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View Full Version : Sony loses $3.3 Billion on the PS3



Deus Ex Dolphin
06-25-2008, 11:50 AM
Looks like Sony has joined MS in being able to lose big money on a console. I believe MS has lost about 4 billion on the Xbox and Xbox 360 (though they are now making a PROFIT from the 360) and Sony is at 3.3 billion and probably a bit more this year.

Link:
http://kotaku.com/5018899/sony-lost-over-3-billion-to-ps3-cost-pricing-imbalance#viewcomments

A few things we can take from all this:

One, don't expect a price drop on the PS3 this year.

Two, MS won't be in a hurry to drop the 360 prices more than $50 this year.

Three, the nextgen of gaming consoles may be only a minor upgrade over what the PS3/360 are right now. With Nintendo running away with sales and profits with the underpowered Wii, you know MS and Sony are wondering why they need to bother with cutting edge hardware.

finserg
06-25-2008, 12:59 PM
I thought for sure MS was second in the gaming part

SKing29
06-25-2008, 05:58 PM
I'm pretty sure I read somewhere that the PS3 is now making money (especially with the 40GB). So it should also be making money now.

CitizenSnips
06-25-2008, 10:11 PM
I'm pretty sure I read somewhere that the PS3 is now making money (especially with the 40GB). So it should also be making money now.

i dont see how. that 40 gb PS3 was originally supposed to sell for $500 and not $400.

Remember the original price of PS3s? I mean when they were first announced the cheapest they had was $600. Sony built an impressive machine no doubt, but in the process they built something that was simply too expensive for its fan base. I thought $400 was ridiculous for the 360 when that was announced, but damned if Sony didn't make that look small.

Then you add into the fact that American economy just isn't doing very well right now, and that just drives sales down further (or towards the very cheap Wii, however you wanna look at it).

Price is important. And the worst part is both systems, while providing the best graphics and probably the best games on the market, are also experiencing hardware problems.

Deus Ex Dolphin
06-26-2008, 01:57 AM
I'm pretty sure I read somewhere that the PS3 is now making money (especially with the 40GB). So it should also be making money now.

Actually, even Sony themselves are warning that the PS3 may NEVER make that money back (check the link above).

Certainly, neither Sony or MS expected Nintendo to win this generation with the Wii, but they will, that is 90% set in stone. The battle is now for second place for Sony, and they must balance price cuts (losing money on the PS3) versus lagging sales for having the most expensive hardware.

We'll see how this plays out through the rest of 08, but MS can certainly afford to drop the 360 price and pressure Sony if 360 sales continue to lag, while only giving up some hardware profit, not taking losses on it.

SKing29
06-26-2008, 04:35 PM
Actually, even Sony themselves are warning that the PS3 may NEVER make that money back (check the link above).

Certainly, neither Sony or MS expected Nintendo to win this generation with the Wii, but they will, that is 90% set in stone. The battle is now for second place for Sony, and they must balance price cuts (losing money on the PS3) versus lagging sales for having the most expensive hardware.

We'll see how this plays out through the rest of 08, but MS can certainly afford to drop the 360 price and pressure Sony if 360 sales continue to lag, while only giving up some hardware profit, not taking losses on it.

Ah, I said I "thought" I read that somewhere, it was in no way gospel-just my two cents.

However here is the article I read saying that Sony Game Division was making money and that the PS3 was beginning to make a profit. However this was something I read back in January it could be different now. The article is overall 65% negative and 35% positive for Sony, so take it for what its worth.

http://www.gamespot.com/news/6185395.html

Also here is a recent article talking a little about the PS3 being on the road to increased sales and some profit (in a paragraph near the end).

http://www.gamespot.com/news/6193035.html?action=convert&om_clk=latestnews&tag=latestnews;title;4

Get Up And Go
06-27-2008, 12:37 AM
The PS3 is slowly selling more and more. Its just a matter of time until they start making money. If they keep on getting games on the scale of MGS4, they should be there in no time.

CDNPHIN
06-27-2008, 08:21 PM
2-words for ya...."Blue Ray".It's only a matter of time before sony's back on top.

CitizenSnips
06-27-2008, 09:07 PM
2-words for ya...."Blue Ray".It's only a matter of time before sony's back on top.

Blu Ray really isn't doing as hot as Sony wants people to believe. Which makes sense, DVD prices just keep getting lower and Blu Rays are still pretty high. Ironically something that would be helping Sony right now is if the Xbox had a Blu Ray player, cause that would at least mean more people with Blu Ray players, which would lead to more Blu Ray sales.

Blu Ray feels a little forced, the average American isn't ready to make that change yet. We were (most still are) perfectly fine with DVDs.

Deus Ex Dolphin
06-27-2008, 09:41 PM
The PS3 is slowly selling more and more. Its just a matter of time until they start making money. If they keep on getting games on the scale of MGS4, they should be there in no time.


Let's get a sense of how much money Sony has lost on the PS3. That debt has wiped out most of the profits they made with the PS2. The PS2 sold over a 100 million consoles, was a HUGE success, and yet Sony needs the PS3 to sell nearly as well to make that money back.

It won't happen.

The Wii simply refuses to stop selling, and may very well break the PS2 sales record when all is said and done.

Sony, at best can be #2, and MS stands in their way.

Think MGS4 is enough to get more than hardcore fans to drop $400-$500 on a PS3? I doubt it. Sony needs to bring the PS3 down to $299 before most will get interested.

As for Blu-ray? Sony is preparing a movie-on-demand download service, which actually works against people needing to buy the Blu-ray movies. Why are they doing it? Because they understand many will just rent movies to watch, and they want in on that pie. It means Blu-ray will never match the success of DVD.

Is Sony doomed? No, but the glory days of PS2 sales and profits are over. They might be able to show a modest profit in five years, and I'd expect the PS4 to be an upgraded version of the PS3. Blu-ray drive, Cell chips, just more RAM and a better graphics card. I'd also expect, at most, a $399 launch price.

SKing29
06-28-2008, 09:20 PM
Let's get a sense of how much money Sony has lost on the PS3. That debt has wiped out most of the profits they made with the PS2. The PS2 sold over a 100 million consoles, was a HUGE success, and yet Sony needs the PS3 to sell nearly as well to make that money back.

It won't happen.

The Wii simply refuses to stop selling, and may very well break the PS2 sales record when all is said and done.

Sony, at best can be #2, and MS stands in their way.

Think MGS4 is enough to get more than hardcore fans to drop $400-$500 on a PS3? I doubt it. Sony needs to bring the PS3 down to $299 before most will get interested.

As for Blu-ray? Sony is preparing a movie-on-demand download service, which actually works against people needing to buy the Blu-ray movies. Why are they doing it? Because they understand many will just rent movies to watch, and they want in on that pie. It means Blu-ray will never match the success of DVD.

Is Sony doomed? No, but the glory days of PS2 sales and profits are over. They might be able to show a modest profit in five years, and I'd expect the PS4 to be an upgraded version of the PS3. Blu-ray drive, Cell chips, just more RAM and a better graphics card. I'd also expect, at most, a $399 launch price.

You make some good points (I agree on the DVD vs. Blu-Ray comparison whole heartedly) but it seems like your not looking at the whole picture. I will grant you that the PS3 has been having troubles especially with its price but that seems to be changing. If you look at the recent NPD console sales charts the PS3 and 360 have been running neck and neck for months now and thats with the $279 price tag on the 360's entry system. If you get a premium or an elite you could be paying a little less or a little more than the PS3 (40GB), so because of the close proximity of prices and how the charts show a close race in recent sales I would have to throw the price being to high for the PS3 argument out of the debate (because even with the cheap 360 the numbers are so tight).

What has killed the PS3 dearly has been that they have had no exclusives (which is what its all about) that people care about up until MGS4. Think about it with the 360 you have Gears of War, Bioshock, Mass Effect, and the monster that is Halo; so 360 was clearly winning the exclusive side of the deal and bringing in loads of new people. In addition Xbox Live is attracting people whereas PSN isn't. Plus I think that Sony has poorly marketed the PS3 thinking that well its a Playstation so people will snatch it up left and right and just totally blowing it on that end (also we must factor in the "original" high price tags on the systems as part of this).

Both of these systems are great but both have their problems. However it seems to me that Sony is fixing their problems with more exclusives on the way and PSN being upgraded(so is Microsoft). Also most regard the PS3 as the best Blu-Ray player on the market so I don't see how that doesn't help its sales even if people use it for only that. It seems they are back in the race and could easily pull ahead, but why does it matter more competition is better for the gamers :D

Plus there is the same debate on another dolphins message board that makes the argument that software sales tend to make up for hardware pitfalls so that could be a saving grace for Sony there. Its going to be interesting to watch.

SarahAnn
06-29-2008, 01:32 AM
Sony knew this was going to happen and even stated in pre-release interviews that they didn't expect the PS3 to turn a profit until years 3 and 4 of its 10 year cycle. I'll dig around tomorrow and locate links.

Deus Ex Dolphin
06-29-2008, 04:12 PM
Sony knew this was going to happen and even stated in pre-release interviews that they didn't expect the PS3 to turn a profit until years 3 and 4 of its 10 year cycle. I'll dig around tomorrow and locate links.

What about the difference between not making a profit (but breaking even) versus what Sony has actually done with the PS3 so far (LOSING $3.3 billion)?

Even if they start making money in the games division this year, they have to earn that lost $3.3 billion back over the years ahead.

Can they even profit on the PS3 if they are forced to have another price drop on the PS3 to match MS? It appears the Xbox 360 will now be $50 cheaper come early July (according to leaked Kmart ads).

You know what Sony expected to happen? That people would line up to pay $599 for the PS3. They were certain the Sony brand was THAT powerful. Instead, most balked at that price and Sony was forced to slash prices at least a year before they wanted too. That's how you lose $3.3 billion.

Sure, Sony was prepared to lose some money to launch the PS3, but never thought it would be so much. They must now either hold the line on price and see sales drop, or match MS and keep losing money.

As I talked about above though, I think Sony can make a very affordable PS4, using the Cell and Blu-ray tech they paid so much to put in the PS3, and have a shot at gaining back a lot of marketshare. Expect both MS and Sony to have some kind of Wii-mote controller too.

Right now, they've paid $3.3 billion to see the PS3 have less than half the marketshare of the PS2.

Phinz420
06-30-2008, 03:20 PM
Sony said it expects Blu-ray to reign in profits close to $10 billion annually within three years. The company also said its gaming business would be profitable by the end of the fiscal year in March, 2009, much in part to increased PS3 software sales as well as lowered PS3 production costs.
.....
Sony estimates that 15 million Blu-ray players and PS3 game consoles have been sold worldwide (the total includes the Blu-ray built-in player included with the PS3.) Analysts expect Blu-ray sales to more than triple this year, mainly because the Toshiba discontinuing x-rival HD DVD format.

http://www.hd-report.com/2008/06/27/sony-aims-for-big-blu-ray-sales-within-next-few-years/

The future is anything but bleak for BluRay, I would venture to say people who are quick to say otherwise are likely bitter because Sony stole their girlfriend and ate their chocolate cake.

Deus Ex Dolphin
06-30-2008, 09:51 PM
Who said the future was bleak for Blu-ray? It simply won't be the HUGE success that DVD has been. Downloads-on-demand will eat up a lot of the market. The fact Sony is getting in on the download market says it all.

That $10 billion in sales sounds good, but remember that Sony sees only a fraction of that money. It's like pointing to $100 million in movie ticket sales and thinking the studio gets it all.

Yes, I believe Sony can begin earning a profit on the PS3 by March 09, but it will mean holding the price at $400 and $500 for the rest of this year. Will hardware sales keep pace with the soon-to-be cheaper 360 though? Is third place enough to earn Sony back the money it has lost?

Can we at least agree that Sony made some big mistakes in launching the PS3, dug a hole for themselves, and now have to climb out? The real debate is about how successful they can be in doing that.