Skip to main content

PlayStation 3-related Losses Hit $4.7 Billion

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."

  • indran1412
    Sony will bounce back
    Reply
  • ssalim
    Stop making portable console that looks like a cellphone or calculator and you might cut your losses.
    Reply
  • nforce4max
    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.
    Reply
  • matchboxmatt
    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.
    Reply
  • IronRyan21
    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.

    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.
    Reply
  • pharge
    IronRyan21M$ 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.
    Reply
  • mdillenbeck
    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.
    Reply
  • redgarl
    What about the 360 fiasco? The 40% of failure rate?
    Reply
  • precariousgray
    Is this just for the console hardware? I'm pretty sure they make most of their money from software sales and licensing.
    Reply
  • tayb
    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.
    Reply