PlayStation 3-related Losses Hit $4.7 Billion

By Marcus Yam
published

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."

Marcus Yam

Marcus Yam is a technology evangelist for Intel Corporation, the latest in a long line of tech-focused roles spanning a more than 20-year career in the industry. As Executive Editor, News on Tom's Guide and Tom's Hardware, Marcus was responsible for shaping the sites' news output, and he also spent a period as Editor of Outdoors & Sports at Digital Trends.

50 Comments Comment from the forums
  • 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