Why reports of the decline of the PS3 have been grossly exaggerated.

[Kantor]

Smashchu2 said:

But how can SCE afford such outlanding expenses such as a price cut in these harsh times?

If we assume everythings in U.S dollars for a moment, and that Sony sells 10,000,000 PS3s with a price cut. At $400, they would have recieved $4,000,000,000 of revenue whilst at $350 it would be $3,500,000,000. A shortfall of about $500,000,000 (Im assuming the same number sold because I don't want to complicate things)

Note that says revenue. Not profit. Profit is cost-revenue. The PS3 obviously had a high cost (especially in the begining), so the profits will be lower. This does not include the cost of labor and running a facility. Since it is selling at a slow rate, these cost will be more of a hurt on the company.

One reason  to lower the price is to move them. Labor and facility cost will be less of a strain if money is coming in faster. It's a matter of movving consoles they can, then not selling enough.

Killzone 2, Uncharted 2, MAG, Gran Turismo 5, God of War III, the agency.

If you could think of a reason these games will sell fewer than 15,000,000 combined on a userbase approaching the 30,000,000 mark please raise your hand and tell me. Now thats out of the way, if you assume a publisher cut of $38 per game that gives you a total revenue of: $570,000,000 minimum.

http://vgchartz.com/worldtotals.php?name=&console=PS3&publisher=&sort=Total

Look at the sales of those games. Now look at the sales of the games you mentioned. Besides Resistance, most of those games will only make ~1million. It might break 15million on two games a lone, but the truth is that the games may very well not. The games must sell 2.5 million each, and many might not make that, while the ones that sell over might not be enough to over pass the number. It might not make it. Plus, remeber that is only 15million in sales. These are all games with HIGH cost. Killzone has been in development for up to 4 years. These games may just cconver their development cost.

So the PS3 needs a price cut to stimulate sales, fact. The PS3 can afford a pricecut because this is likely to be the biggest year for sales for SCE on the PS3 for a while and even with a crappy exchange rate one can easily subsidise the other.

With Grand Theft Auto and Metal Gear Solid out of the way, I doubt Sony will have a strong year for a while.

Grand Theft Auto was a multiplat, so it doesn't count.

I think Killzone 2, Uncharted 2, MAG, God of War III, The Agency and especially Gran Turismo 5 will have a much larger impact than MGS4.