| bumidan said: the big thing is the structural deficit. lets pretend they produced a blockbuster game that quarter. So if all our assumptions are relatively "correct", then if they produced a hit like MGS4 (1st party), then: Sales = 4 million units Assume profit is greater coz it is 1st party = $5 per unit (instead of $2) then that is still only $20 million, out of a loss of almost $400 million Lets even pretend they made HALO 3 in that quarter. According to MSFT - Halo 3 earned REVENUES of $330 million. EVEN IF (VERY BIG IF) they made a NET PROFIT OF $50 million on Halo 3, then IT STILL DOESN'T PUT A DENT in that LOSS. So even if they keep producing a Halo 3 1st party BLOCKBUSTER every quarter, they lose money. Again, note that last quarter Sony made money. And HOPEFULLY in the Holiday quarter, they will also make money. But PS2 is basically dying, PSP is not selling any software (where the high margins) are. PS3 is selling decent software and hardware But the division is still BLEEDING money... so there must be some sort of structual problems, because it is now 2 years in. that is assuming the PS3 is almost BREAKING EVEN on hardware already.... |
A couple of things. With a longer development cycle they have deferred a lot of their software revenue to the end of this year and the start of next year.
You can also assume they recieve a recenue of about ~$38 per 1st party game vs ~$6 for a third party game. The other figures already include development cost, but if the expenses are already accounted for then any profit they make on them has to be applied back to previous expenses.
For example if Killzone 2 costs $50,000,000 to develop and another $30,000,000 to market, test and publish the game then they would need to sell a little over 2,000,000 copies just to break even, except you would have to take the opportunity cost over those years of just keeping the money in the bank so the real break even point because it took 3+ years to develop (10% net increase in money from interest) would be 2.3 Million unit sales at full price.
If we expect a reasonable rate of returns of 30% then Sony would be expecting $114 million in revenue to make up for games which don't break even etc and still give them an overall profit they would need to sell 3,000,000 copies.
Tease.
