Sony's internet service provider spin-off So-net Entertainment has continued to grow strongly since its Japanese IPO last year.
The company and analysts agree that So-net is on course to exceed $400m in revenues for the financial year ending this month.
So-net will probably approach $500m in revenues in the next financial year, according to Tokyo-based Nomura Securities.
"We think So-net Entertainment offers the strongest growth potential among companies in the Sony group," said Nomura analyst Eiichi Katayama in a briefing for investors this week.
The company is trying to move beyond providing an internet connection to generating more income from its user base.
These include Livly Island, a character-based entertainment and community portal which generates income mainly through advertising to So-net's three million users.
"With a focus on the internet connection business, So-net would face a mature market eventually, but we think the company has put forth a new direction by leveraging its strengths, such as by directing its energies to the character-related business," said Katayama.
Margins at the portal business appear to be improving as So-Net discovers which services make more profit, and markets those more aggressively, Nomura's analysts believe.
So-net has used capital from its IPO last year to invest in other firms which can provide content for the Livly Island portal.
Despite its success in Japan, So-net's expansion overseas has been limited to regional markets such as Taiwan.
Sony So-net spin-off hits record revenues
By Simon Burns on Apr 2, 2007 10:08AM