| Procrastinato said: Maxwell's argument has some erroneous, simplistic assumptions -- namely he's ignoring the fact that Sony makes about $9 in royalties off each BD drive produced (which is $270M for PS3 drives alone) which are reported in another division as revenue, and that money is spent by the game division, in purchasing BD drives from 3rd parties (which is part of the reported expenses), and that the cost-of-goods for all of Sony's software is reported as losses in the games division, and as gains in the disc manufacturing division (again, tens, maybe hundreds of millions of dollars, in this gen alone). Still, he's fundamentally correct in his base assumption -- the same things I mention above were true during the "PS2 era" (except DVD royalties for Sony are far lesser per unit), and thus the PS2 was actually much more profitable than it appears from reading the games division reports directly, and the PS3 is not as profitable thusfar... at least not directly. You might put forth that BD royalties will eventually sum to billions of USD for Sony alone (i.e. not inclusive of the rest of the BDA), during the format's lifetime. The Wii is just plain a cash cow for Nintendo -- they have created a no-lose scenario for themselves, by creating hardware which is cheap enough for consumers to afford, and yet profitable enough for Nintendo to rake in money from hardware alone. On top of that, the plethora of cheap software available for the platform ensures its continued existance, and although the profits are spread too thinly amongst 3rd parties to make them happy, Nintendo sees money from every single title licensed for their hardware -- DS and Wii alike. Much like Apple's iStore, actually... |
While this is all generally true (at least structurally, speculating actual figures is likely a losing game), it's also important to note that R&D costs for some key technologies used primarily in PS2 and PS3 (namely EE and CELL) were offloaded to SEL (Sony Electronics Inc.) by Kutaragi under the guise of these chips being used in other consumer devices and electronics (which was planned, but never came to fruition), making the division's products seem more profitable than they likely were. Of course, now Kutraragi's gone and SCE and SEL are being reported together as of this year's financials, so there's really no where to "hide" these sort of expenses any longer.
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