Sony might come back? I can't shake the feeling

[NJ5]

FishyJoe said:

NJ5 said:

FishyJoe said:

 

A first party game may earn Sony $30, however you also have to pay the developers, marketing, publishing, distribution, etc. for the game itself. Then after that, if there are any profits left then you can count that towards subsidizing the PS3. So it would take a lot more than 3 or 4 first party games to subsidize a $100 price cut alone.

That is not relevant in this case, since these costs you mentioned do not happen due to the price cut.

 

 

It is relevant, here's why. If people don't buy the software, then you take a loss. You weight the risk of action, in this case a price cut, against that of inaction, no price cut. The goal is to make profit, not a zero sum game. So the number of games required to acheive increased overall profitability is important because it has to be weighed against the risk of taking loss.

There's two components which result in profit as you know, revenues and expenses. A price cut does not change the expenses side, it just reduces the hardware revenue (and hopefully boosts the software one). The risk of acting by making a price cut does not change the software development expenses.