Sony Still Losing Money on Each PS3 Sold
Source: Tom's Guide US | Keywords: sony, ps3, playstation, cost, price | Themes: Digital Entertainment
You can't build them as cheap as you can buy them.
It’s not uncommon for video game companies to sell hardware at below cost with plans to make it all back (and eventually profit) from software sales. It’s the classic razor and blade model.
Over time, the platform holder eventually breaks even on the hardware and even later begins to make money. This hasn’t happened yet for Sony and the PlayStation 3.
When it launched in late 2006, Sony was losing hundreds of dollars on each console sold. While manufacturing costs have fallen since then, so too has the price of the system.
According to Japanese-centric site Andriasang, Sony CFO Nobuyuki Oneda said at an earnings briefing that the cost for a PlayStation 3 is still 10 percent higher than the system's price.
The PlayStation 3 is priced differently around the world, but given that the comments were made in Japan, a 10 percent loss per system would equate to 4,000 yen each ($41).
With Sony still losing money on each PlayStation 3 sold, that definitely restricts the company’s ability to bring in a price drop. Oneda did say that further cost reductions were in store for the hardware, but didn’t specify when (or if) those would translate to a price cut.
So for now, anyone buying a PS3 is still getting it cheaper than Sony can build them.
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In curiosity, I popped on Newegg to see what a PS3 costs nowadays. "Your Price:$389.99" for the 80GB "Core Pack".
*makes a face*
And apparently Sony's still losing money, huh? Its a good thing that you can't just put a 60 dollar videocard in a cheap Core2 based system and play most of the same games... -wait, you can. Damn this thing sucks!
If they want to win the war....they need to make the games cheaper than the other consoles...by 5 bucks???
it IS still a GREAT BD player!!!!
It was a gamble on sonys part. Thinking that a more expensive, flashy console is what ppl want. We just wanted a motion sensor device thats all, sony.
Screw PS3... PC FTW!!
i sort of feel sorry for sony
but in someways i think they deserve this...
I admire the cell masterpiece sony created
But they should have taken competitive opponents into consideration
A whole study should have been made regarding the simple minded people that thinks the color of some game is better than some other game.
By the way... Who thought that wii could ever win the console war??
At least sony put some effort into their console rather than creating what may be considered a side kick PC with lots of errors and manufacturing problems.
So with the PS2 outselling the PS3, which do you guys think will be discontinued first? LOL
Luckily for Sony no one ever buys them, so they aren't losing that much!
Don't count on there being a ps4
@japnoise99: I get what you're implying, and I don't exactly like it... but then I remember that not only is the PS2 outselling the PS3, it also makes Sony money on each console sold!
This is an expected course of action when they decided to put blu-ray in the game machine hoping that they can beat out the competition by destroying HD-DVD and XBox. Things have come full circle.
Sony's bigger deal with the PS3 was to use it to push Blu-ray and look, they won! For every dollar they lose on the PS3, they'll make 10-100 times that money back on blu-ray licenses alone over the next ten years. Chances are Sony would have lost the format war if it hadn't of been for the PS3. Honestly, I doubt Sony is really that bothered that their console's got the weakest sales. Blu-ray sales is where the money's at.
Sony's bigger deal with the PS3 was to use it to push Blu-ray and look, they won! For every dollar they lose on the PS3, they'll make 10-100 times that money back on blu-ray licenses alone over the next ten years.
Yea Blu-ray is so winning, I mean it's not like Sony just lost 3 billion dollars... Oh wait. Not to mention it seems media will most likely move towards digital distribution. And Blu-ray is still not catching on like Sony needs it too.
Sony is quite worried that their cash cow is now probably the main reason for their lost of 3 billion dollars.
Firstly, their loss was £1.7 billion dollars, not 3 billion. That's not why Sony's just made a loss. Sony's made such a big loss because of the effect the current global financial crisis has had on exchange rates. Since 80% of Sony's business comes from overseas buyers, they've been seriously affected by the strong value of the Japanese Yen due to all the problems economies are having in Europe and North America.
Digital distributions isn't picking up nearly as fast as people thought for video needs - especially top quality high definition video. The age of high definition digital distribution by the masses likely won't be here yet for at least 5-10 years. Broadband speeds are increasing too slowly and ISPs are imposing too many download limits for it to really take off.
blue- ray is winning??? go check blue ray sales next to to normal DVD sales....its a slaughter month in and month out...and not in blue ray's favor.
How about just making the damn thing easier to develope for by assisting devs more with middleware or specialized tools. That is something that Microsoft hit dead on and it paid off for them. Instead of spending time on crap like Home.
Blueray is not going to overcome DVD sales anytime soon so your argument about that is off base. DVD is not a high def format and the Blueray players only recently came down to a price that was easier for people to justify. Nevermind the fact that allot of people still do not have a 1080p capable tv. Most people still have 1080i tv's. That combined with the price of the blue ray disc's itself. 29.00 bucks for a movie. It is still a tough sell for allot of people. Also, you can hardly see the difference on TV's below 42 inches.
Funny thing is, I've never heard Sony-exclusive developers complain that PS3 development is too hard. It's only the huge companies who don't want to spend the extra time and effort to actually get to know the hardware who complain because it means less profits for them. The crack at Home doesn't make much sense- it's not like there's only one team of developers at Sony. Kind of like that stupid I'm a Mac/I'm a PC ad that suggested that Microsoft spent all their money on advertisements- as if Microsoft can't spend a lot on ads and software development.
1080i and 720p are still hi-def; you don't need a 1080p screen to get a hi-def experience (although certainly 1080p looks the best out of anything). You sub-42-inch statement is true for the 720p/1080p difference, not the standard-def/hi-def difference.
lol sparky. Read that again.
"Firstly, their loss was £1.7 billion dollars, not 3 billion."
1.7 billion pounds dollars? Anyway, 1.7 billion British pounds is about 2.6 billion USD, so his figure of 3 billion USD is not too far off the mark.
Errr spanky. Sorry, I can't read, either.
So what if I was off by 2 billion, they STILL lost a billion. Despite all your talk about Blu-ray winning. And yes the strong Yen is hurting Sony, like it is all Japanese companies. But considering how there are plenty of other companies making big profits anyway, that is not the main cause for their lost.
Can they please cut the costs enough to put hardware backwards-compatablity of the PS2 back in? PLEASE? Maybe then people would have more incentive to stop buying the 2 and move to the 3.
I highly agree with this. I bought one of the release day PS3s and couldn't be happier with it, but now if I didn't have one I'd just be waiting for Sony to at least add the level of backwards compatibility that the 360 has.
Well, they aren't doing too bad considering that someone who buys a PS3 only needs to buy a game and a few blu rays for Sony to make that up. I think it really comes down to both Sonys decision to add blu-ray to the PS3, and the prohibitive fees that the blu-ray consortium insisted on for so long that killed alot of blu-rays momentum. Sure it helped sony with the HD war, but it lost them the counsel war and from a financial perspective it wasn't worth it. By the time blu-ray really begins pulling up the PS3, if people don't ditch it for HD downloads anyway, it will be time for the next generation.
kami3k: You weren't off by that much if you were talking in USD. He was talking in British pounds, and he was more wrong since he used the sign for British pounds then appended dollars at the end anyway =S
PS3 = $600.00 paperweight...at least that's true for me and the hundreds/thousands of people who have had their PS3 bricked by a firmware update...go look at the official forums.
SONY charges $160.00 to fix it. No wonder when they're still losing money on each sale.
ps3 has been selling well in the past few months in japan, and i think it'll continue to do better. if they come out with a slim, im def gonna get it as well as a few exclusives. =]
but a 360 and pc is more than enough for me as of now. got mad friends with 360's
It doesnt matter. all you sony haters can enjoy the RRoD all you want ... oh yes you xbox fanboys/girls. dont be jealous.
PS3 = $600.00 paperweight...at least that's true for me and the hundreds/thousands of people who have had their PS3 bricked by a firmware update...go look at the official forums. SONY charges $160.00 to fix it. No wonder when they're still losing money on each sale.
And the 360 has had hundreds of thousands of consoles die because of shoddy hardware. I do give Microsoft credit for extending RRoD warranties across the board, but they still have way more console failures than Sony does. I'm sorry your PS3 got bricked, and yes the firmware updates should be more thoroughly tested, but you have to admit that PS3 failures are nothing compared to the 360's.
kami3k: You weren't off by that much if you were talking in USD. He was talking in British pounds, and he was more wrong since he used the sign for British pounds then appended dollars at the end anyway =S
Well I was off by 2 billion, it was one billion that they lost. I got confused about the 3 billion they made last year, or the year before that. But even then, they spent something like 99 billion dollars and only got 3 billion in profits back. Ouch. I was looking at other companies like IBM and they were spending like 15billion to make 5 billion.
Sony has some serious issues right now.
And yes I noticed he used the pound symbol then said dollars at the end, probably just habit though.
I might have to buy one before they start making money of them... and then just steal games...
kami3k: All right, I gotcha.
Well, it certainly won't help anyone if Sony exits the console business. Although I'm a cheapskate who buys stuff from a generation back, I'd be sad to see any of the current players leave the business.
It is disheartening to see the level of incompetence from companies these days though.