Sony Dismisses Warner Bros Merger Talk, Doubles Down on Games

• CEO Hiroki Totoki confirms no plans for a major media merger with Warner Bros., ending ongoing speculation.
• Totoki also says that current movie studios do not appeal to him much in terms of profitability.
• Sony plans for a 10% annual profit growth by concentrating more on games (18.5%) and music (10.5%) rather than cinema (5.7%).

Sony Group Corp. has ruled out a merger with Warner Bros. Discovery Inc., ending months of speculation about a potential blockbuster media deal as the Japanese entertainment giant pivots toward its most profitable divisions.

Chief Executive Hiroki Totoki told Nikkei Asia that Sony isn't pursuing major Hollywood acquisitions, citing concerns about profitability in traditional film studios. Instead, the company plans to focus on businesses such as videogames and anime, which generate significantly higher returns than its motion-picture operations.

"Simply adding together the current movie studios doesn't strike me as leading to a big gain in profitability," Mr. Totoki said. He emphasized Sony's preference for building "a solid base" in creative sectors including anime and games rather than expanding through scale alone.

The comments effectively close the door on what would have been one of the entertainment industry's largest mergers. Warner Bros. Discovery has been exploring strategic options for parts of its business as it grapples with challenges in its traditional television operations.

Sony's Profit Strategy Prioritizes High-Margin Entertainment Divisions

Sony's decision reflects broader shifts reshaping Hollywood. As streaming platforms upend theatrical distribution and legacy media companies struggle with declining viewership, Sony is betting on cross-division collaboration rather than empire-building.

The strategy appears to be paying off. Sony's games division has shown substantially higher operating margins than its pictures segment, while its music business also delivers stronger returns. Recent quarterly results showed the games division's operating income surged 37% while the music segment climbed 28%. By contrast, the pictures segment saw operating income fall 18%, underscoring the profitability gap driving Mr. Totoki's thinking.

The approach has already yielded results. "Demon Slayer: Kimetsu no Yaiba Infinity Castle," produced by Sony's anime unit Aniplex, became the highest-grossing international film in North America in 2025. The success demonstrates how Sony can leverage intellectual property across its entertainment ecosystem without major acquisitions.

Sony aims to increase operating profit by concentrating on synergies among its film, music, games and animation divisions. The company is moving away from the traditional Hollywood model of theatrical distribution, focusing instead on direct-to-consumer platforms and integrated content strategies.

The decision marks a departure from the mega-merger trend that has defined media consolidation in recent years. While rivals have pursued scale through large acquisitions, Sony is wagering that carefully cultivated creative assets and higher-margin businesses will deliver better returns for shareholders than transformative deals.