Losses in Sony's games division double

ColossalHat, you need to read the article because it's not about the 360 it's the Xbox. The article is from Nov 2002

The main problem is, and I remember reading articles about this, the PS3 is losing SO MUCH money on each console they sell that it's going to need to stick around for an extra generation just to make ANY profit. The PS3 at this point is totally banking on the games it has, and the problem is, Microsoft has things like Halo, which is the biggest selling title like EVER. Microsoft ain't losing as much money per console as the PS3 and, yeah, the 360 is not only getting better hardware, but cheaper to make hardware, too, so they're looking towards some profit sooner than Sony. Also, BTW, the Wii is the only console which actually costs more than it costs to make, giving Nintendo instant profit, so YEAH they're doing freakin well, not to mention the huge amount of people they've grabbed in the casual market (people in nursing homes are having Wii Bowling tournaments, for goodness sakes!! Geez!) I think, overall, Nintendo's gonna be the biggest winner of this round, with Microsoft in close second and PS3 in a further third, especially if Sony keeps screwing with their customers and Nintendo continues to keep their software somewhat varied, putting out some titles like Red Steel and RE4.

Just look at it whis way. Sony went from undisputed gaming champion to needed complex examples and reasoning for why they aren't doing as bad as it seems. They are clearly struggling.

The PS3 lacks an identity. GTA is no longer exclusive. Their price is mega hardcore, but their exclusive games are semi-casual. Blu-ray movie playback is their best advantage, but that doesn't impress gamers all that incredibly much.

I don't yet have a PS3, but I have 2 separate friends that own both a PS3 and 360. One of them lives with 4 other dudes. The PS3 does not get used in either case, at all. Not even a little.

I used to live with 4 guys and we had every system between us, and the PS2 was being used most of the time. That's not good for ol' Sony.

teh Sony is doomed! DOOOOOOOMMMMMED!!!

That was not sarcasm, by the way.

To quote Nariko:
"I'm not ready to die....not yet."

That picture = So win.

since when do you guys care about profits? oh yea.. only when it gives you ammo for your stupid war.

A hundred years from now, after the dust and rubble has settled from the war, historians will look back on this thread and declare that October 25, 2007 was the beginning of the defeat of SDF and it's allies.

At this time in 2008, sony will be laughing all the way to the bank ... believe it.

It does not look the best for Sony's black box for losses to be so high. This may or may not be according to plan though. They obviously lost a ton of money last year and put them in the red a bit but this year they are in the black. There are probably some more numbers that Im curious to see, what part of Sony is profiting so well. Are people starting to buy more HDTV's are the Blu Ray movie royalties starting to help. Are these profits on these other areas in any way attributed to the losses on the PS3.

The bottom line is games. I have a 360, PS3, and Wii. I'm not playing favorites here, I've invested in all of them. I probably have purchased 20 or so 360 games and 6 Wii games. I don't even own a game for my PS3, and I may not for a long time. Between the lack of compelling titles and the ability to download demos (which makes me realize I don't want to buy any of the games), there is simply no gaming reason right now to get a PS3 over the 360. If Resistance and Warhawk are the strength of the PS3's current library, they are handily outclassed by Gears, Bioshock, Halo 3, and the Orange Box. I'm sure Warhawk is a great game, but it just can't compete for my limited gaming time against those others.

Unless you happen to love the FF or MGS franchises (which I don't, personally, though many do), there isn't going to be much of a reason to choose a PS3 in the foreseeable future other than as a Blu-ray player. Multiplatform 3rd party games are coming out sooner and better on the 360, and every good PS3 exclusive has so far been outdone by a 360 exclusive. This is a real problem for Sony. I don't want my PS3 to become a $500 paperweight, but it's been a waste of money so far and right now I can't reccommend it to anyone. Wake me up when LittleBigPlanet comes out.

Talking about Sony is always fun. I wouldn't go out saying they were arrogant...They just thought their victory was pre-written. They HAD market dominance. They seemed(and possibly saw themselves) as invincible. You know what happened? THEY GOT SLOPPY!

Reason #1 why im not getting 360 = I havta pay to play online, thats bs. After 1 year, ps3 will turnaround, u shall see.

Since there are too many different replies required, this will take its own post.

Shagi has said so many false and financially dangerous things in this particular post that I actually feel compelled to call him out on it.

1. 10 years is an absolute bogus timeframe when determining investment income. Let's take your beloved Sony. 10 year ago, Sony's stock price was $42.18. Today Sony's stock price is $48.19. If you bought 100 shares of Sony stock in 1997, that would have cost $4,218. Today that same 100 shares would be worth $4,819. Factor in dividends, that results in a gain of roughly $1,000 or 23.7% over the course of 10 years. That may SEEM like a good investment, until I tell you the average mutual fund pulled 14% PER YEAR over that timeframe. Over the same timeframe (I've been investing for longer than 10 years, but I'll use my last 10 years as an example) I averaged 16.3% return. That same $4,218 in my portfolio would be worth $19,094 today, or a gain of $14,876. I just outgained Shagi by $13,876, or an entire economy car.

Investors don't make money sitting on an investment. Risky mutual funds, for example, are people who by and trade constantly throughout the day to built funds based on daily fluctuatios on stock. This is where my money is (I know I could beat 16.3% if I actually had the resources to day trade). While it is "sitting" in that fund, the ownership in dozens of companies changes in and out of my name on a daily basis. If I am not making at least 5% over the previous three month period, I change my investment portfolio, not wait 10 years.

The 10 year plan theory is someone who considers government funded retirement a major portion of their retirement income, not like the "oh, look, another monthly PC upgrade" I'll be treating it (if it still exists when I retire). And no, you don't have to be even remotely wealthy to be able to do this. Give up a game a month and put it into an investment account and you'll be surprised where it goes.

2. While companies do have 10 year plans, they don't involve specific product designs but usually R&D and market research projects. Japanese companies are notoriously rigid in their implementation of long-term strategies and focus heavily on products, not evolution. US companies have long-term plans, but they are far more flexible and focus on business evolution and not specific produts.

Sony's strategy is a rigid one. They outright decided that over the next 10 years, the company will be run on Cell and BluRay. That is far too specific for an effective long term strategy. Communism failed partly because they used this concept, and they were on a shorter 5 year window. It is impossible to be able to determine the wants and needs of the marketplace 10 years in the future and a company needs to be either flexible enough or diversified enough to not have to deal with this problem. Sony is neither. They've put all their proverbial eggs into a single basket and it will make or break them.

Japan went through a recession in the 90s mainly because of this rigid corporate structure. During the 90s, Japanese companies behaved like it was still the 80s and suffered for it. Their companies do well after making the adjustment to a new mode of thinking, but getting them to change is the hard part and takes extreme circumstances to make it happen. Sony is a pioneer in this sense because they've chosen to helm the company up with a Western thinker. The board of directors identified that Japanese business is not good for the health of a company. The only difficulty is for Harrison to wean Sony off this mode of thinking and we can only hope the PS3 is the last of their rigid strategy.

lol sorry... i love sony (for the most part im impartial to either ms and sony, i love both consoles) but that picture and tagline is hilarious, like the opposite of the DS money printer posts.

"It's $50 a year. Sacrifice buying a crappy game and pay for Live."

Last I checked, I had my ps2 for more than 6 years (7 years tomorrow :), plan on doing the same with the ps3. 6*$50= a whole lot more than I need to spend, especially since I game casually.

I think you guys missed the point of my post. I wasnt trying to knock the PS3 or the Xbox. I just wanted to draw a parallel between the two brands.

The first xbox was pretty much a financial failure for MS(its only real success was establishing MS as a brand). Less than six months after its launch, MS had to drop the sale price to move units. This hurt MS because they were already taking a loss on each xbox sold, but it had to be done just to boost sales of the dying brand. Sony responded by dropping the PS2s price again, which forced MS to lower their prices for a second time. Ultimately the loss taken on each xbox sold was too great to be recouped fully in software sales, thus the xbox was rarely profitable for MS and even when it was, the profits werent large enough to cover the deficit.

Now if we peice together what we know about the ps3, we get a very similar story.
Like the xbox, the ps3s posses internal components that make it expensive.
Like MS, Sony launched this expensive console against a cheaper one that had a large install base and a large game library.
Like MS, Sony is trying to sell the ps3 for a loss and recoupe the money with software sales.
Like the xbox devs are slow to develope games exclusively for the ps3 because its expensive and has a low install base. This means that like the xbox, games are solw coming to the ps3
So like MS, Sony had to drop the price of its ps3 to boost hardware sales at the cost of an increased loss on each unit sold. However this breif stir in sales still doesnt properly motivate devs to release games faster.
So like the xbox,games are still slow coming to the ps3,the attach rate for the ps3 is low, and sony is unable to make back enough money on the software side to cover the loss taken at the sale of the unit.

So maybe its just me, but the ps3 is starting to sound a lot like an xbox. Thats not a bad thing (for gamers anyway) but Sony surely cant like where the ps3 is headed.

+2 Andross polygons for that pic.

I say SONY should just take the BLU-RAY, wifi, HDD, and USB ports out of the system permanently. We'll make it a new sku. We'll call it the Sony Elite.

Give us cheaper less reliable parts! LOWER PRODUCTION COSTS SONY!! Just give the consumer what WE want, a product that we'd have to replace every 4-8 months!

HAHAHA, I laugh at SONY and their stuuuupid 10 year plan. Build a reliable piece of Hardware with advanced technology...

Seriously, within 2-4 years, Sony would have fully recovered and recouped the losses through Hardware and software sales. I say keep doing what you're doing SONY. JUST HURRY WITH THE GAMES!!

You know what Joystiq? That picture is uncalled for. I think that's in very poor taste.

"you can't afford $1 a week for great online multiplayer functionality?"

On the contrary, I just don't have the time to spend too much time on line. I don't see it being justifiable if I go on a handful of times a month.

Sony did not care what the consumer wanted (YOU!!) or what developers wanted when making this console. All they cared about was using it to trojan horse some technology into our homes. They assumed since they had been so succesful with the PSone and even more so with the PS2 that we would simply eat up the hardware without question.(or games) The only people who have bought Ps3's so far are sony fanboys, the blu-ray faithful or fools hoping that some day down the line there will be some vast number of amazing exclusive games. Sadly those games are not comming. In the next 18months there are 3-5 good looking exclusives announced. ANd on top of that every game that is on the 360 as well runs better and has a more robust online setup. That is not enough to sell a consumer on a $400-$600 console. SOny needs to start prepping for their next gen now, and do it buy going to the gamers and developers and ask them what they want and what is important to them. Dont worry about trying to sell a new technology worry about selling a game machine people want with games they want to play at a reasonable price. I know they can do it, just a matter of will they.

BluRay is NOT the definitive disc format. It may become later, but now it's sort of fighting with HDDVD. So, unlike DVD, you can't get ANY new movie on BluRay. It isn't the standard, so it is diferent from the DVD, and even MORE from CD.

Continue?

10...

Bloody ppl moan and groaned all the time about the bloody price, now they have forced Sony into torture. A loss was being made as it was from the start anyway.