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Forums - Sony Discussion - SONY lost 3.31 Billion on initial PS3 costs; May never see that money back.

dougsdad0629 on 23 June 2008

Yes, Million, it has been stated that BD's growth is outpacing DVD. However, I don't believe it will ever catch up to DVD's LTD sales simply because a DVD player works on any TV whereas you need a HDTV to reap the benefits of a Blu-ray player. Not everyone has/will have a HDTV.

As for buying exclusive studios, that has never been proven. It was just a HD DVD talking point. The studios (except for Paramount who DID take money from HD DVD) were likely more interested in getting a standard format established to help subsidize their declining DVD sales. Most of the studios believed that standard was Blu-ray for many off-topic reasons I won't get into here.



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Dgc1808 on 23 June 2008

Lol, well i already have my console, so no price cut means no major affect on me. Hopefully by November this year, or maybe even Oct, they can rake in some profit. If it's in time for FF13 and GoW3, then this doesn't seem to bleek, they mite be able to pull up the loss to 2.1G by Mid 09 if they can get some amazing games in once the console hits profitibility



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Smashchu2 on 23 June 2008

While PS3 is doing better in sales now, it's costing a lot more. I guess this is a superficial victory (think that is the right term). They spent so much to try and get the system moving but have lost a lot more.

Also, on the subject of Blu Ray as the bigger picture: it hasn't really been adopted yet. DVDs are still doing well and Blu Ray may not become the norm till 3 years if that. By that time, there will be a PS4 and they'll walk out of this generation with large losses and a weaker brand name. HD and Blu Ray are trying to be moved to early. Come 2011 or 2012 the masses might be ready but that's probably when everyone will have a new console.



Million on 23 June 2008

Sony has some real problems here. First of all, I still maintain that Blu-Ray was a huge mistake. Blu-Ray is not going to penetrate the market the way DVD did. Ever. Apple and Amazon and Netflix and your cable companies will be providing affordable HD movies on demand whenever you want, whatever you want at an affordable price point within the next five years. I just don't think they are going to make enough money back - remember they are just a piece of the Blu-Ray group.

Firstly fast internet connections are far from being the norm , infact even in the UK households with any internet what so ever may still be at 60%-75% at a rough guess .BTW who's going to carry the huge costs of HD media availible to you the second you press a button , I'm positive as hell that the ISP's won't , i'm also sure that if Apple , Amazon or Netflix wanted HD Media they'd have to carry the burden of the ISP's , something they may not be so willing to do as individual businesses.

 

Remember that if they take 5 years to make this money back, they will already be in or will be nearing research and development of the PS4 by then, which is then a few billion more in costs.

Well i'm pretty sure Sony has the finances to be able to fund huge R&D projects so if the PS3 fails to make a profit I don't think it would hinder the PS4 too much unless Sony felt a  change of stratergy would be in order.

 

 

 




nordlead on 23 June 2008
talkingparrot said:
There's alot of talk here, but I would like to know what the above means. Are they saying in 2008 to this point Sony has lost 1.16 Billion or that it is predicted in Fiscal 2008 (till the end of the year), they will lose that much. The article is misleading if one wants to read it in a fanboy's manner.

 

I'm fairly sure they are talking fiscal years, so that would mean FY07 is April 06-March 07, and FY08 is April 07-March 08.




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skeezer on 23 June 2008

Even if they are losing money, can you imagine how much they are still making out of the ps2



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HappySqurriel on 23 June 2008
Million said:
HappySqurriel said:
dougsdad0629 said:
It's getting REAL tiresome reading stuff like this from people who can't see the bigger picture. Yes, Sony spent a lot of money getting PS3 off the ground and technically those losses all get attributed to the gaming division. The bigger picture is that the PS3 helped Blu-ray become the next-gen standard for optical media. The royalties that Sony is reaping/will reap from Blu-ray will make that money back many times over. Sony is a multifaceted company, much like Microsoft. Sometimes one division has to take a loss in order for other divisions to profit. It's symbiosis.

BTW, before I get flamed for being a Sony fanboy, I own a PS3 and a Wii.

 

What are the per-disc royalties on a Blu-Ray disc? Being that promotion of the format is payed for through royalties, and there are multiple members in the Blu-Ray consortium what percentage of those royalties is Sony (really) entitled to?

People seem to forget that the Blu-Ray consortium has already spent Billions of dollars promoting the format and buying exclusive movie studios, and will continue spending hundreds of millions of dollars over the next couple of years, which will eat up most of the royalties. If Blu-Ray is like most formats, after they have broken even (due to upfront costs) they will lower their royalty fess (on discs and players) in order to encourage greater adoption. On top of this Sony will/may end up only receiving a small fraction (possibly 10% to 20%) of those royalties.

In other words, it is highly unlikely that Sony will earn enough money from Blu-Ray royalties in order to recover the costs associated with the PS3.

 

Please elaborate on the bolded as I believe you are talking garbage to strengthen your argument , as for Sony not fully recovering the costs of the PS3 with Blu-Ray , that is yet to be seen , if it is anything near as big as DVD was then i'd say your completley wrong but no one can be really certain . What I do understand is that blu-ray growth is faster than that of DVD in the same time period ( I think lol).

 

First off, Blu-Ray has been aggressively marketing in magazines, on television, in movies, on DVDs, and in tradeshows; each of these marketing tasks cost money and far more than most people on these sites would imagine.

Beyond that there are 18 board members in the Blu-Ray association, and if royalty fees were distributed equally Sony would only receive 5.5% of royalty fees; assuming a disproportionate distribution of more than 20% towards Sony would be foolish without any further information.

Edit: There are also 66 companies which are contributors to the Blu-Ray format which will likely be paid licencing fees for the technologies they produced and are used in the format.



Krusnik on 23 June 2008
fastyxx said:
Sony has some real problems here. First of all, I still maintain that Blu-Ray was a huge mistake. Blu-Ray is not going to penetrate the market the way DVD did. Ever. Apple and Amazon and Netflix and your cable companies will be providing affordable HD movies on demand whenever you want, whatever you want at an affordable price point within the next five years. I just don't think they are going to make enough money back - remember they are just a piece of the Blu-Ray group.

Also, they are also facing the prospects of just not selling software the way they did with PS2. They are selling more now than they did, surely, but they aren't selling crazy total numbers, and that's how they are going to make their money back. If they don't get that attach rate boosted, it could be a long generation for them indeed.

Remember that if they take 5 years to make this money back, they will already be in or will be nearing research and development of the PS4 by then, which is then a few billion more in costs.

 

 This very thought crossed my mind earlier just how are they planning to recoup the costs, given that proportionately the PS2 had a much larger user-base and software sales yet manged to only eek out what was it $1B in profits [correct me if  i'm wrong on the figure]



dib8rman on 23 June 2008

@doug

Blu-Ray is the standard? I though it shifted from DvD to bootlegs... unless your telling me Bootleg isn't a viable format!

For all intent's and purposes Bootleg won the format war at least in my pocket err eyes.



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talkingparrot on 23 June 2008

Wait if they are talking fiscal years, thats actually quite good. From 2 billion to 1 billion is quite a feat. With the new consoles being introduced, that means the PS3 should start raking in soon and the overall loss will go down.



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