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Do you think Sony will ever make a net profit from the PS3?

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TWRoO said:
Is no-one else having a problem with this page?... I have to go into rich text reply to read the posts.... though I think we are nearly on page 3, perhaps it will fix itself.

No problems for me. Page 3 brought to you by Austria's biggest Kim Possible fan.



Legend11 correctly predicted that GTA IV (360+PS3) would outsell SSBB. I was wrong.

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Of course hind sight is 20-20.

I am more concerned with what Sony is going to do with the PS3's sequal. Either it is going to be very expensive again, or it is going to need to be launched very late...

That true. It pretty obvious now $600 is too much (maybe even $500) for a console.

As far as PS3 sequal if HD really doesn't sell and most people still have SD TV later on then why do you need a sequal the start with? Do you really need anything more powerful to run games in 480p? As of now it's the Wii and it's game that's on top. If PS3 is profitable it will clearly be in the long run.



rukusa said:
Lol, kinda ironic that I clearly remember the same kind of thread about the 360 about a year ago.

Of course it will, if the 360 is proof of anything, then it takes time for a newly arrived console to gain profit.

Its awkward that people are questioning it about the PS3.

 360 has not earned a net profit yet



 

Predictions:Sales of Wii Fit will surpass the combined sales of the Grand Theft Auto franchiseLifetime sales of Wii will surpass the combined sales of the entire Playstation family of consoles by 12/31/2015 Wii hardware sales will surpass the total hardware sales of the PS2 by 12/31/2010 Wii will have 50% marketshare or more by the end of 2008 (I was wrong!!  It was a little over 48% only)Wii will surpass 45 Million in lifetime sales by the end of 2008 (I was wrong!!  Nintendo Financials showed it fell slightly short of 45 million shipped by end of 2008)Wii will surpass 80 Million in lifetime sales by the end of 2009 (I was wrong!! Wii didn't even get to 70 Million)

This thread is too long to address all the different arguments so here's my two cents:

PS3 hardware & software, clearly will never earn a net profit. The already incurred loss is simply too great. PS3 would have to outsell PS2 and it's software would have to substantially outsells PS2's for this to happen. And after one year plus it's clear the PS3 will never reach PS2 sales.

Now if you include blu-ray then it really gets confusing since we really have no idea how much they make off that. Also you have to consider the sales of blu-ray players and even HD tvs that might sell because of blu-ray becoming the standard. All of which is impossible to quantify even for Sony.

Plus John Lucas is right, Sony put themselves into a hugely expensive fight with MS by deciding to aim the PS3 at the exact same market while ignoring Nintendo and the larger audience share. This fight will be a blood bath for them both. Both systems will see quarterly profits in time, but neither will earn a net profit this generation. MS might break even thanks to larger revenue streams, but it'll still be billions in the hole from the original xbox.

One thing I'm feel very confident about. You're seeing the end of the powerful, subsidized, loss leading console. If and when Sony & MS put their next gen system out, they'll ape Nintendo's highly profitable business model. Nintendo has never lost money, not even with the worse selling system. Why should Sony & MS continue to slowly bleed to death? Just so core gamers can be happy? I don't think so.



 

Individual PS3 software, of course, some have, some won't.

PS3 hardware profit on the final box sold, probably.  On the other hand,  note in the table:

Sony Annual Reports Game Operating Income
YearEnd Mar 31 Yen(B)

2006 8.7
2005 43.2
2004 67.6
2003 112.7

Either PS2 operating income peaked in 2003, and its profits started declining.  Or 2004 the cost of developing the PS3 was already so large, it knocked down the net game division net operating income even with PS2's income staying the same or growing.  PS3 losses are *much* bigger than the losses reported for 2007.  There is probably 100-200Yen(B) of PS3 losses masked by the PS2 in the previous years and 2007 itself.  

For the PS3 hardware to be profitable LTD at the end, no way.

Including software and other game related income, very doubtful.

Including Blu-Ray royalities, possibly if it becomes a long term standard.  But Blu-Ray income will not go to the Gaming Division.  That is not one of their items to 'sell'.

 



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Renar said:

Individual PS3 software, of course, some have, some won't.

PS3 hardware profit on the final box sold, probably. On the other hand, note in the table:

Sony Annual Reports Game Operating Income
YearEnd Mar 31 Yen(B)

2006 8.7
2005 43.2
2004 67.6
2003 112.7

Either PS2 operating income peaked in 2003, and its profits started declining. Or 2004 the cost of developing the PS3 was already so large, it knocked down the net game division net operating income even with PS2's income staying the same or growing. PS3 losses are *much* bigger than the losses reported for 2007. There is probably 100-200Yen(B) of PS3 losses masked by the PS2 in the previous years and 2007 itself.

For the PS3 hardware to be profitable LTD at the end, no way.

Including software and other game related income, very doubtful.

Including Blu-Ray royalities, possibly if it becomes a long term standard. But Blu-Ray income will not go to the Gaming Division. That is not one of their items to 'sell'.


You are missing one important big factor: the PSP. It launched during fiscal year 2004 and was sold at a loss initially.



Legend11 correctly predicted that GTA IV (360+PS3) would outsell SSBB. I was wrong.

A Biased Review Reloaded / Open Your Eyes / Switch Gamers Club

When pigs fly.



RolStoppable said:
Renar said:

Individual PS3 software, of course, some have, some won't.

PS3 hardware profit on the final box sold, probably. On the other hand, note in the table:

Sony Annual Reports Game Operating Income
YearEnd Mar 31 Yen(B)

2006 8.7
2005 43.2
2004 67.6
2003 112.7

Either PS2 operating income peaked in 2003, and its profits started declining. Or 2004 the cost of developing the PS3 was already so large, it knocked down the net game division net operating income even with PS2's income staying the same or growing. PS3 losses are *much* bigger than the losses reported for 2007. There is probably 100-200Yen(B) of PS3 losses masked by the PS2 in the previous years and 2007 itself.

For the PS3 hardware to be profitable LTD at the end, no way.

Including software and other game related income, very doubtful.

Including Blu-Ray royalities, possibly if it becomes a long term standard. But Blu-Ray income will not go to the Gaming Division. That is not one of their items to 'sell'.


You are missing one important big factor: the PSP. It launched during fiscal year 2004 and was sold at a loss initially.

Ahh, yes.  So the PSP could have (probably) ate up a lot of the PS2 operating income that I blamed on the PS3.  For 2004, most likely, 2005.  But, as I'm sure Sony supporters would tell you, PSP is now making lots of money.   Which if it is, that money is being eaten up by the PS3 as well.  Poor PS3.  I guess the only thing that it can't be blamed for is global warming.

 

(Which as we all know, is due to the X360!) 

 



Torturing the numbers.  Hear them scream.

TWRoO said:
Needs More Graphs.

Hey Rol... how did you (or Renar) get the gaming division operating profit for 96-98? because I have just been looking through those reports and I couldn't find anything other than revenue and sales for gaming division... all the operating profits were lumped together for the company rather than being seperate.

anyhow.... I copied some of the charts from various reports to build up a picture... so this shows the sales revenue and operating profit from 1999 onwards, but also revenue for 95-98.

 

There seems to have been a change in their reporting methods between 2000 and 2001 by the way, because the lower left chart is from 2000, but shows lower sales than the 2001 chart (which i put on it's side).... I believe they may have reported sales to retail pre 2001, before changing back again recently.

Also I don't know what operating margin is, so don't ask me.

------
and finally, I guess the numbers Renar has given you do not include the R+D costs for the PS1, which will probably have been in the 95 or 94 report... so Sony won't have made 383billion Yen in the PS1 era.

and according to the 1997 report the xchange rate then was 124 Yen to $1... but unless it went up a lot before coming down recently I don't suppose that makes too much difference.


 



I think Sony needs to concentrate on the next generation as personally I think this one is a goner. They are extremely unlikely to turn a profit on the PS3.

They need to keep the PS3 competitive without bleeding too much money so that the general public doesn't see it as a complete flop, then they need to concentrate on redesigning their entire business structure so that they can survive in a console market in which they aren't king. The main problem with the PS3 is that it is unable to survive in such a market, each PS3 sold represents a loss in money for the company and while such a loss leading strategy worked while PS was king the PS3 has clearly shown such a strategy just doesn't work when another console gains the lead.
They need to adapt and learn from Nintendo who showed last generation with the GC that it is possible to survive at the bottom of the heap. I expect the PS4 not to use a loss leading strategy.