Sony's Game Biz Thrives While Company Takes A Big Hit

Illustration for article titled Sony's Game Biz Thrives While Company Takes A Big Hit

Thanks to improved PS3 sales, Sony's games biz reported a profit on their first fiscal quarter, with sales up 16.8 percent over last year. Net sales for the devision were ¥5.4 billion ($51 million), whereas the company lost ¥29.2 billion ($273 million) in the same period last year. But it's not all good news. Overall, Sony saw its profits plummet about 47 percent in the quarter, failing to meet analyst estimates and down close to 40 percent over last year. It also lowered its forecast for next year, due to concerns about the mobile phone business for the company as a whole. While sales of PSP and PS2 hardware declined, PS3 sales were up. The PS3 sold 1.56 million units, compared with .86 million in the same period last year. The big gain, though, was in individual platform software. Hit the jump to see details of how it all breaks down.PS3 software sales saw a stunning increase from 4.7 million units in last year's first quarter to 22.8 million units this time around. PSP games are also selling healthily, up 1.59 million to 3.72 million year-over-year.

Worldwide hardware unit sales (increase/decrease year-on-year): PS2: 1.51 million units (a decrease of 1.15 million units) PSP: 3.72 million units (an increase of 1.59 million units) PS3: 1.56 million units (an increase of 0.86 million units) Worldwide software unit sales (increase/decrease year-on-year): PS2: 19.3 million units (a decrease of 11.8 million units) PSP: 11.8 million units (an increase of 2.0 million units) PS3: 22.8 million units (an increase of 18.1 million units)

Advertisement

Sony said, however, that its total software sales were down due to the decline in PS2 software sales.

DISCUSSION

There's an analogy from my frat days that isn't too different in corporate America sometimes. "You can survive one bad pledge class, but never two in a row." The same could be applied to videogame systems.

Regardless of what the fanboys think, Sony won't be euthanizing its PlayStation brand anytime soon because it was and is by no means a failure. Microsoft's finally in the black after sinking huge amounts of money to launch the Xbox brand and gain a foothold with gamers.

Both are well-diversified companies with several different markets under the umbrella. They'll be around for awhile, though both aren't nearly as dominant as they were a decade ago. Google will challenge MS with online apps, Apple is the strongest it's ever been in the home computing market. Then there's Sony, who used to be the standard for consumer electronics before iPod killed the Walkman and they took too long developing quality HDTVs compared to cheaper — and often better models — from competitors.

That said, as an Xbox owner I'm still admitting the PS3 has a larger upside as Bluray takes hold, and am looking forward to owning one by Christmas this year.

If anybody was in danger of becoming the next Sega, and exiting the home console biz, it was Nintendo. They could have survived in portable land, but look at the news today where EA's exec said he wished he caught the Wii wave earlier... nobody saw that coming, because the last two consoles underwhelmed and they've always had a contentious relationship with third parties. Nobody said it at the company (they never do), but if the Wii tanked, it may have been Nintendo's console swan song.

***Disclaimer: I love Nintendo, don't flame my ass!