange rate fluctuation, we have the tolerance to cope with these fluctuations.
We have DX of operation improved efficiency, and the margin of the businesses are being increased to cope with these fluctuations. We will continue to do so going forward. About your second question, China and the impact of COVID-19. Well, for this fiscal year, there are a variety of risks, as you know. About the parts procurement, we think that to quite an extent, well, last fiscal year, compared to the second half, I think in different areas, so for example, we have changed our source of procurement and also changed our design, among others. So we have been capable of coping. For the parts procurement, I think we have a good outlook.
Meanwhile, the spread of the virus in China. Well, how long this will continue and to what extent it will continue and spread, this is something that is very difficult to predict. At this point in time, we think that it will take about three months, especially for the Shanghai lockdown, it will take about three months to normalize. That is what we're thinking right now. We should not be complacent and look at logistics and procurement and try to detect those risks early on, so as to be able to cope with them. We want to be active in coping with these risks. Thank you.
We'll take the next question from Nikkei. Tsutsumi-san, please.
My name is Tsutsumi from Nikkei. Can you hear me?
Yes, we can clearly hear you.
Thank you. Two questions. First, in the game business, about your outlook for this fiscal year. Against the assumptions, you may have the upsides or, and also at the same time, downside risks. Upside and downside, both. If you could mention on both sides, I would appreciate it.
Well, you have only one question? Or please, proceed to the second question.
My second question, in the MRP's amendment, revision, EBITDA, cumulative EBITDA, I think there was this number of 54% or so. If you could give me the breakdown of the increase, I would appreciate it. About your strategic investment, if you could give us your philosophy in the strategic investment, I would appreciate it. Thank you.
About G&NS outlook or forecast, let me start with that. About our assumptions, at this moment, the risks and upsides are both factored in to come up with the best estimation. If there's one upside, how much sales can we expect about our hits? Software titles, and the number of hits, these are the variables, and we expect highly on these two. We announced already, PS Plus included, network services are to be renewed after June.
There will be gradual releases stage by stage. For this, we want the users to enjoy this and find them higher quality and easier to use or play, and that should be our upside. About the risks or downside, needless to say, and it's not only restricted to game business, at this moment, 18 million units is the forecast for this fiscal year. For components, we do have a good feel about how to procure the components and parts. Going forward, for example, the situation of the pandemic in China, if it worsens going forward, and if the lockdowns will expand further, then that will have a possibility of affecting the production, and that can be a downside risk. However, this will not happen overnight.
For us, we need to be proactive, have a focus, and take appropriate measures. Now about your second question about MRP. Now concerning EBITDA, and there's the change or revision of EBITDA's forecast. About this forecast, including the supplementary documents of the financial results and others, all the data are available for you to see. Basically, the baseline of our profitability has been enhanced. Now, we are expecting 14% growth. Using this, we can allocate it to the JPY 2 trillion strategic investment if there are good opportunities. At this moment, we look at the market environment. At this moment, we can leave this fund as it is, and if necessary, we will review the situation and then we'll make an announcement accordingly.
Thank you.
Next, let's move on to the next questions. Nishida-san, freelance writer, please.
This is Nishida speaking. Can you hear me?
Yes, we can. Please.
I also have two questions. The first about the game business. PlayStation 5's procurement is pretty much in place, and the shortage of components you're expecting, that will be resolved. 18 million units is that enough to meet the demand, compared with the demand? The semiconductor sensors, high-end sensors are expected to sell, leading to the increase in sales.
Now, without depending on the Chinese market, overall product mix is improved, and that's improvement, or you're largely relying on the Chinese market for this improvement, if you could educate us.
Thank you for your questions. Two questions you asked us. First question regarding the PS5-related procurement. Maybe it's more of a demand side question. 18 million units is what we feel very comfortable that we can get the parts and components. We feel that there was a little bit higher demand than that. If the question is whether we can meet the demand, I think we're still short somewhat. Regarding our stock or inventory, still remain very low. In order to provide our PlayStation units to customers smoothly and timely basis, in that sense, we are still behind or short.
Regarding I&SS, the sensors, as I mentioned in my earlier stage, there is an increase in the size and higher added value in the market. That's a trend regardless of the regions. The large smartphone set manufacturers are going through that trend, and it is becoming very visible. That's what we feel through discussion with our customers and communicating with customers. We want to make sure to respond to that demand. That way, we can increase the sales. Also, if we talk about the Chinese market, we are still cautious. We do have slow movement and also the stock level, inventory level low in China. We hope by the end of this year it will normalize.
Next question, please. Asahi Shimbun, Hizawa-san, please.
Can you hear me?
Yes. Please.
I have two questions, both about PS5. In 2022, for this fiscal year, you said that the unit sales target, you said, 22.6 million. I think it was to exceed PS5. You say 18 million. Why did you have to reduce the number? Second, in earlier you said, FY 2021, the PS5 result, can you explain about the PS5 result for FY 2021?
First question about the fact that we originally were talking about 22.6 million, and that was more than PS5. Well, this was reduced because of the constraint of components. When it comes to procurement of components, and we have not given up on this, we would like to continue to work on this. But at this point in time, what we can say safely is that we can achieve the necessary components for 18 million units. That is the reason for this change in the number. Also about FY 2021, the actual result, did you say? The actual unit sales, FY 2021, unit sales number. Yes, we have presented that. PS5, 11.5 million units.
Have I answered your question?
That is the actual unit sales for FY 2021?
Yes.
Thank you.
Now time is running out on us, so the next person will be the last one to ask questions. From Toyo Keizai, Sasaki-san, please.
Do you hear me?
Yes. Yes.
My name is Sasaki from Toyo Keizai. Thank you for giving this opportunity. Two questions. You stopped the individual disclosure of the smartphones. Compared to the previous year, the sales is increasing, but what about profitability? If you could disclose that, I would appreciate it. Second, the plan to increase both sales and earnings of the semiconductors. Well, you are talking about the larger size and higher added value, but what would be the percentage of the contribution to the profit for each, from each?
Well, I couldn't hear. I'm sorry. Your second question. Could you repeat again?
Can you hear me?
Yes, please. Go ahead.
About the image sensor, the plan to increase both revenue and sales and the earnings. In terms of volume and price, I would like you to explain the contribution of each.
I see. About the smartphones. Well, we don't disclose individually, but in a qualitative way, I can say that the profitability improvement, the level of fixed cost has declined by a large margin, and the merchandise appeal improved, so profitability improved, so it can contribute to the stable sales increase. That's the structure we have already established. Then the image sensors both increase both in terms of the sales and the earnings of the image sensor.
In terms of the market share compared to this fiscal year, there seems to be a slight decrease in the market share. Now, the larger size and higher value added will be the direction, so the unit price will drastically increase, and that can push up or drive the sales. Thank you.
Thank you.
Okay, it is time. We'd like to conclude the Q&A session for media people. We will start the Q&A session for investors at 4:50 P.M. or 16:50.
We're starting the investor analyst Q&A shortly. We ask for your indulgence. Thank you for waiting. Now we would like to start the investor analyst Q&A session. I'll be serving as the emcee. I am from the finance group, IR group. My name is Shinji. I seek your cooperation. At the beginning. The moderator is now correcting a mistake in the Japanese version of the CFO speech. Please wait a moment. Please note that there was no mistake in the English script. Now we would like to take questions. Those who'll be responding is Executive Deputy President and CFO, Hiroki Totoki. Senior Vice President in charge of Corporate Planning and Control, Support for Finance Business Entertainment area, and Naomi Matsuoka. Senior Vice President in charge of Finance and IR, Sadahiko Hayakawa.
As for how to ask questions, the points to be noted, please refer to the information we have provided to you early on. Now we would like to proceed to the Q&A. Those of you who have questions, please limit yourself to two questions. Those of you who have a question, please press the asterisk button followed by the number one on your telephone.
Now, first, from Morgan Stanley MUFG Securities, we have Ono-san.
This is Ono speaking from Morgan Stanley. Can you hear me?
Yes, we can. Please go ahead.
First, I have a question regarding games and another question on the imaging sensors. First, about the forecast for game sales this year. Bungie cost will be JPY 44 billion, and the software development also JPY 40 billion. Those are the expected expenditures. JPY 44 billion for Bungie expenditure. That's quite a large amount of investment this year. How much do you plan on continuing to invest in Bungie from next year? Also, the effect of the software development expenditure. You will be spending more R&D costs this year compared with next year and further down?
Do you plan to make similar level of investment? Second point is about the image sensing. Chinese smartphone sales have been stagnating, especially in high-end segment, more in comparison to the expectation. Now, the CMOS sensors usually have five months lead time, so you should have inventory built up, and it will have an impact on your revenue. That will be my first hunch. If you could expound on how you incorporated these factors into your forecast.
Okay. First, for Game & Network Services first. Not just for Bungie, but we have posted JPY 44 billion for acquisitions, and large portions will be used for Bungie acquisition.
In this fiscal year, we have this forecast, but this forecast itself is assuming that we will complete this acquisition in the third quarter this year. In the fiscal year 2023, we have to have a expenditure, expenses for the whole year. We will expect 50% more expenses next year for Bungie. We said that we will increase the R&D cost for software titles, but the game titles. But looking at the current market trends and our capabilities, we feel by investing into R&D and thus create the upside factors for the future. I think that's the healthy investment, strategic investment, which we want to execute. It will cost us, but together with that, we can expect the growth in sales, at least we hope.
Next year, this added investment will not reduce the operating income directly. Next, about I&SS. The Chinese smartphone market and the demand, our forecast of the Chinese market. Right now, there is an inventory in the supply chain, so there is a slight slowdown in the Chinese market. We hope that in the second half of 2022, FY 2022, it will return to normal conditions. For general purpose products, a number of customers can use them, so a little bit higher inventory is acceptable to us. To cope with the changes in the demand, and also at the same time, respond to the higher demand in the market, we want to have healthy stock and consider the good timing for capital expenditures, and that's our thought. Thank you.
Thank you. Next question, Mizuho Securities, Mr. Nakane, please. Mizuho, Nakane, can you hear me?
Thank you. Again, two questions. First, I&SS and sales. Totoki-san earlier said, the unit volume will be slight increase and the price will increase more significantly. As for the price increase, will it be higher value added? And also, the logistics procurement cost will increase. I think there are these two factors. So can you give me the breakdown of the two? And second, how much of this cost increase are you going to add on to the sales price? For example, you can and will be able to maintain the gross margin. That's the first question. About the second question, about inventory.
Page seven of the handout, I&SS, I see that the inventory is high in G&NS of two. There's the COVID-19 and also the logistics and semiconductor. There are number of factors. I&SS, aside from the, I think the cost increase is also included here, in addition to the strategy. Can you talk about this? Towards September, what is the inventory level that you're assuming at this point in time in your budget? Well then, first, about I&SS, the unit price. Well, is it because of the higher value added on also the larger size or increase in logic price? We want to know the breakdown.
Well, either/or, I guess you're asking.
In regards to this, basically, the larger size and higher value added, this has a bigger impact, we think. About the logic, procurement costs, the increase and the device increase, and how much of this can be added on to the product price? Well, it depends on the transaction, the deal, and therefore, I cannot give you the details, I'm afraid. Basically, we think that we will be securing a proper margin. For this, we have to add on to our sales price. About the shortage of devices, we have to look at both the market and customer. I think that they, the customers understand the situation. It's not the case that they will not listen.
I think that describes the current status. About ET&S, about the shortage of materials, yes, we have put in place the necessary measures. About logistics, the lead time, it's long. Therefore, this will have an impact on the inventory level. We think that the fiscal year that's ended, the inventory level was high, but this was intentional. Therefore, for ET&S, the inventory level, we do not have any significant concern at this point in time. As for I&SS, well, naturally, our capacity needs to be efficiently and effectively used. We have to run at full capacity. That's what we're doing right now. For this fiscal year, this is intended to meet the demand.
The capital investment and also the starting of the equipment. This is also being taken into consideration. That is the reason why we intend to increase the inventory. About September inventory level, I don't think that there will be any major change at the end of the fiscal year. Towards the end of the fiscal year, it might not change that much. We are already discussing the FY 2023 demand. With that in mind, we want to have the appropriate inventory to satisfy that. We want to control the inventory properly with these things in mind. I think I've answered all the questions, I hope. Is that right? Can you hear me? I cannot hear you. Is that right?
We'll proceed to the next question. From SMBC Nikko Securities, Katsura-san, please.
Thank you very much, Katsura.
Can you hear me?
Yes.
G&NS and I&SS, for these two, I have questions. About G&NS, on page nine of the supplementary documents, PS Plus subscribers. Basically, it has shown some decline. Going forward, what's your take on this and what is your plan? There will be a renewal of PS Plus in June. Now, on this renewal, how did you take into consideration the past trend? If you could give me some idea, I would appreciate it. Second, I&SS. Well, you talked about the full capacity utilization. As usual, capacity and the number of wafers, if you could give me an idea. On page 21, there's the CapEx number, JPY 370 billion for this fiscal year. Well, I guess JPY 900 billion. Next fiscal year, the CapEx is going to decline, and this year will be the peak, in my view.
You're excluding the joint venture deal from this numbers. I mean, joint venture of TSMC. Game & Network Services first. Now, PS Plus subscribers. Before going into the discussion of that, let me give you an overall trend for us. The total gameplay time is so important. Year-on-year, there has been a decline, but the stay-at-home demand was not so strong from January to February in 2021. Compared to that, there's an increase by 8%, quite recently, compared to January and February in 2022. Compared to the end of March in 2020, there's an increase by 5.9 million. The stay-at-home demand was a temporary factor. After it has subsided, it seems to me that the high level of engagement is maintained.
On a midterm basis, I don't see much concern on PS Plus. I am sure that the high level of engagement will continue. That's a positive take that I have. About the renewal, we will start the renewal from June onward in a staged manner, and we would like it to be stably grow and be supported by users. I would like you to have great expectations on this together with me. Now, I&SS capacity and the number of input wafers, FY 2021 at the end of fourth quarter, 122, we would like it to be stably grow and be supported by users. I would like you to have great expectations on this together with me.
Now, I&SS capacity and the number of input wafers, FY 2021 at the end of fourth quarter, 122,000. That's the rough estimate. That's the capacity. With the change of model product mix and the facility maintenance caused some interruptions. As of the end of the first quarter in 2022, 130,000 will be achieved as originally scheduled. The number of wafers in FY 2021 fourth quarter actual, the three months average, simple average is 121,000. There was this great earthquake in January, and there's a Miyagi earthquake in March, and excluding that, the flat trend. Then three months average, simple average of this fiscal year is 126,000. With these assumptions, what about the investment?
For fiscal 2023, there will be a slight decrease, but still there will be a high level to be maintained. About the joint venture with TSMC. Well, this is separate from the investment with TSMC.
Thank you.
We are running short of time, so the next person will be the last person asking questions. We'd like to have Okazaki-san of Nomura Securities.
Thank you. This is Okazaki speaking of Nomura Securities. I also have questions, one each on the games and semiconductor. First, for games, that the renewal of a PlayStation, the content will be incorporated into the fleet, and that's what the competitors is doing. In strengthening your content, would that be an option for you in the future? As for imaging, the sales are expected to grow substantially. Imaging sensor will grow, but how about the other segments within that? I see they're expected to grow. If you could share with us, what are some other growth elements.
First, regarding the Game & Network Services, network service, I will refrain from making comments on the competitor's strategy. Our current thinking is to have a development cost, appropriate R&D investment for quality products, and that will improve the platform and also improve the business in the long run. The AAA type titles from games, PlayStation 5, if we distribute that on the subscription services. We may need to shrink the investment needed for that, and that will deteriorate the first-party title quality, and that's our concern. We want to make sure that we spend appropriate development cost to have a solid products with solid titles to be introduced in the right manner.
In terms of renewal, Returnal and Spider-Man and the first-party popular titles, we will be providing those titles for the new platform. We want to have an overall good balance in growing our business further. As for the FY 2022 sales for I&SS, what are driving factors? Mobile sensor is the driving factor, and laser and other products are experiencing sales growth. In terms of the magnitude of sales growth, that comes largely from mobile sensors. That's all.
Okay, that finishes our allocated time for today's earnings announcement of Sony Group Corporation. We thank you for attending this session. Thank you.