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Forums - Sales Discussion - SONY LOSSES, especially PS3 – New & Improved Analysis - End Mar 2008

dbot said:
It will be interesting to see the quarterly numbers for FY 2009. Fiscal Year 2008 included the 20 gig and 60 gig systems that were sold at a substantially higher loss. I believe the initial loss estimates on these were close to $500 per console. The introduction of the 40 gig and 80 gig really allowed Sony to pair the cost down. The fact that they were able to get a blended per system loss to ($210 per console) is fairly remarkable. I appreciate your research. I appreciate Sony for splitting the cost of my 60 gig PS3.

I certainly appreciate it also because I would have bought the console as long as it was $1000 or less. I'm not rich, I just work and save money for whatever I want.

 



"Dr. Tenma, according to you, lives are equal. That's why I live today. But you must have realised it by now...the only thing people are equal in is death"---Johann Liebert (MONSTER)

"WAR is a racket. It always has been.

It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives"---Maj. Gen. Smedley Butler

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BengaBenga said:
antfromtashkent said:
BengaBenga said:
antfromtashkent said:
BengaBenga said:

You're right. With the 127/1 Yen/$ it is about $ 400 million loss in 2001.
About a third of this years.

 

 so twice the loss / twice the cost of the system = the same dosent it?

 

If we take the year before into acount it's a bit different than that. 2000 show 800 million profit for SCE. So those two years comined have a profit of $400 million, while 2007 - 2008 show a 3.3 billion loss for SCE. (Years are when year ends, not FY).

Although the PS2 was not or barely launched in April 2000, the R&D and other costs can be compared to 2007.

i think that thats the combination of PSP and PS3 being out so close together is the problem and if thats the case then Sony is doing better than it did with the PS2.....

 

 

Hmm, I don't see how it does better. I see that the difference between + 400M and -3.3 billion is staggering. I don't see how you can call that better.

The PSP and PS2 should make quite a big profit, during the PS2 launch it was only the PSone.

If you consider the price of the PS3.... Plus the losses from a whole another system its like they are taking a tripple hit.

 



Pretty good analysis, though it is obviously hard to guess the exact profits/losses per console and software. Anyway, FishyJoe mentioned some additional expenses that are not included, but would affect the results. I don't think the R&D done for Home or the operating expenses of PSN are that significant, probably we're talking about tens of millions of dollars of R&D and maybe a similar amount for the PSN. Marketing costs are on another level, however. I'd suspect them to be anything between 10 to 20 percent of the total revenue, so that would have a big impact on the PSP and PS3 hardware figures. Other unknowns are the R&D expenses for the PS3 revisions, PSP and the next generation of hardware. If you take these into account, the losses per hardware will be somewhat smaller I believe, but it's virtually impossible to say how much.

In any event, Sony has sustained huge losses so far. For a comparison, during the same timeframe Nintendo has posted profits of 811.4 + 913.2 + 1620.9 + 2393.3 = 5738.8 million dollars. If Sony can sell the hardware at cost or for some profit and if they can sell boatloads of software and movies, I believe they can recuperate the losses. It is good that they are focusing on being profitable now, that gives me hope.



Anyone care to cook up a guess as too how future profitability of Sony will be impacted by their use of the PS3 to win the High Def. DVD format war? There has to be a value on that, some amount of the 'loss per unit' had to be calculated not only in payback from peripherals and software, but also is a generation of Blu Ray sales.

I think this may be a big picture thing for them.



 

PSN: TheGodofWine (Warhawk / R2 / MotorStorm PR)

AND

PSN: Skigazzi (for KZ2 and future games)

To answer some of the questions that a lot of people seem to have (con't):

1. Software NET PROFIT = $2(*)

This takes into account all costs associated, including, but not limited to R&D, distribution, marketing, etc. This number is the AVERAGE of all software sold, regardless of 1st, 2nd or 3rd party.

As mentioned in the additional scenario analysis - a $3(*) software NET profit for PS2, PSP and PS3, while keeping everything the same results in a NET PS3 HARDWARE LOSS of $5.931(*) Billion Dollars ending Mar 2008, compared to $5.139(*) Billion in the original analysis.



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Kasz216 said:
DMeisterJ said:
Sony's only making 2 dollars off of each PS3? Even with the Slim/Lite staying at the same price as the fatty?

I don't buy that for a second.

 

$2 for each software game... not each PS2.

Which seems low.

That 2$ profit per software includes the development and marketing and manufacturing costs for software, it's not the same as licence fees per game.

Edit: bumidan beat me to it.



GodofWine said:
Anyone care to cook up a guess as too how future profitability of Sony will be impacted by their use of the PS3 to win the High Def. DVD format war? There has to be a value on that, some amount of the 'loss per unit' had to be calculated not only in payback from peripherals and software, but also is a generation of Blu Ray sales.

I think this may be a big picture thing for them.

 

 lol i dont think doing a "kamikaze" with the gaming divition is a very good plan :P i think the big picture is that there planning to bank off the PSP and the PS3 at the same time and thats what is going to happen....



antfromtashkent said:
BengaBenga said:
antfromtashkent said:
BengaBenga said:
antfromtashkent said:
BengaBenga said:

You're right. With the 127/1 Yen/$ it is about $ 400 million loss in 2001.
About a third of this years.

 

 so twice the loss / twice the cost of the system = the same dosent it?

 

If we take the year before into acount it's a bit different than that. 2000 show 800 million profit for SCE. So those two years comined have a profit of $400 million, while 2007 - 2008 show a 3.3 billion loss for SCE. (Years are when year ends, not FY).

Although the PS2 was not or barely launched in April 2000, the R&D and other costs can be compared to 2007.

i think that thats the combination of PSP and PS3 being out so close together is the problem and if thats the case then Sony is doing better than it did with the PS2.....

 

 

Hmm, I don't see how it does better. I see that the difference between + 400M and -3.3 billion is staggering. I don't see how you can call that better.

The PSP and PS2 should make quite a big profit, during the PS2 launch it was only the PSone.

If you consider the price of the PS3.... Plus the losses from a whole another system its like they are taking a tripple hit.

 

Oh you mean that if you take the loss Sony makes on every PS3 into acount that the rest of the division is doing quite well?

That could be. I don't believe that the PSP make a loss, it must be profitable by now. It's quite a successful device.

I don't know what Sony lost per PS2 initially. It should be less than the (rumored) $200-300 per PS3, but then again, they didn't sell that well, so didn't cause a massive loss.

I don't know if that's what you mean, cause I still think it's quite clear that in comparison to 2001 Sony is doing horrible.



I think the extreme losses this year is amplified by the complete lack of 1st party software success. Sure there are some million sellers but the development costs are said to be so high that you need a million seller to break even and a lot of 1st part games were bundled, which reduces the margins even more.
I even think that Heavenly Sword made a loss on itself. It's no coincidence that two major projects were cancelled a few weeks ago. Sony is feeling the strain of the high development costs.

This year should be better though, with Motorstorm 2, Resistance 2, LBP. Killzone however is pretty expensive.

 



Another point to consider is that the PS2 revenue will probably be significantly lower going forward. So it's rather critical that the PS3 become profitable soon as the PS2 will no longer be able to pick up the slack.



BengaBenga said:
antfromtashkent said:
BengaBenga said:
antfromtashkent said:
BengaBenga said:
antfromtashkent said:
BengaBenga said:

You're right. With the 127/1 Yen/$ it is about $ 400 million loss in 2001.
About a third of this years.

 

 so twice the loss / twice the cost of the system = the same dosent it?

 

If we take the year before into acount it's a bit different than that. 2000 show 800 million profit for SCE. So those two years comined have a profit of $400 million, while 2007 - 2008 show a 3.3 billion loss for SCE. (Years are when year ends, not FY).

Although the PS2 was not or barely launched in April 2000, the R&D and other costs can be compared to 2007.

i think that thats the combination of PSP and PS3 being out so close together is the problem and if thats the case then Sony is doing better than it did with the PS2.....

 

 

Hmm, I don't see how it does better. I see that the difference between + 400M and -3.3 billion is staggering. I don't see how you can call that better.

The PSP and PS2 should make quite a big profit, during the PS2 launch it was only the PSone.

If you consider the price of the PS3.... Plus the losses from a whole another system its like they are taking a tripple hit.

 

Oh you mean that if you take the loss Sony makes on every PS3 into acount that the rest of the division is doing quite well?

That could be. I don't believe that the PSP make a loss, it must be profitable by now. It's quite a successful device.

I don't know what Sony lost per PS2 initially. It should be less than the (rumored) $200-300 per PS3, but then again, they didn't sell that well, so didn't cause a massive loss.

I don't know if that's what you mean, cause I still think it's quite clear that in comparison to 2001 Sony is doing horrible.



I think the extreme losses this year is amplified by the complete lack of 1st party software success. Sure there are some million sellers but the development costs are said to be so high that you need a million seller to break even and a lot of 1st part games were bundled, which reduces the margins even more.
I even think that Heavenly Sword made a loss on itself. It's no coincidence that two major projects were cancelled a few weeks ago. Sony is feeling the strain of the high development costs.

This year should be better though, with Motorstorm 2, Resistance 2, LBP. Killzone however is pretty expensive.

 

With the PSP now making proffit (and the PS3 soon to be making) the profits will acumilate just as fast as the losses did...