PS3 Drives Big Drop in Sony Profits

[Zoglog]

http://www.next-gen.biz/index.php?option=com_content&task=view&id=5646&Itemid=2

Sony has posted a 68% fall in operating profits for the financial year and a major operating loss for its fiscal Q4 primarily due to large losses in its games division--but there is an upside in the firm's forecasts.

Not surprising considering the cost incurred on each PS3 Sold. At least they aren't operating at a loss like many major companies. Of course this makes them look bad when Nintendo is basically swimming in profits :D

[MadFlava]

I read a Wired article last year that stated that Sony was banking everything on the PS3. If the system does fail and Blu-Ray loses out to HD-DVD, then Sony's existance could possible be under threat. No question, PS3 is one of the biggest gambles we have seen in gaming history.

[jer7583]

Thank God people are buying Bravias, PS2s, and going to see (yicks) Spider Man 3..

[Zoglog]

I read a Wired article last year that stated that Sony was banking everything on the PS3. If the system does fail and Blu-Ray loses out to HD-DVD, then Sony's existance could possible be under threat. No question, PS3 is one of the biggest gambles we have seen in gaming history.

The article is partially true. The fact is that the PS3 has been relatively successful on the front of generating a boost in Blu-Ray Sales. But yeah as the article notes apparently Sony Ericsson has been doing very well. Also yeah the Bravia's sales have also helped quite a bit. Nobody denies that Sony has a uphill battle to fight on the Console front though. The joy of competition ;)

[Puffa469]

I think this was pretty much to be expected. But I still cant wait to hear Sony PR spin this into the best news ever!

[Apossum]

I read a Wired article last year that stated that Sony was banking everything on the PS3. If the system does fail and Blu-Ray loses out to HD-DVD, then Sony's existance could possible be under threat. No question, PS3 is one of the biggest gambles we have seen in gaming history.


Is the PS3 hurting them right now? Yeah.

Can Sony go bankrupt and fold? no way. They've got their hands in too many other parts of the electronics industry. I think the worst that could come of it is a"toning down" of the Playstation line next gen.

I think this was pretty much to be expected. But I still cant wait to hear Sony PR spin this into the best news ever!

Phil Harrison: "It's ummm....like....pruning a tree! Yeah, that's the ticket! The Playstation branch will grow back stronger than ever! This is how we planned it..."

[daroga]

Can Sony go bankrupt and fold? no way. They've got their hands in too many other parts of the electronics industry. I think the worst that could come of it is a"toning down" of the Playstation line next gen.I think that's just exactly their problem, though. They've got their hands in too many pots, and too many of them aren't profitable (or at least, as profitable) as they were before. They're making their one constantly dependable branch (Playstation) bear the brunt of their desperate endeavors (Blu-Ray). It could either win big or cause real disaster for the company.

We'd never see the Sony name disappear, though. Worst case scenario is the company branches are sold off or the whole thing is bought out by someone. It would be the same name brand, just different people at the helm.

[Apossum]

We'd never see the Sony name disappear, though. Worst case scenario is the company branches are sold off or the whole thing is bought out by someone. It would be the same name brand, just different people at the helm.


that might not be a bad thing if this current team can't resurrect this thing. I don't see any ads for it any more and they're stacked high at every store...it's good there's supply, but it's not there to fulfill demand by any means.

I think they can afford to not go to crazy over the summer, but I hope Home is a big hit--that seems to be their ace card this Fall/Winter. They need kiosks with Home running everywhere, even 7-11s.

[dallow]

I think that's just exactly their problem, though. They've got their hands in too many pots, and too many of them aren't profitable (or at least, as profitable) as they were before. They're making their one constantly dependable branch (Playstation) bear the brunt of their desperate endeavors (Blu-Ray). It could either win big or cause real disaster for the company.

We'd never see the Sony name disappear, though. Worst case scenario is the company branches are sold off or the whole thing is bought out by someone. It would be the same name brand, just different people at the helm.

What other Sony areas are not profitable?

[daroga]

What other Sony areas are not profitable?Taking a look through reports over the last few quarters via Google news, Games, Movies, and Financial Services seem to be incurring the biggest losses. But obviously, each quarter will paint a different picture. The massive battery recalls really hurt them as well. Sony Ericson seems to be rolling in money, however.

[Zoglog]

I love how some sensational news outlets are putting "Sony Suffers Losses" in the headline as if the company was hemorrhaging money, which is not the case. Idiots...

[Monsta Mack]

So how much did Microsoft lose on the original XBox? How much are they losing on the 360? 2 billion is alot of money for the PS3, but I remember reading the XBox was over 3 billion over it's life span?

[tangytangerine]

How much are they losing on the 360?
They're not really losing that much now, since production costs for it are cheaper now. There's a thread on here somewhere that mentions it costs $3xx.00 to produce a 360 premium bundle now and it still costs Sony something more than $800.00 to produce the 60gb PS3 bundle.

As for the comment about Sony advertising, yeah, I haven't seen that many commercials on TV for games on the console. The only ones I've seen for it within the past month is Fear & MLB 07 The Show.

Honestly, Sony was asking for big losses just putting the Blu-ray drive in the console. Even David Jaffe said that was a mistake.

[Dr Mario Kart]

http://www.neogaf.com/forum/showthread.php?t=111003
Profit 1998-2007

FY* Sony** Nintendo Microsoft
1998 974,000,000 629,000,000
1999 1,130,000,000 645,000,000
2000 730,000,000 421,000,000
2001 -409,000,000 726,000,000
2002 623,000,000 800,000,000 -750,000,000
2003 939,000,000 560,000,000 -1,191,000,000
2004 650,000,000 316,000,000 -1,215,000,000
2005 404,000,000 777,000,000 -485,000,000
2006 75,000,00 894,000,000 -1,262,000,000
2007 -602,000,000 457,000,000 -95,000,000
Totals 4,514,000,000 6,225,000,000 -4,998,000,000
All the numbers but last year were collected by our best man sonycowboy and are from previous thread.

So we could all remember the name of the game. It's not for the love of interactive entertainment.

* -- it's fiscal year for both Microsoft and Nintendo
** -- it's FY+1 for Sony for comparison reasons

Microsoft – Home and Entertainment through 1st Q FY 2007 ended Sept. 30
Sony – Game division through 1st H FY 2006 ended Sept. 30
Nintendo – Overall through 1st H FY 2007 ended Sept. 30


FY* Sony** Nintendo Microsoft
1998 974,000,000 629,000,000
1999 1,130,000,000 645,000,000
2000 730,000,000 421,000,000
2001 -409,000,000 726,000,000
2002 623,000,000 800,000,000 -750,000,000
2003 939,000,000 560,000,000 -1,191,000,000
2004 650,000,000 316,000,000 -1,215,000,000
2005 404,000,000 777,000,000 -485,000,000
2006 75,000,00 894,000,000 -1,262,000,000
2007 -1,057,000,000 1,150,000,000 -384,000,000
Totals 4,059,000,000 6,918,000,000 -5,287,000,000
Microsoft – Home and Entertainment through 1st H FY 2007 ended December 31
Sony – Game division through 3rd Q FY 2006 ended December 31
Nintendo – Overall through 3rd Q FY 2007 ended December 31




FY* Sony** Nintendo Microsoft
1998 974,000,000 629,000,000
1999 1,130,000,000 645,000,000
2000 730,000,000 421,000,000
2001 -409,000,000 726,000,000
2002 623,000,000 800,000,000 -750,000,000
2003 939,000,000 560,000,000 -1,191,000,000
2004 650,000,000 316,000,000 -1,215,000,000
2005 404,000,000 777,000,000 -485,000,000
2006 75,000,00 894,000,000 -1,262,000,000
2007 -1,969,000,000 1,489,000,000 -693,000,000
Totals 3,147,000,000 7,257,000,000 -5,596,000,000

All the numbers but last year were collected by our best man sonycowboy and are from previous thread.

So we could all remember the name of the game. It's not for the love of interactive entertainment.

* -- it's fiscal year for both Microsoft and Nintendo
** -- it's FY+1 for Sony for comparison reasons

Microsoft – Entertainment and Devices Division (Home and Entertainment) through 3rd Q FY 2007 ended March 31
Sony – Game division through 4th Q FY 2006 ended March 31
Nintendo – Overall through 4th Q FY 2007 ended March 31. Average exchange rate: 1 US $ = 117.02 yen


The most pure videogame sector here is Sony's reports.

All Home & Entertainment divisions but Xbox is considered to be profitable. They also started losing money on Xbox before 2002 as it had to be R&D'ed and produced. Which is more than likely another billion or so. Recent reports also contain loses on Zune.

Nintendo releases overall earnings reports – stake in pokemon + currency investments + some other minor things.

Additions, suggestions and comments are welcome.
[/quote]

[dpatel]

Pretty interesting stuff. It looks like the PS2 dropped Sony's profits, as well as both xboxs. Of course, the PS3 had about triple the losses the PS2 did, and about 1.5x as much as the 360 did too.

[Monsta Mack]

It's interesting to see MS still losing so much money. You would think making a profit on the 360 was a clear goal for now. Afterall they have to make over 5 billion to "break even". Nintendo is the clear king in all of this though.

[KingDox]

I really think MS doesn't care about losing money. They want to gain more market share. I bet MS will be even cool with losing money on the next xbox. Just as long as it's user base keeps getting bigger that's all they really seem to care about.

As for sony the problem is each new generation of tech people expect to do better then the last. Especialy since the game market keeps getting bigger. Sony really should be selling more PS3s but it's almost like the PS2 did "too well" that the PS3 has no chance to meet it's sucess.

Oh and please try to keep the flames to a min, Thanks

[Dr Mario Kart]

Why bother to have marketshare if you cant make money off them? They're not exactly a benevolent entity that is bringing gaming to the everyone out of the good of their hearts and their own pockets.

3 straight generations of throwing money away? for what?

[foltzie]

Why bother to have marketshare if you cant make money off them? They're not exactly a benevolent entity that is bringing gaming to the everyone out of the good of their hearts and their own pockets.

3 straight generations of throwing money away? for what?

Windows Live, sales for their iTunes competitor. Bettter goodwill for the Windows divisions.

Of course, MSFT would prefer that the Xbox make money, but the company has the reserves to float the division along for a while.

[Monsta Mack]

3 straight generations of throwing money away? for what?

I have no fucking clue.

But from the numbers you've given they have to make over a billion in profit before the 360's life ends to break even, which seems impossible. Of course since theres no Microsoft gaming division in relation to complete and accurate numbers for the 360, the losses could be from the Zune and what not. It's just real troublesome to hear Microsoft making money on consoles only to post massive profit loss.

I will be shocked if Microsoft puts out another console so soon, if ever. There is too much loss associated with the system. The only thing I can think of is MS will keep the 360 at a *SIX* year life span and make as much profit as possible and/OR sucker *A LOT* of people into buying Elites (They pull very good profits btw) to somehow garner a profit. It would be suicidal for MS to go early with the next console profit wise, but may dishearten a lot of fans that are graphics whores that their next console may not be number one in graphics (and it isn't anymore, behind the ps3, but only by a slight margin).

I love the 360 and It's my favorite console this gen (although the Wii would be my first if it had more games out) , and the XBox was my favorite last gen (by a fairly large margin, only lacking RPGS imho). However, I won't be mad if MS pulled out with this tremendously stupid large debt hole they dug their selves into. Straight from the man who loves his 360.

[Dr Mario Kart]

Neither their plans for Windows Live nor the Zune seem particularly well received at this point. So is the case for Vista, outside of being shipped with new systems.

[62t]

MS was willing to lose money to get into the market for Xbox 1. With X360 they are expected to make a profit. MS already eliminated many games that are not profitable like their sport games. They did expected Xbox 1 to lose money, but they wanted to compete with sony for 1st place and not expected it to compete with nintendo for third place.

[dpatel]

I can't see MS staying in if the 360 doesn't turn a profit. Yes MS has 'deep pockets', but they are also not stupid. The 360 is and will be a huge success, and if, somehow, it doesn't turn a profit, MS has little reason to stay in gaming.

With that said, I can't see MS not making a profit this gen. These inital losses are expected. R&D costs, and huge losses for each console sold for the first several months.

[itachiitachi]

I can't see MS staying in if the 360 doesn't turn a profit. Yes MS has 'deep pockets', but they are also not stupid. The 360 is and will be a huge success, and if, somehow, it doesn't turn a profit, MS has little reason to stay in gaming.


Microsoft has been looking for a way to gets into poeple's living rooms (mainly in the form of an entertainment center) for years. I don't think the money they lose on the x-boxes is anything compared to the money they make with there monoply, I thinks its about 40 billion a year and going up despite the x-box. And as long as there expanding there market share, which it certainly looks like they are going to do this generation. There is no reason to stop even if its costing a couple billion if it means the can dominate all home electronic mulimedia.

[Dr Mario Kart]

Does it not bother anyone that gaming is not their real aim? Do we really want them having that kind of presence in our living rooms?

[RedvsBlue]

Does it not bother anyone that gaming is not their real aim? Do we really want them having that kind of presence in our living rooms?

:roll:

"that kind of presence in our living rooms" You make it sound like they're trying to create some kind of mind control device.

[Puffa469]

The only thing that can stop Microsoft from flushing money down the Xbox toilet is their shareholders.
But since the 'Windows' division of MS is sooo damn profitable, and continually more so, the shareholders are happy and MS can contunue to pursue its Xbox dreams.

[Apossum]

They're losing money on purpose. They won't quit with the 360-- it's part of their plan to lose money on it. and yes, it's peanuts for good ol M$


Does it not bother anyone that gaming is not their real aim? Do we really want them having that kind of presence in our living rooms?

a corporation is a corporation. Nintendo is not your best buddy. they're aren't "the good guy" and it doesn't matter what product they put out--they just want your money.

[Gentlegamer]

a corporation is a corporation. Nintendo is not your best buddy. they're aren't "the good guy" and it doesn't matter what product they put out--they just want your money.Yes, but Nintendo wants our money from selling us games. Microsoft and Sony are trying to get "all in one" media centers into our living rooms. Its a legitimate point to differentiate them.

[Apossum]

Yes, but Nintendo wants our money from selling us games. Microsoft and Sony are trying to get "all in one" media centers into our living rooms. Its a legitimate point to differentiate them.


no it isn't. I speak for a lot of people when I say I wouldn't be happy if the only thing on the market right now was the Wii. I like having an "all-in-one" system, I like HD graphics, and I like normal controllers. also, there are games for these systems, contrary to popular belief.

[Dr Mario Kart]

No one is pushing for a single company monopoly over gaming. Likewise, no one wants a monopoly over all of your living room functions. However, in this case, supporting 2 of the 3 companies out there furthers their agenda to that very goal.

[dallow]

I would say that you should worry less about the hardware manufacturers, and more about what the game developers offer us.

Just play some damn videogames.

[Roufuss]

No one is pushing for a single company monopoly over gaming. Likewise, no one wants a monopoly over all of your living room functions. However, in this case, supporting 2 of the 3 companies out there furthers their agenda to that very goal.

:rofl:

"Furthers their agenda", "that kind of prescence in our living rooms"

Conspiracy much?

Your posts are starting to read like the crazy guy in the foil hat warning us about the end of the world.

[Apossum]

No one is pushing for a single company monopoly over gaming. Likewise, no one wants a monopoly over all of your living room functions. However, in this case, supporting 2 of the 3 companies out there furthers their agenda to that very goal.


and if you buy a Wii and a DS, you've furthered Nintendo's goal of having you play their products no matter where you are. What's your point? this is all in your head...

I don't know a single person who only has Sony products in their living room. Your fear doesn't really apply to MS--owning a PC with Windows and a 360 is not a "monopoly" at all.

[Dr Mario Kart]

Nintendo is only in one market. Gaming. Their sphere of influence is very limited, and buying only their products does not affect this. They wouldnt be able to say for example,...I want to start charging for PC online gaming.

All in one machines are in more than one market by definition, and marketshare allows them influence in more than one area.

[dallow]

What if you buy a PS3 or 360 only to play games?

.

[Dr Mario Kart]

Buying a multifunction machine to only use one function means you've overpaid, since the cost of the machine at every level is higher to accomodate for other functions.

Blu-ray, storage for media, etc.

[daroga]

What if you buy a PS3 or 360 only to play games?Then you'll have ruined their plans to take over your life and make you their slave!!!!1

[dallow]

Buying a multifunction machine to only use one function means you've overpaid, since the cost of the machine at every level is higher to accomodate for other functions.
Blu-ray, storage for media, etc.

I bought the PS3 for games, and enjoy having lossless audio, thanks to BD, on PS3 games.
As well as a HDD for free game demos.

I bought a Wii and I think I overpaid for that useless SD slot though.

[Dr Mario Kart]

Not only that, but it has a real affect of the very games themselves, by raising development costs.

I'm very glad that so far Japan has rejected next-gen.

[dallow]

Oh don't worry, that'll change.

Every game on a next gen HD system doesn't have to cost through the roof.
There are simple games out there, not including the online stores, PSN, and XBLA.

Some of the announced PSN titles are proof that full fledged games, with smaller dev costs, are coming.

Look at the upcoming "next-gen" Katamari game.
Not a significant upgrade, certainly not taking full advantage of HD power.
Didn't even use all of last gen's power.

And I'm sure the new PS3 Loco Roco won't blow us away with life like visuals as well.

.

[Dr Mario Kart]

There certainly is something to digital distribution.

You know me though. I'm old fashioned. I like owning physical media.

[Apossum]

Nintendo is only in one market. Gaming. Their sphere of influence is very limited, and buying only their products does not affect this. They wouldnt be able to say for example,...I want to start charging for PC online gaming.

All in one machines are in more than one market by definition, and marketshare allows them influence in more than one area.

So, still, what's your point? Is Nintendo ethical because TVs and DVD players aren't in their business plan? Is it better to own a Wii and a Sony DVD player?

I don't see where you're going with this at all...there are 3 companies competing in the game industry, they are all healthy, and buying one over another really makes no difference.

do you not understand that a lot of people want the stuff that you're against? If anything, the pressure causes Nintendo to make innovations like the Wii-remote because they can't throw oodles of money at an HD machine. Everybody wins, I guess.

[dallow]

There certainly is something to digital distribution.

You know me though. I'm old fashioned. I like owning physical media.

Me too in that sense.
I'd much rather have the disc if given the option.
That's why I buy CDs, rather than download.

[dallow]

All I knows is that I'm going to be playing this:

Direct feed, real time

http://psinext.e-mpire.com/modules/game_media/images/199.jpg

[Dr Mario Kart]

Certainly. Its really all about my personal agenda. I dont want things that are offensive to my personal tastes becoming more and more common.

The very topic of this thread though, is that maybe all of the companies involved ARENT healthy

[Dr Mario Kart]

Lets pretend for a moment that you are a PC only gamer, and in a fictional reality, everyone jumped onto the Live for Windows service.

In this case, changes in the console market reached out and changed things for you in the PC market, despite you not having anything to do with the console market otherwise. This is what I mean by being able to gain leverage in other areas outside of the primary market.

[dallow]

Lets pretend for a moment that you are a PC only gamer, and in a fictional reality, everyone jumped onto the Live for Windows service.

In this case, changes in the console market reached out and changed things for you in the PC market, despite you not having anything to do with the console market otherwise. This is what I mean by being able to gain leverage in other areas outside of the primary market.

That's probably true in the MS dominated PC community.
Thank goodness I'm not a PC gamer.

With Sony? There isn't much a of a foul.
You should be glad people have a choice, for gaming-centric Wii, and multi-fuctional PS3.
Or the best choice, all of them.

There's tons of movies and music created that I believe are in very poor taste.
I can't hate the entire music industry for that.

[Apossum]

Lets pretend for a moment that you are a PC only gamer, and in a fictional reality, everyone jumped onto the Live for Windows service.

In this case, changes in the console market reached out and changed things for you in the PC market, despite you not having anything to do with the console market otherwise. This is what I mean by being able to gain leverage in other areas outside of the primary market.


That would suck, and I'd curse MS for it. as of right now, I don't think that could happen. maybe as a younger generation of gamers moves on to the PC, it will, but I'm not so sure if that's the Xbox's fault to begin with or if it was their plan all along.

I'm sure they were looking for a way to charge for online play long before the Xbox. Regardless, you are right in that case, but I haven't the full details on the Windows Live plan, so I'm not sure if that's exactly how it will go down.

I should say I don't think they are totally harmless....$180 for a hard drive :lol:

I don't see how any situation like that, in which other markets are harmed, could happen with Sony. If anything, their cheaper BD players will screw the PS3. Maybe their goal is to get you to buy a Bravia and a Sony 5.1 system...I dunno.

[RedvsBlue]

:rofl:

"Furthers their agenda", "that kind of prescence in our living rooms"

Conspiracy much?

Your posts are starting to read like the crazy guy in the foil hat warning us about the end of the world.

Oh come on, starting to look like the crazy guy in the foil? His posts have been like this for months.

Nintendo is only in one market. Gaming. Their sphere of influence is very limited, and buying only their products does not affect this. They wouldnt be able to say for example,...I want to start charging for PC online gaming.

All in one machines are in more than one market by definition, and marketshare allows them influence in more than one area.

Only one market huh? What about the Pokemon trading card game? Licensing and selling their IPs...

Sure their main focus is gaming but to imply that its their only focus is simply ridiculous.

[Dr Mario Kart]

Sure their main focus is gaming but to imply that its their only focus is simply ridiculous.

Thats actually exactly what I am asserting with respects to the MACHINE.

When you buy a Wii, you're not buying a trojan horse for their hanafuda cards, nor their trading card games, nor their themed candys and sodas. You're not buying a media player. You're not even buying a DVD player.

Sure, you've got some limited software functionality, but those functions are gimped because you didnt pay extra to have the machine design reflect those functions. Lets say Nintendo wanted to add software support to mimic the media player functions of the PS3/360. They cant. It lacks both the power and storage space for HD playback.