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BengaBenga on 29 October 2008
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drkohler said:
BengaBenga said:
To everyone in this thread that's trying to downplay the losses: SCE is supposed to make money. If things continue like this it will mean a third financial year of losses in a row.
This will have a negative effect on the games that Sony will release (Eight Days, The Getaway anyone?) and on Sony's next console.
The cumulative losses on the PS3 are enormous and will certainly lead to a change in strategy at SCE.

A) Of course SCE is supposed to make money, every division of a company is. The question is one of the time horizon and whether the divisions are able (and willing) to outbalance each other. Just how long it takes for a division to achieve profitability (with a new product) and how long it has to stay profitable is a corporate management decision

It's quite clear that the PS3 will never be able to earn back the money that has been invested in it. Sure it will be profitable at some point, but right now we're looking at some 3.7 billion loss since the launch of the PS3. Last year's demands by the Sony CEO that SCE had to be profitable was more than enough proof that Sony isn't willing to take the burden of SCE anymore.

B) This will have absolutely no effect on whether (insert favourite fanboy game) gets pulled or published. Software projects run over several years and once you go beyond a "point of no return" within the project, it does not get cancelled anymore (whatever the current state of an entire division is - unless it is short of bancruptcy..)

This is naive. Do you think SCE can magically make money? They're losing money on a big scale. They will have to cut costs somewhere. Both Eight Days and the Getaway 3 were definitely supposed to be released, cause they were already way beyond demo status. They got cancelled after the Sony board openly worried SCE's situation. Also you'll see less new projects, simply because they're short on money. Sony won't put significant recources into SCE anymore.

C) The cumulative losses are _not_ enormous and are certainly _not_ leading to a change of strategy at SCE given a 10 year plan. (By the way, such strategy change would come from Sony HQ as this would likely be a corporate decision). Such a decision is possible when the next quarter comes in and it is a critical quarter for SCE. They have now finalized all the redesigns of the PSP/PS2 (which cost them a ton of money hw-wise) and manufacturing costs are close to break-even for all consoles. The increase of software revenues should result in a massive profit (>$350mio) this quarter or something is (still and unrepairably) really broken inside SCE.

The cumulative losses are absolutely enormous. How else would you call the fact that the PS3 has made more loss right now than the PS2 ever made Sony? The 10 year strategy is a myth only believed by fanboys, please don't use it as an argument in a serious discussion about the financial state of SCE. Such a decision is made by the costumers, not by anyone inside Sony.
We can also learn that the PS3 is clearly not close to breaking even, since both PSP and PS2 should make SCE a lot of money. If you still end up with a loss it's quite reasonable to assume that the 3rd console loses money.