PS3 has lost Sony $4.7 billion, may be profitable next year
by Griffin McElroy 
{ Oct 30th 2009 at 11:15AM } 
Now, the worse news: The financial report included enough data for various GAFers and VG247ers to slap a number on the amount of money that the PS3 has lost Sony: $4.695 billion. Sure, that number seems outrageously high -- because, well, it is -- but it's hardly an apocalyptic loss. Actually, it's reminiscent of losses incurred by Microsoft with the release of the original Xbox, which drained the company of $4.202 billion over a similar four-year period.
Finally, the good news: Shortly after the financial report was published, Sony CFO Nobuyuki Oneda claimed the PS3 was getting cheaper to produce, stating, "the difference between sales and materials cost has been reduced to between 10 and 20%. Within the year, it could be in the single digits." He later added, "we'll be able to reach profitability at some point in the next term." Considering PS3 sales jumped 800,000 year-over-year with the launch of the Slim, we've got a bit of advice to aid in this endeavor: Keep making it skinnier.
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Reader Comments (Page 1 of 3)
Uncontrol @ Oct 30th 2009 11:17AM
Honestly, the brand awareness for Sony that the Playstation brand has generated probably justifies this.
wormania @ Oct 30th 2009 11:24AM
I'm pretty sure for the last 15 years "Playstation" has been a household name globally. And they made a lot of profit for most of those 15 years.
Alex @ Oct 30th 2009 11:40AM
Wormania,I know people who own Xboxes but call them Playstations because now it is basically a generic name for a console.
WREturns [Planeteer I Power of Fucking Peter Moore's Mother] @ Oct 30th 2009 11:44AM
My friends and I still call everything Nintendo, so it makes sense if you were raised on Playstation that you would do the same.
uncle jesse @ Oct 30th 2009 12:00PM
@WRE
I remember if I was talking to anyone that didn't know anything about video games, I would just refer to it as Nintendo, because they would just call all video games Nintendo.
"What are you doing today?"
"Oh, just playing Nintendo."
"Did you get any new Nintendo games?"
"Nintendo, Nintendo, Nintendo."
Everything used to just be lumped together and be called Nintendo. Well, when I was growing up anyways...
jayeffaar @ Oct 30th 2009 12:49PM
A couple of years ago, when Rock Band was impossible to find in Montreal, I drove down to upstate New York to get the full kit. I declared it to Canadian customs on my way home, explaining what it was and when I looked at my receipt, I saw that they has classified it as a "Nintendo Cartridge".
PR0F3TA (PSN - PROPHETA) @ Oct 30th 2009 1:04PM
i remember calling all electronic games "Nintendo" lol.... my old folks still do.
WINterfang ( Now with the power to piss you off ) @ Oct 30th 2009 1:24PM
My Mother calls everything SEGA =D.
My mom does what your Nintenmondon't....?
that didn't work but she does call the DS, SEGA DS.
Monica Dickey @ Oct 30th 2009 3:26PM
I hope so. They keep saying it will be profitable, but profitable enough to recover 4.7 billion? I mean it's only a few years until the next gen of consoles come around anyway.
Ex14 @ Oct 30th 2009 11:18AM
I'm not surprised at this, however, it won't be a surprise that next year, it will probably do much better, esp with the slim and it's very attractive pricing. The wii is a dying console, while the 360 doesn't have what it takes to match the PS3 withthat price.
Doreo (Psn-doreo503) @ Oct 30th 2009 11:27AM
Well the 360 only has to compete with the ps3 based on price because it already has a broad user base. Since it has sold so much, the only thing that can happen is that the sales will slowly decrease. Sony had a much smaller user base until the price drops started happening, so the only way to compete with Sony is to lower the price on the 360. I mean since the 360 has sold so much, they can lose a bit of profit by lowering the price and not have to worry. Sony lost a lot of profit just to get the ps3 to pick up steam. The wii on the other hand is just losing its appeal, it was directed towards a casual audience and now that the release of good first and third party games has started slowing down; many don't see the reason to purchase the console. The sales are also slowing down because so many people have purchased one since the release. All in All, the wii won't necessarily die anytime soon, the 360's will still compete with the ps3, but I believe the ps3 will continue on to make profit and sell the most consoles next year.
copa @ Oct 30th 2009 11:30AM
"The wii is a dying console."
BWAAAAHAAAAHAAAAHAAAHAAAAAHAAAAA!
"The 360 doesn't have what it takes to match the PS3 with that price."
That's probably true. Here's the problem. The 360 is cheaper to produce, and is profitable, and is supplemented by revenue from XBox Live, so Microsoft has plenty of room to make price cuts.
The PS3 has lost five. Fucking. Billion. Dollars. That might be expected on a first rev console, as the cost of breaking into the marketplace with initial R&D expenditures. But this is Sony's third go-around, and this is the successor the enormously profitable PS2.
Howard Stringer's mandate to Sony is getting back to profitability. After losing five billion dollars and finishing in last place, I doubt Sony still has the appetite to stay in the console wars for another round. I expect Sony to drop out for the next generation, and be replaced by Apple.
Darth Bradwart, Dark Lord of the Sith @ Oct 30th 2009 11:32AM
Copa, Sony is a massive company. Five billion dollars is nothing. Microsoft has lost a lot more than that-do you see them dropping out? The RRoD repairs have already drained that one billion dollar internal account, and they keep coming anyway. But they're not going to drop out.
Chris D.(PSN: Aggie_CEO | XBL:The Aggie CEO | Steam: Aggie_CEO @ Oct 30th 2009 11:37AM
Uhhh Copa....$5billion loss didn't keep MS out....why would it keep Sony out?? They aren't going anywhere...finishing in 3rd? its not over yet...7-9 million units from that one year gap that the 360 can easily be caught up....PS3 will sit at $299 for at LEAST another year or 2 but will begin to get more things bundled in....just like the 360....once NAMEBRAND profile 2.0, Netflix streaming BD players hit $150 expect the PS3 to hit $200....and then that will pull in even more sales.....with 7 years left in sales the PS3 still has plenty of time to catch up
E.J. @ Oct 30th 2009 11:51AM
@Darth, @Chris D.
$5b is a lot for a company that has the market capital of ~$30b compared to the company worth ~$250b. Guess which company is Sony?
copa @ Oct 30th 2009 11:56AM
Microsoft brought in a net profit of $15 Billion for fiscal year ending '09. Their second-place console is profitable.
Sony brought in a net loss of $1 Billion for fiscal year ending '09. Their last-place console continues to lose money.
"Sony is a massive company. Five billion dollars is nothing."
That is a very easy thing to say, but it is not true. Sony has a market cap of $29B, and they are under enormous shareholder pressure to return to profitability. They just lost one billion dollars in the most recent fiscal year. Five billion dollars is a very, very large amount of money.
Chris D.(PSN: Aggie_CEO | XBL:The Aggie CEO | Steam: Aggie_CEO @ Oct 30th 2009 11:57AM
I know how much money Sony has Versus MS....but their networth is what they can leverage to get funds with if needed....and its more than 30 Billion
copa @ Oct 30th 2009 12:05PM
"but their net worth is what they can leverage to get funds with if needed....and its more than 30 Billion"
What the fuck are you talking about, Chris? Is it just easier to make up facts as you go along, instead of considering information that might not support your opinions?
Their market cap is $30 billion. I know that North Carolina A&T isn't a business school, but please explain to us how their net worth is more than $30 billion.
copa @ Oct 30th 2009 12:12PM
I changed my mind, Chris. Don't explain it to us, I'll just cut to the chase. Sony declared their net worth to be $18.8 Billion.
http://finance.yahoo.com/q/bs?s=SNE&annual
Anyway, I'll be getting my PS3 this Christmas. Thanks for the $5 Billion subsidy, Sony!
Vcize @ Oct 30th 2009 1:05PM
If I were Chris my pride would hurt right now.
nick @ Oct 30th 2009 2:17PM
I beg to differ that 5 billion is nothing. It is a lot of money.
Sure, Microsoft lost that much, but they weren't carrying any debt on the books at that time. Right now Microsoft has about 6 billion dollars worth of debt, which is most likely related to the economy and getting Windows 7 out the door.
Sony, by comparision, is carrying about 15 billion worth of debt on their books. Again, economy.
As far as revenue, Sony has always made more than Microsoft. But for less profit. Sony's profits have always been thin. But that's typical for an electronics company. Sony generates 80 billion in revenue to Microsoft's 56 billion. From that revenue, Sony's profits are -2.33% compared to Microsoft profit margin of 24.46%
Microsoft has 33 billion in cash on hand, and Sony has 7 billion.
Now, neither Sony nor Microsoft is going away. 5 billion isn't going to ruin the company, but sustained losses are great either. I think Sony's recovery is dependant on the economy. In the past the PS2 was the company's cash cow that generated money even when other divisions weren't doing well. I'm not so sure the entertainment division is as rosey these days even with the recent price cut, but it is better off because of the cut from a sales point of view. It still going to take Sony years to realize benefits from the PS3 which is why this generation they're going to be dependant on a 10 year+ lifecycle, rather than 'oh our console sold for 10 years... wow that's great'
Microsoft will likely benefit in the near term from Windows 7, and the 360 continues to sell well enough.
More than likely 2010 will be a soft year possibly for consoles. The major game titles will continue to sell well. They'll likely be less titles marketed overall. We'll likely see more consolidation in the industry as the smaller or independent companies are acquired.
Ozzman_79 @ Oct 30th 2009 11:58PM
"the wii is a dying console"
Lemme see if I got this straight, Sony reports a $654 million Q2 loss, while Nintendo reports a $772 million first half profit.....and the Wii is the dying console?
Ex14 @ Oct 30th 2009 11:59PM
@Ozzman I'm not talking profits. I'm talking console sales. i believe the wii sales have been dropping for quite some time, even after the price drop.
jekoln @ Oct 30th 2009 11:19AM
poor sony, making games i actually want to play and losing all this money, meanwhile, nintendo is making out like gangbusters.
WREturns [Planeteer I Power of Fucking Peter Moore's Mother] @ Oct 30th 2009 11:49AM
This is sad, but true. Sony has really won my admiration this gen by churning out amazing new IPs while Nintendo has lost a lot of appeal. Don't get me wrong, Galaxy, Twilight Princess, Prime, Wii Sports, even Wii Fit are great efforts and the "Wii" titles are definitely risky titles that I think are great additions to Nintendo's lineup, but they need to play really nice hardball with third-parties. Teach them how to make great games on Nintendo consoles and then hold them to a high standard. Put the shovelware on WiiWare if you have to have it around but don't be satisfied with lackluster cash-ins. That's all.
Cody @ Oct 30th 2009 12:28PM
Wii is THE definitive console this gen.
Just look at all the hate it gets. Must be doing something right.
President Taco @ Oct 30th 2009 12:59PM
@Cody
Hatred does not dictate success. For example, I hate you and you're a fucking douche nozzle.
Archon (PSN: Archonik, XBL: DarkARHN) @ Oct 30th 2009 11:19AM
A flood of comments starts beyond this point:
Nytemare457 @ Oct 30th 2009 11:31AM
^A series of comments lies above this point.
Mr. Joe @ Oct 31st 2009 3:11AM
sticky white stuff
RKN @ Oct 30th 2009 11:19AM
I believe things can only get better for Sony. All I am concerned about is if they have put the YLOD and Blu-Ray disc crapping out behind them in these slim models just like most problems with the fat PS2 were fixed in the slim PS2. They stop charging $150 for the repair for out of warranty units and I am happy with them.
Now with the success of the PS3 slim and price cut, why did they have to go a step backwards and release the PSP Go and at that price? What, lower the price of the PS3 and raise the price of the PSP to keep things even?
Chris D.(PSN: Aggie_CEO | XBL:The Aggie CEO | Steam: Aggie_CEO @ Oct 30th 2009 11:23AM
the PSP Go is pretty much PURE profit I'm certain...thats why the price is so high....that and its R&D for the PSP2....
Player1 @ Oct 30th 2009 11:27AM
Thank you! I get my PS3 back today (80g semi-backwards compat) that stopped reading any type of disc. I've paid $650 so far for a single console and they still can't swing a profit. People need to be aware of the issues with the PS3. I may be on my 6th 360, but I never had to pay for a repair.
RKN @ Oct 30th 2009 11:31AM
Right Player1, I have put up with a lot from Sony in the past with the PS3 and I did because I was a Sony and Playstation fanboy. But after seeing many PS3's breaking, through the fault of Sony and them charging to fix it whereas MS didn't, that was the last straw. Especially when the Sony fanboys would accuse me of being a 360 fanboy.
Sony, just own up to it like MS did, swallow your pride and fix the units for free outside of warranty, its your own damn fault, whereas I see many blaming the user themselves when they use it normally.
Both the PS3 and 360 have their share of build quality problems. I am not a fan of Nintendo since the SNES, but they make some damn good hardware.
Doreo (Psn-doreo503) @ Oct 30th 2009 11:32AM
My ps3 stopped reading discs in July and I still haven't gotten it fixed. I hate that my first 60gig ps3 broke and had a 1yr warranty, so Sony sent me a replacement system for free. Yet that system comes with a 90 day warranty, so now that this one has stopped working, I have to pay for it. It irritates me that it broke in under a year, and I'm responsible for it. I mean any replacement system should have a 1 yr warranty, but that's just my opinion. The weird thing is that so far I have had two ps3's (both 60 gigs) and they seem to break down within a year; even though I clean them and dust them. Yet my friend's 60gig has never broken down, and he doesn't even clean it or dust it. I THINK MY HOUSE IS A SONY GRAVEYARD!!!!
Player1 @ Oct 30th 2009 11:42AM
What's funny is when I had a PS1, I had to get it replaced several times because the ultra-thin plastic on the spindle would break and it would stop reading discs...I was never even able to trade that one in because apparently the older design was a fire hazard. Then PS2 had the class action suit over the disc read error. Now the PS3 just stops reading discs shortly outside of the warranty. Seems like they can't shake issues with reading discs. But that's okay, they'll just charge you a flat repair rate that's half the cost of a new console.
Player1 @ Oct 30th 2009 11:43AM
@Doreo: Did both your PS3s stop reading discs?
Chris D.(PSN: Aggie_CEO | XBL:The Aggie CEO | Steam: Aggie_CEO @ Oct 30th 2009 11:48AM
if the PS3 fucked up as much as the 360 I'm sure Sony would fix them all for free....hell they did with all the PS3's that were bricked after the 2.40 update last year....
I worry about mine because its starting to freeze more and more and its scaring me....I have save files that will be lost cause they ONLY back up when doing a FULL backup....
Chris D.(PSN: Aggie_CEO | XBL:The Aggie CEO | Steam: Aggie_CEO @ Oct 30th 2009 11:49AM
but the 360 are covered under a 3 year warranty....but once that 3rd year is up then what?? you have to pay to fix it....out of pocket...or buy another one
Charades @ Oct 30th 2009 12:00PM
I've had my PS3 since 2007 and it hasn't broken once, this thing has fallen off tables and almost down some stairs. Besides it collecting dust and scratches this thing plays as if it's still new. Probably the only console that I own that will last through the generation with out any repairs.
RKN @ Oct 30th 2009 12:02PM
A free 3 year warranty is still a hell of a lot better than a one year standard warranty and being charged $150 to repair it when its out of that period and when a PS3 will most likely break, outside the warranty.
Let's see what Sony and MS do with their next consoles in regards to quality, I would definitely purchase an extended warranty regardless!!!
Player1 @ Oct 30th 2009 12:29PM
@Charades: Funny, you beat the crap out of yours and it's fine. I take perfect care of mine (very well ventilated, very rarely moved, frequently dusted) and it craps out. The only thing I can think is I was playing a lot of Uncharted 2 the day before it failed. Maybe it reads that disc like crazy.
@Chris D.: When the 3 years on the 360 are up, I could buy a new arcade for $200, (only $50 more than PS3 service), which will then be covered another 3 years. Plus I don't have to do the whole backup restore thing and download my content again. I just have to swap the hard drive. The $150 PS3 repair is only warrantied for 90 days. And they give you refurbs, which may have been serviced for YLOD, but have a drive that's just about to fail.
CaramelZappa @ Oct 30th 2009 1:45PM
@Chris
It doesn't matter if there are a lot less PS3 failures than 360 failures. The fact is a fair amount of PS3's are failing, and sony is charging half the price of the console for repairs. I don't care if you're a sony fanboy or whatever, the PS3 is awesome, but why defend a company for not standing by their products? The fact is they sold people faulty hardware and now the customers that payed up to $600 for it have to shell out more money to fix sony's mistakes. It doesn't matter if it's ten people or thousands of people, it's sony's fault and they should take responsibility for their products.
JACK @ Oct 31st 2009 1:27AM
@rkn "A free 3 year warranty is still a hell of a lot better than a one year standard warranty and being charged $150 to repair it "
well duh! of course it is, just like a lower failure rate is better than a higher one.
Of course MS had to do the three year cover, I guess some of you forgot that MS was getting sued for the RROD? If it weren't for a LAW SUIT then you would of been given the cold shoulder like any money making businesses do. I'm NOT trying to justify the Sony price or anything, just reminding you of the truth.
Gamers win here, so HA take that MS!
http://gamer.blorge.com/2008/10/16/microsofts-xbox-360-rrod-lawsuit-actually-a-good-thing-for-consumers/
Chris D.(PSN: Aggie_CEO | XBL:The Aggie CEO | Steam: Aggie_CEO @ Oct 30th 2009 11:20AM
well thats no surprise considering how much the things cost to make at launch....good thing about the PS3....it will continue to sell for the next 7 years....giving it a chance to make that back and then some.....MS used the orignal Xbox as R&D for the 360....and did a damn good job getting market share....my Guess is Sony has learned from that and will try to to let MS get TOO much of a jump on them Next gen...so my guess is 2012 will see 1 if not 3 new consoles.....
jekoln @ Oct 30th 2009 11:23AM
ms didn't use the original xbox for good R&D concerning build quality, that's for sure.
Chris D.(PSN: Aggie_CEO | XBL:The Aggie CEO | Steam: Aggie_CEO @ Oct 30th 2009 11:26AM
well thats partly do to them wanting to beat Nintendo & Sony out the door....had they took that extra year they would have worked out RRoD and it would have been less hurtful.....at the same time they would have also had to take on the PS3 which was $100-200 more AND the Wii which was cheaper...had the 360 came out at the same time as the Wii and PS3 it would NOT have had the same fate it does now
jekoln @ Oct 30th 2009 11:29AM
most likely. it's so dumb that they put it out before xmas just so they could sell out and not meet demand, then be plagued with problems for the next two years.
i know it's a sony thing, but i really wish that ms would do a slim design on the 360.
Chris D.(PSN: Aggie_CEO | XBL:The Aggie CEO | Steam: Aggie_CEO @ Oct 30th 2009 11:51AM
not sure I would buy a smaller 360....I mean its NOT that big any ways...not to mention it would most likely use a different proprietary HDD....and we know that would blow ass
Alphathon @ Oct 30th 2009 4:59PM
I would love to see a 360 slim, but I really don't see it happening. One of the major ways the the PS2 -> PS2 Slim was achieved the way it was was to put the power supply ooutside the box, which they can't do with the 360 *imagines how hot it would run if it were internal*. They can't really slim down the motherboard either, as that would just end up making it run hotter (unless they improve the chips on it) as everything would be closer together, so all that leaves is disk drive, which wouldn't shave off that much, and room for ventalation, which they can't remove for obvious reasons.