Sony raising money for PlayStation division with insurance unit IPO
As PlayStation 3 continues to lag behind Wii in sales, a renewed price drop seems obvious, but would also mean greater short-term losses for the games division. Money from the insurance unit IPO could help balance that loss, but the IPO faces its own challenge as investors are still shaken from losses in the subprime mortgage market. But would they have said "no" to a pile of gooey cupcakes and fudge-packed brownies? We'll never know.
Reader Comments (Page 1 of 2)
ukickmydog @ Sep 4th 2007 5:21PM
the end is closer....
sheppy @ Sep 4th 2007 10:32PM
Just like when Nintendo begged the Japanese government to drop their stocks a while back ago?
Look, Sony cannot be expected to turn a profit immediately with PS3. For the first time, much of their manufacturing is done elsewhere. And to top it all off, who's the only one turning a profit in this so far? The one selling $80 hardware for $250? Yup. Because I got news, Xbox hasn't turned dime one yet. Ever.
Slaziman @ Sep 5th 2007 9:07AM
Nintendo didn't do that because of money problems though, they just wanted someone other than the government to hold the shares (something like that)
Crono @ Sep 4th 2007 5:23PM
Ouch. I knew things were bad, but this bad? Seems to reinforce the idea of yet another price drop this season.
You know, the last console that dropped its price this quick was the Gamecube. And we all know how that turned out.
mr nimblewick @ Sep 4th 2007 5:30PM
Hmmm... did it have something to do with pretty fairies with glittery wings?
ukickmydog @ Sep 4th 2007 5:30PM
oh how the tables have turned...
Vegnagun @ Sep 4th 2007 5:27PM
The sound of another nail hitting some sort of hollow wooden object?
flameofdoom666 @ Sep 4th 2007 5:31PM
yeps
J-Guy @ Sep 4th 2007 5:38PM
Is it just me or are gamers screwed this gen?
Crono @ Sep 4th 2007 5:40PM
only if the gamers already bought a PS3.
Taco_Hell @ Sep 4th 2007 5:41PM
I'm pretty sure its just you, since there are still the other 2 systems to play.
J-Guy @ Sep 4th 2007 5:55PM
If my avatar is confusing you, I only have a Wii at this time.
Kye @ Sep 4th 2007 5:38PM
What's that? A PS3 149 quid? Cheers mate!
copa @ Sep 4th 2007 5:39PM
Until the Holy Trinity (LittleBigPlanet, MGS, FF) arrives, Sony is going to sink deeper and deeper with lagging adoption numbers and dwindling third-party support.
The big question is: once the software comes, will Sony make the massive financial investment that will be necessary to climb out of this hole?
Kazi @ Sep 4th 2007 5:43PM
I think they'll dig them selves out of this hole. In other words this means this is the best time to buy SCE stock.
Vegnagun @ Sep 4th 2007 5:47PM
The Holy Trinity? I smell fanboy.
Crono @ Sep 4th 2007 5:51PM
LBP isn't going to sell to the PS3 userbase. Its a stellar idea, but teh haxxor harcore gamers that own PS3 won't be buying this in droves, and it will flop. Similar to Viva Piniata on 360.
I learned about 5 or so years ago not to trust the FF name anymore. FFX and FFX-2 were very disappointing. FF12 was much better, but by no means is it the best they have. FF13 won't sell consoles. MGS i've never played, but since its a sequel to a sequel to a sequel, I would imagine the target audience for it can't be larger than the total install base for the first game.
Note to self: find a copy of MGS1 and play it.
Vegnagun @ Sep 4th 2007 5:59PM
How was FFX disappointing? It had a great story line with some of the best plot twists I've ever seen. It has the best score I've ever heard from a video game, and a great solid combat and leveling system. FFX-2 was pretty bad, but FFX was incredible.
lk @ Sep 4th 2007 6:08PM
@Crono
You underestimate the legions of FF fans who actually liked FFX & FFX-2. You also think too highly of yourself if you think your dislike and contempt for newer Final Fantasies will stop the masses from buying FFXIII and a PS3. I mean, I agree that post-10 Final Fantasies sucked terribly, but it is naive to disregard the brand completely because amazingly enough, the fans love those cheesy RPG romps with whiny, effeminate main characters.
If you don't believe me, just go over to GameFAQs one of these days...
Vegnagun @ Sep 4th 2007 6:24PM
Alright Tidus is pretty damn effeminate, but the game is great if you look past his awkward motions and voice acting. FFX-2 did suck though.
sheppy @ Sep 4th 2007 10:25PM
Funny thing, that. In Japanese Culture.... Tidus, Squall, Cloud... those are much more manly men than Marcus Cain who's design throws up the traditional "gay man" flags. Gays of War may as well be the title in Japan.
So yes, to us, FF characters (and JRPG characters in general) may seem effinate, but in Japan? Those are the dream guys.
sheppy @ Sep 4th 2007 10:28PM
Also, bashing Holy Trinity? What? And Perfect Storm was any better? And fyi, the Holy Trinity for Wii is Metroid 3, SSBB, and SMG. In other words, each system has a small group of games they look to as saviors. And each system has had them. Only Microsoft was dumb enough to name them in a press conference.
Ska Oreo @ Sep 4th 2007 10:57PM
Honestly I don't think even MGS or FF will be able to help Sony this time. I mean 10 million consoles won't be magically sold when they finally arrive.
samfish @ Sep 5th 2007 2:13AM
I think MGS4 will move some systems, but really only to people who are holding out for a PS3 in the first place.
Basically to the second string Playstation hardcore, I guess you could call them.
I don't, however, think it'll move consoles the way the original MGS did, which I imagine the Sony fans have got to be hoping for at this point.
I also agree that LBP won't sell to the PS3 userbase. I'd be surprised if it breaks a million sold. I imagine the only way it'll do that is if the PS3 really does turn into the Gamecube and the hardcore PS fans are desperate for anything good to play.
Vegnagun @ Sep 5th 2007 7:59AM
I think you mean Marcus Fenix [sic].
Slaziman @ Sep 5th 2007 9:11AM
FF will move plenty systems, specially in Japan, but not as much as the fanboys are expecting.
Crono @ Sep 5th 2007 11:44AM
The horrible voice acting ruined FFX for me, as well as the total linearity of the game until right before the last dungeon. At least other FF games gave the illusion of exploration, FFX was a practice in holding forward on the analog stick.
The music may have been well orchestrated, but it was not Uematsu's best composition work. Look up FF6, FF7, FF8 to a degree, and Chrono Trigger for some steller Uematsu compositions. The Aria from FF6 by itself trumps anything in those other games, and anything he's done since, as well.
The sphere grid was the dumbest idea for a skill progression system since ever. It gave the illusion of control over a characters growth because it branched once or twice for each character over the course of the game. In reality, everyone was locked in a linear skill progression that required player intervention instead of just saying "level up: learned curaga". The esper system in FF6 was much more sophisticated, with the Materia system in FF7 having much more instant gratification.
The FF brand has become like water. There are still tons of FF fanboys, but the numbers are beginning to dwindle. FF13 will sell, but it won't sell nearly as well as the FF and Sony Fanboys want it to. You know its gotten bad when the spinoff games are more fun than the main series (FF Tactics series, KH series, Cristal Cronicles series).
Marty @ Sep 4th 2007 5:53PM
Remember when you were playing SimCity, and after an hour or so of record spending, you realized you had no money left, so you decided to take out a loan to make it all back? But then you realized you owed a hefty sum of interest every month to pay it back, and you just had to quit?
mr nimblewick @ Sep 4th 2007 5:57PM
If I'm understanding you, and I do believe I am, somewhere in the world is a huge Sony City going down the tubes because the bums are asking for hand-outs.
I would like a train ticket to this city. To help with the bum problem.
joeyg @ Sep 4th 2007 5:57PM
ahhh...you guys are quick to judge...
perhaps the IPO is to fuel the advancement of the console. I expect big things for the PS3.
not every company can be like M$ and lose billions in a division and not even flinch (monopolies are great).
ukickmydog @ Sep 4th 2007 5:57PM
LBP should actually be on the wii amirite?
mr nimblewick @ Sep 4th 2007 6:04PM
Are you saying that Sony is going to become a 3rd party developer for nintendo?
Psaakyrn @ Sep 4th 2007 7:50PM
Well, that's what happened with Sega, so....
sheppy @ Sep 4th 2007 10:50PM
We'd see PSP2 and PS4 before we'd see Sony go third party. Keep in mind, Sega was losing much more money than Sony was for ten solid years and quit once the Dreamcast turned profitable.
Mr Khan @ Sep 4th 2007 5:59PM
Wasn't it true that the game's division at Sony was the big earner in leaner times?
Although i think them selling off the insurance unit may be attributed to multiple faults, that's like making the claim that the financial losses netted by "The Real Adventures of Johnny Quest" was the primary cause for Turner's merger with Time Warner
Kr155 @ Sep 4th 2007 7:48PM
IPO does not mean a sell off. They are takeing the insurance company public. This is how a company earns investment dollars. Sony its self is a public company, so is nintendo and microsoft. all Sony is doing is taking a private holding and making it public. Do you think google went public because they had troubles?
flcl @ Sep 4th 2007 6:04PM
its not like sonys going to be the next sega. ps3 may be doing bad now, but since its been out less than a year, its too early to tell. plus, sega had three straigt flops before the dreamcast days. (and yes, lbp would make an awesome wii game)
ukickmydog @ Sep 4th 2007 6:09PM
o yea, no way they're going the way sega is, but their games division is getting pounded. o well, there's always the next console cycle, but for Sony, i believe that's 9 years from now
Zeke @ Sep 4th 2007 6:10PM
This seems a lot like "cutting your nose off to spite your face" to me. If the games division is doing so bad cut you losses now. Selling off bits and pieces of the empire to support what may very well be a losing effort this gen seems extremely short sighted IMHO.
ikiryou @ Sep 4th 2007 6:11PM
Hate to break it to all of the haters "in here", but Sony's not going anywhere. That's $2.9 BILLION dollars, folks. They're in no danger of going bankrupt, nor is their gaming division. Unlike their opposition, they're supporting three different gaming consoles - the PS2, the PS3, the PSP, as well as their online gaming element. Naturally, it takes more money to keep that kind of support going, and they're hardly suffering for money.
fawazr @ Sep 4th 2007 6:39PM
It's actually more like an asking price of 2.9 billion. And God forbid that price drops, especially when you think about all the clients insured by what will become an IPO. You can't really spin this anyway but risky and I still don't believe it's true.
nick @ Sep 4th 2007 6:15PM
This is not nearly enough, but it's a start. Remember Sony has 10 billion dollars of debt on their books right now, so almost 3 billion will help them maintain existing debt, but I think it'll be years before the PS3 is profitable.
Hardcore @ Sep 4th 2007 6:23PM
Lest we forget, Microsoft - Xbox from the inception of the first Xbox until the present has yet to turn a profit.
http://arstechnica.com/news.ars/post/20070720-office-vista-save-microsoft-profits-from-xbox-ravaging.html
Crono @ Sep 5th 2007 11:48AM
But microsoft never sold off part of the business to fund it, either. Thats what sony is doing here.
Ska Oreo @ Sep 5th 2007 4:55PM
ummm okay? Why do you keep bringing that up like it matters?
unimental @ Sep 4th 2007 6:25PM
Taking a division public is by no means a sign of financial crisis. It's simply a great way to utilize your assets to generate capital (as opposed to adding debt). Granted, Sony's not in the same financial condition as Nintendo or Microsoft, but this news is in no way a harbinger of Sony's demise.
why not the LS2LS7? @ Sep 4th 2007 6:27PM
What's the big deal? MS had to pony up $1B in ADDITIONAL losses for the 360 this quarter, beyond their operational losses. And since the MS games division has never made a dime (and in fact lost over $100 NET for each unit they've sold even after royalties and accessories sales) since their inception, you can be sure that money came from another division.
If you release a console (except Wii), you lose money for a while. That's how it is.
Drew @ Sep 4th 2007 7:02PM
"What's the big deal? MS had to pony up $1B in ADDITIONAL losses for the 360 this quarter" MS never ponied up 1 Billion for the warranty, if that's what you're referring to. That 1 Billion is an accounting standard that you set aside in reserve. Big difference between paying out 1 Billion and reserving 1 Billion for warranty repairs. Reserving money for warranty repairs is the standard accounting practice.
why not the LS2LS7? @ Sep 4th 2007 7:44PM
Yes, I understand they didn't pay all the money immediately. But they reserved it, because they expect to pay it. That's standard accounting practice.
And I reiterate, that's real money they expect to pay out, and it comes from somewhere, and it sure didn't come from the console division's profits, since they have never had any.
Hey It's Me @ Sep 4th 2007 6:41PM
Microsoft doesn't have any debt that they carry from year to year. The company as a whole is profitable and offers a nice return on investment. Their only unprofitable division is the one that includes the Xbox and handheld devices. I think Microsoft views the division as a long term strategic investment, and it will eventually return a profit.
Sony usually has one profitable division that carries the entire company, while the other divisions fluctuate wildly. Sony's return on investment is usually minimal. Their strategy consists of hardware innovation and strong branding.
Both Microsoft and Sony have had issues featuring recalls, costing each company billions.