Quote: Think you paid too much for your Playstation 3? Don't expect any sympathy from Sony.
In the company's fiscal 2008 annual report, Sony revealed that they've now lost roughly $3.3 billion (that's billion with a B) on the Playstation 3 since its launch. That breaks down to $2.16 billion in 2007, followed by a notably smaller but equally daunting $1.16 billion loss in 2008.
The reason? Pricing the console below its production cost. That's right - that hefty $599 you paid for the PS3 back when it first launched was significantly cheaper than the cost of producing it in the first place, and while the retail price has come down some, the losses keep piling up.
Investors have reason to sweat. In a statement, Sony claimed "the large-scale investment required during the development and introductory period of a new gaming platform may not be fully recovered." They went on to note that they've invested a great deal of money into R&D for the console, a sum they might not be able to recoup if the PS3 "fails to achieve such favorable market penetration."
Sony fanboys should take heart, however. Losing money on hardware is relatively common in the video game biz, as companies routinely lower prices to sell more units and thus stimulate software sales. Sony's game division saw a 26% sales spike last quarter, a trend they expect will continue on the strength of strong exclusives like the recently released Metal Gear Solid 4 and the upcoming sequel Resistance 2. But will it be enough?
The difference, which has been noted for eons, between Sony and Microsoft is that Microsoft knowingly put themselves at a loss to gain market-share; this will lead to profits in the future provided they don't screw it up.
Sony never intended to drop the price as much as they have, and were forced into their losses by their ego and lack of foresight.
Revenue ¥8.8714 trillion or US$88.7 billion (2008)[2] Operating income ¥374.5 billion, or US$3.745 billion Net income ¥369.4 billion, or US$3.694 billion
What you may fail to realize is sony's long term plan... although they may have experienced losses on the PS3, it effectively won them the HD format war. (Sony has the patents on Blu-ray) Thus, they make money off of every Blu-ray sold and as people gradually begin to switch over to HD that will bring in some mad bank for them. That's why they're ok with the losses.
Over time money adds up kids, anyways #13 proves a good point that I was going to brush up on but didn't think about it. Sony isn't that good of a gaming company thus their gaming portion will shut down *cough* Apple.
#2 MS doesn't even break a sweat when they blow a billion dollars, though, and that's why losing money in the short term is one of their favorite tactics of attrition against competitors.
For Sony, however, these sort of losses are pretty stressful.
Anyway, the reason why Sony has basically resigned themselves to losing lots of money in this generation on production costs, is not because they realistically expect software sales for the PS3 to improve all that much (and they won't, the market hierarchy is already pretty much set for this generation and it's not gonna change)... but because doing so will at least keep the PS3 respectable in sales this generation, and thus Sony hopes to minimize the damage being done to the Playstation brand's reputation coming into the next generation and the PS4.
#12 - The economy doesn't favor that view right at this time. I'm not even sure HD will grow that big before the North American ISPs lay the way for downloadable HD.
There are a few studies that have been reported on news sites stating that it might not even be until 2012 before they actually see significant adoption of their format; if ever.
"Sony isn't that good of a gaming company thus their gaming portion will shut down *cough* Apple" what? r u a retard? that explains why the ps2 sold 125million+ and the xbox sold 25 million!!!! and why they have better first party studios!!!
Sony Losses
Think you paid too much for your Playstation 3? Don't expect any sympathy from Sony.
In the company's fiscal 2008 annual report, Sony revealed that they've now lost roughly $3.3 billion (that's billion with a B) on the Playstation 3 since its launch. That breaks down to $2.16 billion in 2007, followed by a notably smaller but equally daunting $1.16 billion loss in 2008.
The reason? Pricing the console below its production cost. That's right - that hefty $599 you paid for the PS3 back when it first launched was significantly cheaper than the cost of producing it in the first place, and while the retail price has come down some, the losses keep piling up.
Investors have reason to sweat. In a statement, Sony claimed "the large-scale investment required during the development and introductory period of a new gaming platform may not be fully recovered." They went on to note that they've invested a great deal of money into R&D for the console, a sum they might not be able to recoup if the PS3 "fails to achieve such favorable market penetration."
Sony fanboys should take heart, however. Losing money on hardware is relatively common in the video game biz, as companies routinely lower prices to sell more units and thus stimulate software sales. Sony's game division saw a 26% sales spike last quarter, a trend they expect will continue on the strength of strong exclusives like the recently released Metal Gear Solid 4 and the upcoming sequel Resistance 2.
But will it be enough?
http://videogames.yahoo.com/feature/sony-..
oh wait...
n1 source though. yahoo is where i get all my gaming news
Sony never intended to drop the price as much as they have, and were forced into their losses by their ego and lack of foresight.
Yes, Sony is much larger than they were, BUT if they keep losing like this they will indeed go under.
Sony Statistics:
Revenue ¥8.8714 trillion or US$88.7 billion (2008)[2]
Operating income ¥374.5 billion, or US$3.745 billion
Net income ¥369.4 billion, or US$3.694 billion
Even in future if they lose their share in gaming industry, it is still one of biggest media conglomerates in the world.
mom, aunt, grandma ?
For Sony, however, these sort of losses are pretty stressful.
Anyway, the reason why Sony has basically resigned themselves to losing lots of money in this generation on production costs, is not because they realistically expect software sales for the PS3 to improve all that much (and they won't, the market hierarchy is already pretty much set for this generation and it's not gonna change)... but because doing so will at least keep the PS3 respectable in sales this generation, and thus Sony hopes to minimize the damage being done to the Playstation brand's reputation coming into the next generation and the PS4.
There are a few studies that have been reported on news sites stating that it might not even be until 2012 before they actually see significant adoption of their format; if ever.
My vote goes on the grandma and aunts.