It really doesn't matter if they don't turn a profit this gen. Sony is not about to go under anytime soon.. And until that happens, the battle for the home goes on.
Why did MS virtually buy themselves into this market last gen? Because this the battle is much bigger than merely the game console. more than two thirds of the expenditure on telecom, media and entertainment (I'm speaking based on UK data) is done on things which can be combined into a home entertainment center, something which both Xbox and PS3 are aspiring to project themselves as.
It's a little hard to imagine what the analyst contributes with this prediction.
If Sony want to subsidize console sales, so much the better for third parties and for consumers. What's it to them if Sony makes a net profit on the PS3 or not. If the PS3 is in so much trouble, does it mean it's life will be shortened or that there will not be a PS4? It's doubtful, since it will always have strong brand power-- the exact thing that the Xbox is aiming for. Whatever dubious businesses were made in the past, the present would seem to suggest making the most of your assets.
Sony was hoping the PS3 would drive growth for the whole company for the long term. Even if it doesn't wind up doing that, a greater return on the investment would result from further support of the PS3, not less.
The point isn't whether they start selling the unit at a profit, it's whether they make back the costs that they have already incurred (through R&D, subsidized hardware sales, marketing and the costs of building up production capacity).
The analyst is saying that they will never make back the money they have spent on the PS3 overall.
In fact, I don't think Microsoft have even reached that point yet with the 360. They are turning a profit now, but they haven't yet reached the point where they have paid for the several years of losses they suffered when developing and launching the 360.
@Marlor: "they haven't yet reached the point where they have paid for the several years of losses they suffered when developing and launching the 360."
Not to mention the losses they suffered with the original X-box (particularly due to the expense of the HDD), which caused them to dump all support and development for the system just as soon as they could.
Until the PS2 is fully phased out people still have options to buy the cheaper option. Think about it you can't buy Original X-boxs unless it is from second hand. So in turn customers had to buy into a 360 to get new games since the old version was abandoned. The Wii has something different even though I don't personally play my fiances Wii all that often nor does she but still it has that little something different. Sony on the other hand still allowed for devs to focus on PS2 so some games they could have been putting on the PS3 to help "force" people to upgrade never happened. Ultimately though the parts and tech for PS3 will get cheaper and cheaper and this will be a mute point.
@TheNexusRebound:The thing is, the PS2 is never going to be phased out in time to save the PS3 at this rate. And no matter how 'cheap' it is for them to make, if the customers aren't buying in, well..
You know, it really speaks volumes about the direction and vision of a company when it makes something that has so much new stuff in it, that costs more to make then what its selling for.
I guess they should have pushed a bunch of defective outdated technology in a plastic box and sold it as something "New". They'd have definately made a ton of money that way, but then I wouldn't have an analyst telling me that I made a good "buy" in the consumer sense of things.
If only it worked the PS3 way with Ferarri's, Yachts or other consoles. Actually too bad ALL things are not stuffed with new things that cost a lot, but I have to pay very little for it.
I highly doubt it. This analyst is obviously an xbox/wii fanboy.
The PS3 made a huge contribution with the winning next-gen format Blu-Ray Disc, and the PS3 has really picked up and is actually selling better than anyone would expect. There is a set of some really good titles for this holiday season that will move console sales and PSN is really improving.
I can say without a doubt that Sony has the ability to have 20 million units sold (all together) by the end of March. I mean God of War III will move systems for sure because there will be die hard fans of the series waiting for it to come out so they can buy their PS3's to play it.
Who cares how much they sell? Every PS3 they sell now just hurts them more. They invested a huge amount in R&D for the PS3 tech, Cell, and Blu-ray stuff, and they still can't sell PS3s at a profit. It'll take them several years just to recoup the dev costs, even assuming they can make the thing profitable. Which is no guarantee. You can't just assume that the manufacturing costs well decrease fast enough to yeild a profit especially if Sony is forced to drop prices to stay competitive.
You also missed the point. Even though Sony loses money on the PS3 itself, the idea is that the owner of the PS3 will spend money on games, accessories, etc. And that's where Sony makes back most of the money. Economics 101.
Not so. The games and accessories also have costs associated with them. Their potential profits are reduced because they were developed in-house and required more dev money. Additionally, in today's market, Sony can't make back enough money with first party games unless they appeal to the casual crowd, and big time. Which do you think made Ninty more profit- Twilight Princess or Wii Fit? They can probably make several mass-market casualware games for the cost of one hardcore game, yet still enjoy massive profits on any one of them.
@cb_32:"I highly doubt it. This analyst is obviously an xbox/wii fanboy."
If your honestly -THAT- thick enough you would think that, then you need to be posting at GameFAQ's, not here. Sony's own financial books pretty much say what this analyst says.
@valkyriex:No he's not. Sony is third place on attachment rate and the PSP's attachment rate is a joke and a half. The owners of PS3's are not spending the extra money on games, accessories, etc and so there's little to offside the huge loss. That's 101 also.
Saying LBP and Resistance will move consoles? If GTA couldn't do it for either console then these won't. LBP will inevitably be the Viva Pinata of the PS3, cutesy enough for casual but the core gamie (creation) is too complex for casuals.
@ZinkO: HYPE GET: Yeah but many people such as your self are failing to understand that Sony is going for a 10 year product life cycle, meaning they are taking their sweet time. They know their production costs are hurting their chances of profit, but at least after 3 years the system WILL be profitable. The PS3 has sold more around this time of the year than it did last year.
Just because this "analyst" guy sais something, it doesn't mean it's true, hes probably not even a real games to begin with.
@cb_32:You have bought into Sony's "Ten year life cycle" sales spin. There is no hope for you at all when it comes to reasoning because you fail to understand that only works when you control the bulk of the market.
You also don't know what your talking about. And analysts have access to a shitload more information then you, hard numbers.
@ZinkO: HYPE GET: they ARE selling a profit. they have been for a year. mid last year they said the price has drasticly decreased to make ps3's. they arent losing very much money in comparison to how microsoft is losing tons of cash over the ongoing rrod epidemic.
@ZinkO: HYPE GET: yeah, the associated cost for the games that sony has to pay is at least $3 a disc. then they make a $57 profit from each sold also, if you have a ps3, there are always announcements in the top news corner that show that sony endorses just about every event imaginable. they are making tons of money, dont you worry.
@RedmondCatoblepas: sorry dude...people are already buying it and the reviews dont count it nearly as crappy as viva pinata. also, pinatas arent one of microsoft's mascots. since sackboy is cool and lovable everywhere, they are safe having it as a mascot. it will not turn out to be like viva pinata since playing viva pinata is boring and doesnt really have a story IMO. little big planet has a story mode, create mode, and a mode to play other's creations. as im sure you dont own a ps3 or little big planet, i can assure you that viva pinata is only 1/40th of the fun of any of those modes individually.
also, the problem isnt the level design, thhe designing is actually simple. anybody can make things. may not be as good, but things none the less. havent you read posts about people saying "im getting little big planet, fallout 3 and resistance 2 before the end of this year." i have plenty of times, casualy gamers find little big planet to be a refreshing relapse to a fun they havent had in years that they couldnt find from shooters. w/e you are indeed a fanboy.
Sony never have to break even on the PS3. The Cell processor is being licensed to so many different companies at the moment that they could stop making PS3's and Cell licensing would do it.
And to avoid the Kool-Aid: I had a PS2 for a week before selling it, because I was playing my other machines. Also Kool-Aid is hard to find in the UK. Not imported by most people.
Eh I think it's still a bit too early to tell if the PS3 will break even or not. Granted it's their (analysts) job to speculate but still!
I wonder who will ever break the 2-console-cycle-king then-drops-the-ball-on-the-third... console chain. Nintendo wasn't able to do it. Sony wasn't able to do it. Hmm MS??!
@excaliburps: "I wonder who will ever break the 2-console-cycle-king then-drops-the-ball-on-the-third...... console chain."
Excellent question! I'm a PS3 owner myself and previously owned both of the previous PlayStations, but before that I owned a SNES (and a NES before that), so I'm no stranger to jumping ship when it suits me. Indeed, I very nearly bought an XBOX360 this generation.
Nintendo's phenomenal success with the Wii puts them in a strong position to retain the lead with the next generation of consoles, but I have a sneaking suspicion that someone like Apple or Google will release a shiny new gaming machine that thumps everything else into dust. As long as we're still playing great games, we'll always be "the winners" regardless of the corporate situation.
@cy-rano: All I can suggest is to not buy them all at once. Think about the summer drought and how cheap the same games will be then. And you'll have extra free time to actually enjoy the games then.
@NeVeRMoRe666:Sony's getting their teeth kicked in on the HDTV front and Blu-ray's adoption rate isn't close to DVD's. It needs to happen at a much higher rate and even so, they still don't see all of the $30-40 dollars that each Blu-ray disk costs.
@NeVeRMoRe666: @NeVeRMoRe666: Their HDTVs are being triumphed by competitors, Blu ray sales arent even comparable to DVD sales, and Nintendo is drinking up the whole damn pond of casual gamers that made the PS2 such a hit. I just don't see it ending well for them, even if they pull threw.
mmmm.... I'm not so sure about what are you saying, the sales on the first year of the BD are far superior in comparison of the fist years of sales of the DVD, and is a really strong HD format
@eggnog007:DVD had a slow adoption up till the PS2 launch and people waking up to see how big a change in format it was, compared to movies on CD and crap.
The same can not be said of Blu-ray, the upstep is not as large and the adoption rate has not spurred the same level growth.
Hmm...Well all good points. I'm not too knowledgeable about Sonys productivities in those other fronts, so you guys could be right. All I'm saying is that Sony is not merely a game manufacturer. They have many other revenue streams so the lack of sales or the improfitability of the PS3 isn't going to kill them per se. They also have...what else: Cell phones, Cameras,computers ect. However, this is merely me guessing here. You guys seem way more knowledgeable about these other kind of matters than I.
If they stop focusing on the PS2 and only focused on the PS3 maybe. I really could care less if they do I got one thats all that matters to me. Oh and LBP is incredible!
Once you factor in the R&D, manufacturing and marketing costs, there is pretty much no way they will ever turn a profit from the PS3.
Even if its sales pick up, and it is still selling well in five years, it will be an impossible struggle for them to make back the costs that they have incurred.
@Marlor: If the PS3 plays out anything like the PS2 did, with more than ten years of continuous sales, it will most certainly more than make up for the money lost in the first two years. I can draw you a pretty little chart if you need it. =)
@RealmRPGer:That's just it, the PS2 was doing WAY better then the PS3 is at this point in it's lifespan by a factor of ten. So they aren't playing out the same at all.
PS3 might not be selling well, but the PSP is selling well enough to compensate that. Sony is on the same situation that Nintendo was last generation with the Game Cube and the GBA.
@CockroachMan: I don't see PSP sales being strong anywhere but Japan. Both Sony systems are losing in every other part of the world, and they're BOTH being sold at a loss. They have a longer cycle planned, and they have the superior tech on both fronts, but they're basically waiting for public demand to meet what they're selling.
@CockroachMan: This is not really about sales. It's about money lost on each console sold. Sony is more in the spot where Microsoft was last gen. Except they actually have enough software (and Blu ray) to make up the loss.
@ManjiKengo reads DuneTiger reads Kotaku, seems pleased.: Yeah, probably not. Well, honestly I'm not concerned over Sony's economic situation. The $200 they "gave" me when I bought the PS3 are still sweet. As long as they can continue to pump out quality games and keep PSN free they can lost 10 bil every year as far as I'm concerned.
@FP_slomo788: It's not that I don't agree with your consumer-mindedness, because I sorta do, but don't you think it's weird that you don't care about Sony being financially healthy yet you want them to keep doing the things for you that looses money for them. Clearly they want to keep you as a customer but if you care more about them giving you money and free services then how can you be a valued customer if you aren't spending money on them.
:D I think you should send them back that $200 and help them out a little or PSN may not be free for much longer :( *cries*
I'm being a little facetious but you get what I'm saying right? They need more revenue streams to offset the cost of the console.
10/30/08
Why did MS virtually buy themselves into this market last gen? Because this the battle is much bigger than merely the game console. more than two thirds of the expenditure on telecom, media and entertainment (I'm speaking based on UK data) is done on things which can be combined into a home entertainment center, something which both Xbox and PS3 are aspiring to project themselves as.
10/29/08
If Sony want to subsidize console sales, so much the better for third parties and for consumers. What's it to them if Sony makes a net profit on the PS3 or not. If the PS3 is in so much trouble, does it mean it's life will be shortened or that there will not be a PS4? It's doubtful, since it will always have strong brand power-- the exact thing that the Xbox is aiming for. Whatever dubious businesses were made in the past, the present would seem to suggest making the most of your assets.
Sony was hoping the PS3 would drive growth for the whole company for the long term. Even if it doesn't wind up doing that, a greater return on the investment would result from further support of the PS3, not less.
10/29/08
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10/29/08
The point isn't whether they start selling the unit at a profit, it's whether they make back the costs that they have already incurred (through R&D, subsidized hardware sales, marketing and the costs of building up production capacity).
The analyst is saying that they will never make back the money they have spent on the PS3 overall.
In fact, I don't think Microsoft have even reached that point yet with the 360. They are turning a profit now, but they haven't yet reached the point where they have paid for the several years of losses they suffered when developing and launching the 360.
10/30/08
Not to mention the losses they suffered with the original X-box (particularly due to the expense of the HDD), which caused them to dump all support and development for the system just as soon as they could.
10/29/08
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I guess they should have pushed a bunch of defective outdated technology in a plastic box and sold it as something "New". They'd have definately made a ton of money that way, but then I wouldn't have an analyst telling me that I made a good "buy" in the consumer sense of things.
If only it worked the PS3 way with Ferarri's, Yachts or other consoles. Actually too bad ALL things are not stuffed with new things that cost a lot, but I have to pay very little for it.
10/29/08
The PS3 made a huge contribution with the winning next-gen format Blu-Ray Disc, and the PS3 has really picked up and is actually selling better than anyone would expect. There is a set of some really good titles for this holiday season that will move console sales and PSN is really improving.
I can say without a doubt that Sony has the ability to have 20 million units sold (all together) by the end of March. I mean God of War III will move systems for sure because there will be die hard fans of the series waiting for it to come out so they can buy their PS3's to play it.
10/29/08
You missed the point entirely.
Who cares how much they sell? Every PS3 they sell now just hurts them more. They invested a huge amount in R&D for the PS3 tech, Cell, and Blu-ray stuff, and they still can't sell PS3s at a profit. It'll take them several years just to recoup the dev costs, even assuming they can make the thing profitable. Which is no guarantee. You can't just assume that the manufacturing costs well decrease fast enough to yeild a profit especially if Sony is forced to drop prices to stay competitive.
10/29/08
You also missed the point. Even though Sony loses money on the PS3 itself, the idea is that the owner of the PS3 will spend money on games, accessories, etc. And that's where Sony makes back most of the money. Economics 101.
10/29/08
Not so. The games and accessories also have costs associated with them. Their potential profits are reduced because they were developed in-house and required more dev money. Additionally, in today's market, Sony can't make back enough money with first party games unless they appeal to the casual crowd, and big time. Which do you think made Ninty more profit- Twilight Princess or Wii Fit? They can probably make several mass-market casualware games for the cost of one hardcore game, yet still enjoy massive profits on any one of them.
10/29/08
If your honestly -THAT- thick enough you would think that, then you need to be posting at GameFAQ's, not here. Sony's own financial books pretty much say what this analyst says.
@valkyriex:No he's not. Sony is third place on attachment rate and the PSP's attachment rate is a joke and a half. The owners of PS3's are not spending the extra money on games, accessories, etc and so there's little to offside the huge loss. That's 101 also.
10/29/08
Saying LBP and Resistance will move consoles? If GTA couldn't do it for either console then these won't. LBP will inevitably be the Viva Pinata of the PS3, cutesy enough for casual but the core gamie (creation) is too complex for casuals.
10/30/08
Just because this "analyst" guy sais something, it doesn't mean it's true, hes probably not even a real games to begin with.
10/30/08
You also don't know what your talking about. And analysts have access to a shitload more information then you, hard numbers.
10/30/08
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also, the problem isnt the level design, thhe designing is actually simple. anybody can make things. may not be as good, but things none the less. havent you read posts about people saying "im getting little big planet, fallout 3 and resistance 2 before the end of this year." i have plenty of times, casualy gamers find little big planet to be a refreshing relapse to a fun they havent had in years that they couldnt find from shooters. w/e you are indeed a fanboy.
10/31/08
10/29/08
And to avoid the Kool-Aid: I had a PS2 for a week before selling it, because I was playing my other machines. Also Kool-Aid is hard to find in the UK. Not imported by most people.
10/30/08
10/29/08
I wonder who will ever break the 2-console-cycle-king then-drops-the-ball-on-the-third... console chain. Nintendo wasn't able to do it. Sony wasn't able to do it. Hmm MS??!
10/30/08
Excellent question! I'm a PS3 owner myself and previously owned both of the previous PlayStations, but before that I owned a SNES (and a NES before that), so I'm no stranger to jumping ship when it suits me. Indeed, I very nearly bought an XBOX360 this generation.
Nintendo's phenomenal success with the Wii puts them in a strong position to retain the lead with the next generation of consoles, but I have a sneaking suspicion that someone like Apple or Google will release a shiny new gaming machine that thumps everything else into dust. As long as we're still playing great games, we'll always be "the winners" regardless of the corporate situation.
10/29/08
Thank you Sony, Nintendo and Microsoft. You're the best!
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mmmm.... I'm not so sure about what are you saying, the sales on the first year of the BD are far superior in comparison of the fist years of sales of the DVD, and is a really strong HD format
10/29/08
The same can not be said of Blu-ray, the upstep is not as large and the adoption rate has not spurred the same level growth.
10/29/08
Hmm...Well all good points. I'm not too knowledgeable about Sonys productivities in those other fronts, so you guys could be right. All I'm saying is that Sony is not merely a game manufacturer. They have many other revenue streams so the lack of sales or the improfitability of the PS3 isn't going to kill them per se. They also have...what else: Cell phones, Cameras,computers ect. However, this is merely me guessing here. You guys seem way more knowledgeable about these other kind of matters than I.
10/29/08
:)
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Once you factor in the R&D, manufacturing and marketing costs, there is pretty much no way they will ever turn a profit from the PS3.
Even if its sales pick up, and it is still selling well in five years, it will be an impossible struggle for them to make back the costs that they have incurred.
10/30/08
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11/05/08
[vgchartz.com]
Note that the Christmas sales jumps are a little bit off-centered, so the PS3 should expectantly jump up closer to that PS2 hike pretty soon.
11/10/08
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"PS3 might not be selling well, but the PSP is selling well enough to compensate that."
*chortle*
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10/29/08
How much did sony lose last year? wasn't it like 4 billion. I don't ever see them making that back up with the ps3, software or not.
10/29/08
10/29/08
Goddamn it.
10/29/08
Very true. When you're taking a loss on each system, every sale is a paper cut, especially if you're not compensating with software.
They should cut Blu-Ray prices and have another Blu-Ray giveaway during the holidays.
10/29/08
:D I think you should send them back that $200 and help them out a little or PSN may not be free for much longer :( *cries*
I'm being a little facetious but you get what I'm saying right? They need more revenue streams to offset the cost of the console.
10/29/08
PSP sales are good worldwide, just because it is not DS level WW does not mean it's not doing well. And PSP is not sold at a loss.
10/29/08