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

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SSPOrSK said:
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Oh darn, this is an invasion !  



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On hardware and software alone? No chance. They have simply lost too much money on this console and are not in a position to capitalize on the market substantially enough to make the money back.

I really do think that Sony sacrificed gaming dominance in order to ensure Blu-Ray survived, and I really don't believe they thought they could only get one without the other. They thought that the PS3 would take off like the PS2 and take Blu-Ray with it. They have saved Blu-Ray, but it won't have anything like the dominance DVD did before it is replaced by digital downloads.



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RolStoppable said:
TWRoO said:

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.

(...) 

------
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 actually haven't looked at the financial reports myself, because I just believed the numbers
Renar has given to be true. They fall in line with what someone would expect, so I had no reason to doubt them.

I think the reason why Renar hasn't given any numbers prior to '96 is because the gaming division wasn't
listed seperately in the financial reports until this point, so there simply aren't any numbers at all available.
Of course with the R+D costs for the PS1 Sony won't have made 383 billion yen in the PS1 era, but at least
we know that they haven't made more than this sum, in case somebody is claiming otherwise.

The total profit Sony has made off of its Playstation brand prior to the PS3 is somewhere between $5-5.5 billion,
since then they made a loss of about $3 billion. We don't have exact numbers for everything, but we have a
good idea how profitable the videogames business is/was for Sony.


page two is ifn on my laptop... it might have just been the Wii opera browser.
so I can finally reply to Rol.

Yes the numbers are all the same for Renar as the ones I found, except I couldn't find any
seperated (game division only) operating profit numbers for 98 and earlier (this is the year they showed
the game division as seperate from the "other electronics" division) I did find, as you can see on the
charts, the game division revenue/sales figures because they put a chart of it on the 1998 statement
showing the past 5 years (though there is no bar for 1994 because they didn't sell anything)

I will PM renar and ask him.... perhaps it was hidden in the text from one of the reports.



Gamerace said:
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.

Nikko Citigroup's Kota Ezawa estimates the games division will lose $1.4 billion this fiscal year, following last year's $2.1 billion loss. And while he doesn't expect the business to be prosperous until late 2009, Ezawa applauds Sony's efforts to shrink the PS3's chips and tweak its design. Already such changes have cut the cost per machine to around $400 now, from above $800 just before it went on sale in November, 2006, he says. (The PS3 with an 80-gigabyte hard-disk drive retails in the U.S.

 

this means they cut making the ps3 buy 400 bucks... so next year expect it to be even cheaper so yes they will make money off their system... with PSN downloads Blu-rays and ps3 games they will. and id say very soon.



Dno said:
Gamerace said:
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.

Nikko Citigroup's Kota Ezawa estimates the games division will lose $1.4 billion this fiscal year, following last year's $2.1 billion loss. And while he doesn't expect the business to be prosperous until late 2009, Ezawa applauds Sony's efforts to shrink the PS3's chips and tweak its design. Already such changes have cut the cost per machine to around $400 now, from above $800 just before it went on sale in November, 2006, he says. (The PS3 with an 80-gigabyte hard-disk drive retails in the U.S.

 

this means they cut making the ps3 buy 400 bucks... so next year expect it to be even cheaper so yes they will make money off their system... with PSN downloads Blu-rays and ps3 games they will. and id say very soon.


They'll likely start to realize a profit at some point yes. But the question is a NET profit.  Will they ever make enough money to offset the incurred losses?  The total profit from the PS2 wouldn't have been enough to offset these kind of losses, and the PS3 is no PS2.



 

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I don't think Sony's games division will see a net profit this cycle, but I think with the PS3 being a successful trojan horse for Blu-ray, BR profits will more than offset their losses on PS3 in the long run.



FishyJoe said:
Troll_Monster said:
Of course Sony can make the PS3 profitable, they are hardware manufacturers and know how to bring down the cost, it's all a matter of time, hell for all we know Sony could have already broken even with the PS3.

Except you're ignoring the fact that Kaz Hirai just said yesterday that they were hopeful but non-commital about making a profit with the PS3 somtime in the NEXT fiscal year.


Perhaps they already broke even in EU, but they don't say it to avoid stressing the higher price they charge here.

In Wikipedia's article about PS3 there are some details on recent savings in production costs.

 

Edit:

Calculating also royalties on 10 games sold for each console and admitting that after 15 millions units they stop losing money on HW, start selling much more games than before thanks to a wider offer and also that at that point losses are $ 3 billions, they need to sell roughly 45-50 millions consoles to break even, while MS needs "only" to sell 35-40 millions XBox360s to do the same.

So it's matter of patience and stoutness, for XFlop 1 MS gave up after 3 1/2 yrs, ending losing 4 billions (also because they shot themselves in the foot and painted themselves in a corner by botching signally supply contracts with intel and nVidia ), while Sony, although initially losing also on PS2,  persisted supporting it much longer and still sells it, earning on HW and SW.



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Gamerace said:
Dno said:
Gamerace said:
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.

Nikko Citigroup's Kota Ezawa estimates the games division will lose $1.4 billion this fiscal year, following last year's $2.1 billion loss. And while he doesn't expect the business to be prosperous until late 2009, Ezawa applauds Sony's efforts to shrink the PS3's chips and tweak its design. Already such changes have cut the cost per machine to around $400 now, from above $800 just before it went on sale in November, 2006, he says. (The PS3 with an 80-gigabyte hard-disk drive retails in the U.S.

 

this means they cut making the ps3 buy 400 bucks... so next year expect it to be even cheaper so yes they will make money off their system... with PSN downloads Blu-rays and ps3 games they will. and id say very soon.


They'll likely start to realize a profit at some point yes. But the question is a NET profit.  Will they ever make enough money to offset the incurred losses?  The total profit from the PS2 wouldn't have been enough to offset these kind of losses, and the PS3 is no PS2.


to make a net profit all you have 2 do is sell for more then its being made sony has cost cut the hell out of that system.. nintendo made money off the Gamecube and the n64 and the ps3 WILL sell better and more games then both of those



@Dno

no, to make a UNIT profit you have to do that.

To make a NET profit your LTD income has to be greater than your LTD expenses which will be VERY difficult to do for the PS3.



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CrashMan said:
@Dno

no, to make a UNIT profit you have to do that.

To make a NET profit your LTD income has to be greater than your LTD expenses which will be VERY difficult to do for the PS3.

dude thanks for the info but i no what NET is.... sony is already selling the ps3 and making a PROFIT on each unit sold of the 80 gig and dead even on the 40 gig (which cost less then 400 bucks) i gave you all the proff. you people are telling me in five years time when ps3 is selling for sub 200 bucks and it cost sony sub 100 bucks to make and over 50 million ps3s WILL be sold by 2012 and countless games that sony will not of made a NET profit? then you are ALL WRONG and stupid to think so. sony cut the cost of the ps3 by FOUR HUNDRED DOLLARS IN ONE YEAR. by next year it will cost sony sub 300 bucks to make and then they will be in the black. sony said themselves that there is a chance to be in the black next year... which means THEY HAVE 3 MORE YEARS OF PROFITABLE INCOME ON THE PS3.... PEOPLE ARE REALLY CRAZY IN THIS SITE.......