Soft PS3 sales spell trouble for EA, others
by Blake Snow 
{ Jan 25th 2007 at 2:35PM }
Who's on the PS3's side, who? Lots. Historically speaking, brand PlayStation has had the best third-party support over any other platform. That's what happens when your first two consoles sell bajillions. A higher install base means more sales of games and a better chance for game developers to make money. So given such strong support for PlayStation systems in general, it's no surprise that EA and others were/are heavy backers of the PS3 from the start.But according to Bank of America, soft PS3 sales not only spell trouble for Sony but for the many third-party publishers supporting the platform, namely EA. Based on recent channel checks at 50 stores, 78% had PS3s in stock. Hence, "disappointing PS3 hardware sales are an incremental negative for all the game publishers." So much, in fact, that 2007 publisher stocks could take a substantial dive this year as 21% of their total expected revenues were pinned on the PS3.
As you can imagine, continued blame for the low demand was placed on the PS3's price point and and "lack of compelling software titles." The take-away: unless PS3 demand increases in lieu of early mishaps, publishers could also be left in the cold. Maybe more than just gamers are rooting for early price cuts now. The pressure's on.
Reader Comments (Page 1 of 2)
RYAN @ Jan 25th 2007 2:44PM
UH OHHHHHHHHHHHHHHHHHHHHHHHH!!
lol I'm sorry but Sony shot themselves in the foot this time around. This could possibly turn out to be even legendary than the Dreamcast launch fiasco..
Knoxximus @ Jan 25th 2007 2:45PM
Can you say, "Formerly exclusive titles suddenly go multiplatform!"? I knew you could....
Diesel 360 @ Jan 25th 2007 2:45PM
Hey forget waiting on a Sony price cut - sounds like picking up some EA stock later this year when the price drops by 21% is the REAl plan!!! EA will bounce back - Sounds like Sony's gonna have to drop prices to get back into the black.
Vince @ Jan 25th 2007 2:46PM
"21% of their total expected revenues were pinned on the PS3."
Well yes that would be a substantial loss, but they'd have to sell zero games for that, so I expect a realistic worst case scenario would be a 5% hit if the PS3 flops like so many want it to.
Much ado about nothing.
Neil @ Jan 25th 2007 2:48PM
How is the PS3 selling bad when it's sold more than the 360 in the US and Japan in the same time frame?
jsn @ Jan 25th 2007 2:47PM
this has been obvious for a while now. Why do you think the ps3 is losing exclusives? Because dev's can't make their money back on the ps3 alone.
Jas @ Jan 25th 2007 8:09PM
What a joke of a company, system and especially blindly devoted fanboys.
Here, I'll save the Sony fanboys the time wasted for their obligatory responses..
"Just wait until the superior PS3 games come out!!"
"The PS3 is more powerful than the CrapBox360!!"
"At least we got a cheap Blu-Ray drive!!"
jsn @ Jan 25th 2007 2:50PM
Vince: when you're a big company like EA, missing your projections by 5% can have a big impact on your stock.
crusher @ Jan 25th 2007 2:55PM
"As you can imagine, continued blame for the low demand was placed on the PS3's price point and and 'lack of compelling software titles.'"
This statement says it all, though. Despite the price point, if these publishers would come up with compelling system-selling software, they wouldn't have as much to worry about.
Sony deserves most of the blame, of course, but release some games that aren't ports of what you can get on any other system and people will buy it. As it stands there's no reason to buy the system yet.
evilplushie @ Jan 25th 2007 2:54PM
#6 you mean shipped, not sold right -_-
Rob Accomando @ Jan 25th 2007 2:56PM
You could compare it to the Dreamcast but Sony is a huge monster that makes money on more than just videogames. I could see them taking a huge loss just to keep the PS3 alive.
RYAN @ Jan 25th 2007 2:55PM
"How is the PS3 selling bad when it's sold more than the 360 in the US and Japan in the same time frame?"
because a year from now, when the ps3 is "maybe" where the 360 is now, people will choose the cheaper, more matured (meaning more great games) system over the ps3. If sony doesn't pick up quick, they'll be screwed this gen. That's just the way it works.
jsn @ Jan 25th 2007 2:52PM
Neil: because it hasn't...
el indiano @ Jan 25th 2007 3:13PM
when are they going to get it?
IT'S TOO FUCKIN EXPENSIVE!!!!
im not going to pay 700 bucks play the same game thats on the cheaper xbox 360
White Rose Duelist @ Jan 25th 2007 2:54PM
Vince - I've been hard on Sony, but I don't *want* them to fail. At the moment, I expect them to finish third this generation, and would be unsurprised if there is never a PS4. I'd like Sony et al. to learn from the mistakes of the PS3 and do better in the future.
Neil - Is the PS3 selling well when its units are sitting on shelves while the Xbox360 sold out for 3 months longer after launch and the much more plentiful Wii is still nigh impossible to find?
PS3 isn't doomed yet, but there's still no good news for it. The longer it takes for that to happen, the worse things look for Sony.
MoonfirePewPEwPEw @ Jan 25th 2007 2:55PM
@6
Stop confusing shipped numbers to sold numbers, fucktard. You fanboys are really getting on my nerve with that.
Just a FYI: Sony bragged about shipping over 1million PS3s to Japan, but Media Create has PS3 sold at only 550,000ish. I wouldn't be surprised if they just broke 1 million units sold not too long ago.
Silver R. Wolfe @ Jan 25th 2007 3:41PM
Who trusts Bank of America anyway? Crooks and thieves there waiting to penny and dime you at every opportunity.
Kspraydad @ Jan 25th 2007 2:56PM
One issue Barron's doesn't cover is that the PS3 is competing with the PS2.
Potential 360 owners are not looking at the old xbox and developers are not announcing many new titles.
Potential Wii owners are not looking at the Gamecube (did they ever?) and developers are not making many new titles.
The PS3 however is going up against its own goliath the PS2. It is still very heavily supported (and developers can make more money off the PS2).
Sony needs to move quickly to shut down support to the PS2 to encourage the movement to the PS3. If there is another year of games coming for the PS2 like God of War 2 there is no incentive for the established base of PS2 users to move to the PS3.
Duscrom @ Jan 25th 2007 3:01PM
"6. How is the PS3 selling bad when it's sold more than the 360 in the US and Japan in the same time frame?"
I'm glad you asked that question Neil. And the answer is quite simple. First, that's the number shipped not sold.. and as we are aware, many of those shipped are sitting on store shelves. And about this time last year, Microsoft was still having shortages. Secondly, with Sony's hype machine, the expectations for the PS3 were much higher then the 360. The PS3 was supposed to be an instant sucess... as it's a playstation.. Brand and hype is a doubble-edged sword.
We don't know exactally how many sold, but rumors are barely above a million.. and the 360 was at 1.5 million by the end of the year. (http://en.wikipedia.org/wiki/Xbox_360)
Corey @ Jan 25th 2007 3:30PM
How will cutting the price get them back into the black? They are in the red even if they SELL consoles. Cutting the price will put them even further into the red. And it's not like they would start selling games like hot cakes once people buy the system.
Ironhide Delta @ Jan 25th 2007 3:02PM
"You could compare it to the Dreamcast but Sony is a huge monster that makes money on more than just videogames. I could see them taking a huge loss just to keep the PS3 alive.
"
The sad and sorry truth of it is that Sony can't afford to do this. The Playstation brand was practically the only division at Sony that was making money. Pre PS3 launch, and now with Sony losing a bundle on every PS3 sold, they simply can't borrow from other divisions like they could before.
JR @ Jan 30th 2007 10:04PM
How can people hate on Playstation 3 so much. Oh wait it’s the Xbox lovers. But hey I love my Xbox 360, even though it broke on me twice. But if you think about it when Xbox 360 came out in November of 2005 it didn't have any other competition graphic wise and there weren't that many games for it. Also it was in short to no supply until like Feb. March of 2006. So this is the same thing with the PS3 except you don’t hear people complaining about their PS3 not working within a week, so many returns, and not even fully backward compatible. It is just a little different where the Xbox 360 dominated game play and graphics of the PS2 and even its own the original XBOX. Where as the PS3 has competition with Xbox 360 which has somewhat the same game play and graphics. Also if you think about it, it took almost a year for a game for Xbox to truly show its power with the HD DVD disk. Blu-ray is in a different platform and developers that are already accustomed to the HD DVD format. It will just take awhile to get used to the Blu-Ray format. Give it till mid year this year to really show its greatness as the new gaming powerhouse that it can be.
OK now you can dissect all you want.
vidGuy @ Jan 25th 2007 3:04PM
It may not mean much in the scope of things, but I enjoy personal experiences with the 'failure' of the PS3 much more than anything I could get from analysts' numbers.
I'm friends with about 300 people on my university's campus of 6000. Two people have a PS3. 70-some have a Wii.
My roommate bought a Wii on Sunday. There were 40 people in line before the store opened (remember this is two months after the Wii's initial launch). I've now seen more than 50 PS3s (all 60gigers) in Best Buy, GameStop, and EBGames. Sure, some of them may have sold at some point, but it's still pretty humorous to see a dozen sitting on a shelf at my Best Buy.
kodec @ Jan 25th 2007 3:07PM
Way back in the day, the videogame industry crashed because clone after clone machine was produced, countless copies of the same games were available for all of the systems or systems that could play other system's games kept cropping up. The industry stabilized when the NES appeared with an onboard authentication chip, which coupled with Nintendo's business practices back then ensured that, for the most part, games on the system were exclusive.
So here we are, devs are trying to rely on multi-platform releases while idiots like that guy from Frontline are whining about how scared they are of making games for a system that doesn't fit into this mode of business - oh no, the games must be specific for the Wii, and that can't be profitable. Except, for some reason, Nintendo has been very profitable doing it.
Multi-platform shovelware has got to go. More exclusives need be developed - not based on how much Microsoft or Sony or Nintendo can pay you for the exclusive, but rather based on which system is best for the game in mind. EA shoveled its usual suspects onto the PS3, and now their wallets are hurting. Well... duh.
Dolla Dolla @ Jan 25th 2007 3:08PM
Kspraydad says it right. The PS3 is competing with its own brethren ... and losing. In Japan, the PSP AND the PS2 are STILL outselling the PS3. And don't even bother talking about software. The damn Xbox 360 has more software sales in Japan than PS3, and it has a smaller install base. Gears of War is in the top 10 software sales of last week. To see a PS3 game, you have to look in the top 50.
The cost of entry into the HD era is too high on the PS3 and the development tools are too complex for a "wait and see" attitude from developers. PS2 will be heavily supported for at least another year or two. You can sell 1 million on the PS2 without breaking a sweat. Try that on the PS3. The Wii already has a million seller. The PS3 won't see one until a HUGE exclusive hits.
fester @ Jan 25th 2007 4:05PM
So bad news for EA and bad news for Sony?
Isn't that a gift from god?
Grindstone @ Jan 25th 2007 3:11PM
Right on spot, Kspray. The good news is that the PS2 is keeping Sony afloat, the bad news is that it means fewer are adopting the new console, and that will ultimately effect developers for said console. Catch-22 in a way. Especially since Sony can't afford a price cut at the moment.
Well, in my opinion Sony deserves this. Their arrogance was unmatched for this PS3, and they are reaping what they sowed. Granted, by no means do I want this to end the console, but a nice slap in the face, a la Nintendo 2 console wars ago, would be helpful for them to re-evaluate their stance.
Darcrequiem @ Jan 25th 2007 3:12PM
Kspraydad, Sony doesn't have the leverage to shutdown PS2 support. Sure they can move their internal teams to PS3 but 3rd Parties balk at any attempt of Sony force them to move titles to the PS3 which has the smallest userbase of the next gen consoles. The only way Sony could be successful with your strategy is via money hats. Given the fact that Sony took out an 800 million dollar loan to launch PS3, I doubt they have the capital for huge numbers of money hats it would take. They haven't been able to look down exclusives on games like Assassin's Creed, GTA, VF5, etc.
Sony lost all of their leverage once the PS3 launched and underperformed. Before the launch it was assumed that the PS3 would toss the Wii aside and quickly catch and surpass the 360. Now that the system has been released and it has not performed as expected, 3rd parties have the power and not Sony. They could threaten to port existing PS2 titles to Wii and pending PS3 projects to 360 if Sony tried to force them to back off of PS2 development.
RYAN @ Jan 25th 2007 3:17PM
GOD THIS IS SATISFYING>
and i love sony, and have for over a decade. It's their arrogance that pissed me off, that made me lose respect for them. And now, they are getting exactly what they deserve. I hope it goes down in flames. I still have my 70+ ps1/2 games to play.
TwilightKnight @ Jan 25th 2007 3:23PM
I'm going to keep track of how many PS3's I see sitting in stores from now on. Just from memory I can recall seeing 9 on two seperate occasions.
It is going to be fun to watch this pan out. If third parties stop developing for the PS2 and move to the PS3 then profits will go down the crazy hole Sony made for themselves. If they stay with the PS2 for the next year or so then support for the PS3 will be limited and it will bomb in a way that will be talked about in hushed circles years from now.
By the way the Wii has 3 titles that have sold over a million already.
Jake @ Jan 25th 2007 3:23PM
About the time the PS3 matures it will have to compete with the xbox 720. 4-5 years from now.
Prokaryote @ Jan 25th 2007 3:27PM
The PS3 is much more comparable to the Sega Saturn than to the Dreamcast, if you ask me.
Lekko @ Jan 25th 2007 4:26PM
I really don't see sony aiming for #1 this time around. Simply put: the lowest common denominator in gaming sells the most units. The Wii being the cheapest and simplest is selling the most, the 360 with a good set of bells and whistles selling second, and the PS3 comming in third with a boatload of features. It almost feels as if Sony is trying to earn their good name back by making a solid system that can retain the crown of 'best system'. The high price is just their way of showing that.
It's a lot like apple. The computers are marginally better, and more stable, but they come at a high high price premium for what you get. Because of the smaller install base, they don't get as much ported to them, but their first party software works flawlessly.
Kinda like last generation, where the PS2 was the cheapest and most underpowered, but sold the most, now they are aiming for the power spot hoping to rely on first party to make the system desirable.
Also, if EA is pinning 21% of their profit margins on the PS3, perhaps they shouldn't have released only ports and sequels onto the system and spent some time actually polishing their games and putting out a decent product. Perhaps made something new and interesting for a change.
Jason @ Jan 25th 2007 3:32PM
Blake Snow must really despise the PS3... He seems to submit 80% of their negative articles. I always like to read a bad Sony headline and see Blake's name underneath... Too funny. I'm here 3-4 times a day for the fanboy bashing... It's my version of Jerry Springer.
zig @ Jan 25th 2007 4:09PM
I don't see why they expected so many people to run out and buy a PS3 since they have an install base of a "bajillion," normal people are thinking they don't need it cause they just bought a Ps2 for every room in the house. Plus there are still NO GAMES!
I don't buy a new Honda every time they change models and I suspect that the public feels the same way about the PS3. Nintendo is doing well because it is a family name... the 360 is doing well because most of the people that are buying it are new to the Xbox... and it has GAMES!
Jake @ Jan 25th 2007 3:34PM
Perfect for 360 owners. PS3 is just enough to keep MS working hard and keeping their margins tight, but not enough to steal many good exclusives. How can a low PS3 install base be a bad thing? It ups the chance that some of the PS exclusives I enjoy will be available without me purchasing the hog known as PS3. Sweet.
Steve @ Jan 25th 2007 3:38PM
Wow that was close! When I saw the clock hit noon and still no negative PS3 article, I panicked. I was starting to worry that there wouldn't be any PS3 bashing articles written on this site today! I should have known it simply isn't possible to miss a day of good 'ol Sony hating on this site! Thanks again!
nick @ Jan 25th 2007 3:38PM
Outside of EA, movie distributors banking on momentum of Playstation sales are probably unhappy that Blu-Ray movie sales aren't dramatically better.
DrXym @ Jan 25th 2007 3:43PM
All this FUD is getting pretty tiresome. How much does porting an EA title to the PS3 seriously add to development costs? EA games run on every platform under the sun, with virtually identical content, textures, models etc. for similar-tier platforms. I doubt that the PS3 adds an extra 10% onto development, QA or marketing budgets for your average EA title, and I doubt that "soft" sales (whatever that means) really will hurt EA as long as they sell strong on the 360. Besides, these same kinds of FUD could and probably were leveled 1 year back on the 360. EA appears to be here still.
If anything is more likely to kill EA, it will be the dawning realisation by gamers that EA is out to rape them over a barrel, pushing out one shoddy franchise after another, stuffing games full of ads / spyware and then foisting micropayments on them for things that should have been on the disk in the first place. That is far, far, far more likely to hurt EA sales than some problem one platform of many may have.
White Rose Duelist @ Jan 25th 2007 3:44PM
Anyone care to guess when Square-Enix will annouce that Final Fantasy XIII is coming out on Xbox360 (also/only)? betting is closed on whether or not it will happen
pixelator @ Jan 25th 2007 7:51PM
Nintendo fanboys will stop at nothing to proclaim the PS3 dead, Sony dead, Nintendo and Wii the victors.
The system is barely two months old. It's FAR too early to spell doom or victory for ANY new system. Hell, it's too early to really close the book on the 360, and that thing has been out a year!
As another poster said, MUCH ado about nothing. But to the Nintendo fanatic hoarde at Joystiq and their champions the anti-Sony blogger staff, no
yoma @ Jan 25th 2007 3:51PM
im realllly digging the rhetoric of ive always liked sony but i love how badly they are getting kicked now when they arent outselling nintendo and microsoft. if you dont think they deserved to be arrogant after selling 220 million consoles from ps1 to psp then i dont know whats going on anymore, allen iverson can be arrogant because hes among the best and he has the numbers to back it up, and people might not like that but then explain to me why peter moore is getting away with trash talk, you guys are hypocrites.
Michael @ Jan 25th 2007 3:58PM
Ahh... my daily dose of SONY is doomed and PS3 sucks 'news.' Thank you! What would I do without you?
Michael
PowerTrade1337 @ Jan 25th 2007 3:53PM
Hmmm, don't you think any lost revenue from PS3 SKUs for EA will just be offset by additional revenue from Xbox 360 SKUs? Most EA games are cross platform. Since the cost of video games is entirely in the development, marginal cost of any unsold PS3 copy is easily offset by the marginal revenue of the Xbox 360 version.
Also, the forecasts for PS3 and Xbox 360 aren't that dramatically different currently on the simExchange. Gamers have maintained a forecast around 41.8 million units worldwide over lifetime for PS3 and 49.82 million units worldwide over lifetime for the Xbox 360. However, as seen from the charts, the 360 has been climbing while PS3 is stagnant.
PS3:
http://www.thesimexchange.com/stock.php?id=11
Xbox 360:
http://www.thesimexchange.com/stock.php?id=10
dis_guy @ Jan 25th 2007 3:55PM
@white rose duelist
I hope it does come out for the 360. then there would be no reason for me to even think of the PS3 as a future purchase for me.
Unit @ Jan 25th 2007 3:55PM
i foud it a little funny how some of these developers actually thought that alot of people were gonna run out a buy the ps3 up like crazy with the $600.00 price tag. Another thing to note is that a big chunk of the ps2's user base very rarely play games religously. i know of many people who have a ps2 but couldn't tell you what the biggest games on the system are. Hell they only own like 2-5 games and one of them is a ea sports title. And im sure most of you guys know people like that too. And with the $600 price, they're not gonna see the need to invest in a ps3.
White Rose Duelist @ Jan 25th 2007 4:01PM
Does anyone here actually believe that the bad news about Sony reported here is NOT caused by the fact that most, if not all, of the news about Sony is bad?
Neil @ Jan 25th 2007 4:30PM
Holy crap, look at your replies! You're happy about bad news for a corporation!? What differenec does this make? Do you guys have lives? No, seriously do you?
What a bunch of nerds. Hahahahah.
Unit @ Jan 25th 2007 4:10PM
plain and simple, people are happy this happening to them, with statements like"we don't need no games, people will buy it just because it's sony" they deserve the hate. lol
DBX00 @ Jan 25th 2007 4:11PM
Same story a different week; the console will succeed or fail on its games and feature offering. If Sony can pump out the games people want to play, people will buy the console. Analysts and consumers constantly trying to put their two cents in about whether or not sales are fast enough or whether inventory levels are the result of fast pace manufacturing (supply) or incredibly low demand if simply just bs. The system is still way too early in its lifecycle to claim anyone is the winner or loser. We'll see what happens when the console is avaialable worldwide, if sales still suck and in a year developers stop supporting the console, then we can better judge who has won. Otherwise, everyone is simply throwing out the same opinion on a different day with no additional facts.