PlayStation 3-related Losses Hit $4.7 Billion
Source: Tom's Guide US | Keywords: playstation, ps3, sony, losses, slim | Themes: Digital Entertainment, Business
Sony expects turnaround in next term.
Unless you're Nintendo, the recession period hasn't been kind to your bottom line. Sony released its fiscal second quarter results, which show a reported a 58.8 billion yen (or $654 million) operating loss from its division responsible for video game hardware and software.
Those who have been tracking Sony's reports since the launch of the PS3 have noticed a trend of losses. Now, launching and supporting a new platform is an expensive endeavor. Typically, hardware is sold at a loss initially to build a user base so that the profits may be reaped from software sales.
Looking at the losses total since the PS3 launch, the branch of Sony has lost nearly $4.7 billion, according to VG247. While that is a lot of money, Microsoft went through a similar sort of thing with the original Xbox, losing $4.2 billion over the console's four-year lifespan.
According to Andriasang, Sony CFO Nobuyuki Oneda said of PlayStation 3 costs, "At present, the difference between sales and materials cost has been reduced to between 10 and 20%. Within the year, it could be in the single digits. We'll be able to reach profitability at some point in the next term."
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Sony will bounce back
Stop making portable console that looks like a cellphone or calculator and you might cut your losses.
That is a sure war to stay in business NOT. At least they got a product out that rather than nvidia and it's lap dog the fud.
I think the business model of losing money on each unit sold and relying on software sales to recuperate doesn't work very well in the real world.
M$ was doing this to compete, and was on its way up in the console world. Sony is on the back end of this. M$ take was to gain marketshare.
M$ was doing this to compete, and was on its way up in the console world. Sony is on the back end of this. M$ take was to gain marketshare.
Same as Sony! Sony was doing this to compete for the "Blu-ray" and they won! Though they are/were lossing money from PS3 but they are gaining them back from Blu-ray associated profits.
I wonder how the Blu-ray versus HD-DVD format war works into this - after all, the PS3 is considered by many to be the top Blu-ray disc. Perhaps they are willing to take the loss in one department to benefit the company overall.
What about the 360 fiasco? The 40% of failure rate?
Is this just for the console hardware? I'm pretty sure they make most of their money from software sales and licensing.
That's what happens when you try to capture a optical format market with your gaming machine instead of trying to capture the gaming market with your gaming machine. Cramming blu-ray into that thing was an apparent $4.7 billion and counting mistake.
This is all about who released that gen of console first. The PS2 came out and everyone got an erection and didn't bother with the XBOX when it released. MS got wise to this and released a poor quality, quickly knocked up shitty quality XBOX 360 that RROD'd for everybody who got one, with a long term plan to just fix them (or not) under guarantee. Then nobody bothered with a PS3.
Clever Billy eh? I had to send my 360 back to him twice. And didn't get a PS3. So his plan for world console domination worked. For now.
Most likely we'll see the same scenario again at the release of the next generation.
I thought they sold 1million units when they dropped the price in one week? Hmmm
Sony you have time till Wii next gen will be available
What about the 360 fiasco? The 40% of failure rate?
Its actually 56 %
Cramming blu-ray into it is what gave them the industry and led to HD-DVD going down the toilet. Sony makes other electronics and does very well in those departments. Losing "pocket change" is nothing to Sony as they will make all that back from their other products. Sony products have been very reliable for me and I will always keep buying from them.
Its actually 56 %
No I heard it was actually a failure rate of 156%. More failed than were even made.
4.7 Billion? Haven't they sold less than 100 million units? And since billion is 1,000x a million, they've lost $500 or more per system? Still? Sheesh. That number doesn't even really make sense to me. With only the number and none of the underlying data, it's hard to say where it comes from or what it represents. It seems it couldn't just be -hardware- losses... could it?
No I heard it was actually a failure rate of 156%. More failed than were even made.
That's like.........(counts on fingers)......eleventy million?!
Your right the numbers don't add up, chances are they haven't lost much at all, but if uncle Sam believes them that's all that matters. Just think of the tax write offs they have made and the profits they are makeing on software, no wonder their still the King!
I just hope this doesn't come as a shock to Sony. They invest nigh on $100 million in a game like Killzone 2 for example hoping it will do for the PS3 what Halo 3 done for the 360 at a time when the most popular games on the console market aren't big blockbusters but causal games like Rock Band etc.
What is worrying the $650 million loss in only for this quarter, this in addition to the billions Sony have already lost on the PS3 project, it's now becoming less and less likely Sony will ever see a profit on this console.
It's only a flesh wound.
If they sold 100 million console. Thats $50 loss per consol to get 5 billion.
as soon as the ps3 gets cracked and a mod chip available
hardware sales will go thru the roof .... profit
That's a good point that the numbers for the losses do not add up. It's way too high a loss per system sold, which simply cannot be the case. There could be other factors in there that we do not know about, likely a good deal of creative accounting going on to save Sony on taxes.
Additionally, I think their profits from blu-ray winning over HD-DVD make any actually losses they incur worthwhile. I strongly doubt the actual financial situation with PS3 is nearly as bad as this article seems to suggest. Between tax write-offs due to supposed losses, blu-ray as the only HD format, and whatever other factors we do not know about, I think PS3 isn't working out too badly for Sony.
So is MS in the black now? Are they profitable with the 360?
Its actually 56 %
Geez. People need to stop quoting a poll from a magazie.
I don't really care what the statistics really are, as I'm a PC gamer, not a console gamer, but citing some poll of 5,000 magazine subscribers is not really the greatest of sources.
*magazine
>_>
Some reasons the math doesn't add up is:
1. Retail price doesn't include retail markup that the retailer gets
2. These numbers don't take into account any if at all tariffs sony pays
3. May or may not include marketing costs as "operating costs" of the product.
Geez. People need to stop quoting a poll from a magazine.I don't really care what the statistics really are, as I'm a PC gamer, not a console gamer, but citing some poll of 5,000 magazine subscribers is not really the greatest of sources.
nah , i read it from trusted online source. actually , u don't expect me to ask every 360 users about their console success rate?
btb, 40% or 56%, 360 still has the highest failure rate than PS3.
This is all about who released that gen of console first. The PS2 came out and everyone got an erection and didn't bother with the XBOX when it released. MS got wise to this and released a poor quality, quickly knocked up shitty quality XBOX 360 that RROD'd for everybody who got one, with a long term plan to just fix them (or not) under guarantee. Then nobody bothered with a PS3.Clever Billy eh? I had to send my 360 back to him twice. And didn't get a PS3. So his plan for world console domination worked. For now.Most likely we'll see the same scenario again at the release of the next generation.
Except if Sony and Nintendo learned their lessons
4.7 Billion? Haven't they sold less than 100 million units? And since billion is 1,000x a million, they've lost $500 or more per system?
Your arithmetics are wrong.
4.7 billion $ (that's 4,700,000,000 $) / 100 million units (that's 100,000,000 u) = 47 $/unit sold
Geez. People need to stop quoting a poll from a magazie.I don't really care what the statistics really are, as I'm a PC gamer, not a console gamer, but citing some poll of 5,000 magazine subscribers is not really the greatest of sources.
but it's better than getting a colonoscopy because a 500 person study said so. We're making progress.