Sony FY 2008 Q2 Results – Analysis – SONY BLEEDING – LOOKING BAD

[Squilliam]

NJ5 said:

Squilliam said:
In an economic crisis like this, I wonder if Sony is suffering from substitution of its goods for other inferior brands.

The basic principle of inferior/normal goods is that when the consumers income goes down they tend to buy more inferior goods and when their wealth increases the opposite.

So instead of buying a Sony, someone might instead buy a Sanyo and save a few hundred $$$.

Am I right?

That's obviously one of the potential consequences of an economic downturn. People become much more cost conscious. Instead of buying the top of the line Panasonic or Sony LCD using their 18% interest credit card from a bank which went bankrupt, they buy the el-cheapo Walmart LCD (or just keep their old TV which still works fine).

 

Thats pretty much what I expected. Unfortunately this credit crisis has hit at almost the worst possible time, they have a lot of games set to release next year and every lost sale now will hurt them additionally when they consider the 1/2 possible first party title sales they lose as well.

The number of studios they have now was only really tenable when they had a PS2 sized userbase, currently they are trying to feed a developer population greater than Nintendo on the userbase of a third place console 2 years into the generation. Furthermore, theres some pretty hefty third party competition for games next year as well so its not like a Nintendo Gamecube where they knew they would sell like hotcakes inspite or because of a lack of competition.