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theprof00 on 05 December 2009
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RolStoppable said:
GreyianStorm said:

Ok, the figures being used here are 28th December 2008 -> 3rd January 2010 (but obviously I only have the figures as far as November 21st, for not even I can see software sales into the future!).

PS3 Hardware Software
Sales 9,149,410 68,925,092

You'll notice the attach rate is closer to 7.5 games sold per console sold during this period (as opposed to the 10:1 in the first scenario).

This gives us a loss of ~$460 million on hardware, with a gain of ~$690 million on software.

This would represent a profit of ~$230 million for the year to date, or a little over $5 million per week. This is significantly lower than the estimated ~$12.5 million per week above, but still a sizeable profit.

Obviously, marketing would be a massive expense, but could it really push Sony $500 million per quarter into the red in the gaming division (the gaming division was about $500 million in the red last quarter, right?). That would mean marketing is roughly $50 million per week, or $2.5 billion per year, which seems very excessive. On top of that, marketing would also have to eat up the profits of the PS2 and PSP.

Now, don't get me wrong. I'm not trying to say Sony is tricking us and is actually rolling around in billions upon billions of dollars (which would be worth like, €25 or so...no, I didn't live out the millions or billions ). I'm just wondering where you guys all think the loss is originating from. Could the shipping be that big (and that is assuming that Sony don't include it when talking about the PS3's cost)? Where are Sony losing such a collosal amount of money?

Since we are talking about losses usually in the hundreds of millions per quarter, the most plausible answer is that Sony is losing more money on the PS3 hardware than you assume ($50). As I previously said, it's probable that Sony talks in the most favorable way for them about how much money they lose on each PS3 unit. This most likely excludes shipping and really only accounts for building the machine and nothing else. Also, since more than a year they keep saying that they hope to break even/become profitable on PS3 hardware, the keyword being "hope". This implies that they are unsure to achieve that feat in the projected time frame.

Additionally you are forgetting about exchange rate, Sony is losing somewhere between 15-30% of revenue on exchange rates. They COULD just hold all the revenue from American sales in America until the money matches up more similarly, but then they wouldn't have very much capital to work with. It is possible that they are doing this and claiming the 15-30% as a loss, but I really doubt it.