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Forums - Sony - Sony slashes profit margins on games business to just 2%

NiKKoM on 24 May 2013

Sony slashes profit margins on games business to just 2%

 

Company continues to seek more funding with ¥150 billion bond sale

Sony has this week slashed its expected profit margins on the PlayStation business for the year to March 2015 from 8 per cent to just 2 per cent.

The company is still sticking to targeted sales of ¥1 trillion for the PlayStation business, as it increases its focus on digital sales through the PlayStation Store and pushes marketing and discounts for the Vita handheld.

"In particular, the company will seek to grow sales of content and services through PlayStation Store and contribute to profit. For PlayStation Vita, the company will aim to secure further sales and profit through various hardware sales initiatives and the introduction of compelling software titles," said Sony in a statement.

Although Sony is expected to launch the PlayStation 4 at the end of this year, it's not concentrating on that side of the business until the following financial year ending March 2016.

Today Sony said it will attempt to raise ¥150 billion through the sale of bonds to Japan's retail investors to raise more cash. The company has recently sold off multiple assets to raise funding, including shares in M3, an office in Tokyo and its US headquarters.

For the last financial year, sales and profits for the PlayStation business dropped signifcantly.

CEO Kaz Hirai also said this week that Sony is considering splitting off its entertainment business, which includes music, TV and films.

http://www.gamesindustry.biz/articles/2013-05-24-sony-slashes-profit-margin-on-games-business-to-just-2-percent

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Otakumegane on 24 May 2013

So we might see a price drop soon on Vita or PS3?



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Turkish on 24 May 2013

So for once they'll profit when they launch a new console.



Troll_Whisperer on 24 May 2013
Otakumegane said:
So we might see a price drop soon on Vita or PS3?

PS4 production and marketing mostly I guess.



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Proclus on 24 May 2013

Kind of curious to know whether it's the HW or SW side to not perform as well as initially expected, or whether they undershot on costs factoring.

Either way dissapointing for Sony I guess, but still better to profit a bit than not at all.



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HikenNoAce on 24 May 2013

This is still good news. That means that they won't be losing billions on the PS4 like they did with the PS3.



NiKKoM on 24 May 2013
Troll_Whisperer said:
Otakumegane said:
So we might see a price drop soon on Vita or PS3?

PS4 production and marketing mostly I guess.

it's marketing for the PS4


Earlier this week, Sony cut its profit margin target for the game business to 2 percent for the year ending March 2015 from 8 percent projected a year ago, citing expenses for promoting the new PS4 console for introduction by year’s end.
from Bloomberg

Anyway It's kinda crazy that they slashing it a whoping 2 weeks after announcing the 8%..



 

Face the future.. Gamecenter ID: nikkom_nl (oh no he didn't!!) 

JEMC on 24 May 2013
Proclus said:
Kind of curious to know whether it's the HW or SW side to not perform as well as initially expected, or whether they undershot on costs factoring.

Either way dissapointing for Sony I guess, but still better to profit a bit than not at all.

It can be the increase of RAM, going from 4GB of expensive GDDR5 to 8GB while keeping the same price point (a guess).

Higher manufacturing costs and bigger than expected losses from each console sold can explain that revision, at least in part. Add possible price cuts for Vita and PS3 and there you have it.



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Troll_Whisperer on 24 May 2013
NiKKoM said:
Troll_Whisperer said:
Otakumegane said:
So we might see a price drop soon on Vita or PS3?

PS4 production and marketing mostly I guess.

it's marketing for the PS4


Earlier this week, Sony cut its profit margin target for the game business to 2 percent for the year ending March 2015 from 8 percent projected a year ago, citing expenses for promoting the new PS4 console for introduction by year’s end.
from Bloomberg

Anyway It's kinda crazy that they slashing it a whoping 2 weeks after announcing the 8%..

Well, at least a 2% profit margin at launch is better than losing billions. But yeah, strange that. Maybe they changed something suddenly regarding the launch.



No troll is too much for me to handle. I rehabilitate trolls, I train people. I am the Troll Whisperer.

NiKKoM on 24 May 2013
Troll_Whisperer said:

Well, at least a 2% profit margin at launch is better than losing billions. But yeah, strange that. Maybe they changed something suddenly regarding the launch.


I think they are going to be more aggressive against the XBone in the US.. they will have too cause the XBone looks mighty fine from a US perspective



 

Face the future.. Gamecenter ID: nikkom_nl (oh no he didn't!!)