I've been thinking about the PS3 situation at the moment, and it occurs to me that right now it doesn't seem like anybody involved in its production, distribution or sale is making much of a profit, which is likely to have some long-term effects.
Sony -- as the designer and manufacturer, we know they've been losing money on the PS3 console hardware to date. If the losses are indeed in the $100-$200 range, then the successful first party titles they're publishing and third-party royaties together aren't yet bringing in enough money to make up the difference. (And in some markets, people aren't buying games for the PS3 at all, so those consoles are currently at a "permanent loss.") Sony also has a lot of money tied up in warehoused PS3's according to their most recent official reports, so Sony will not be making a true profit on the PS3 for a while. A price cut appears to be a smart move, but that has huge financial ramifications given current inventory levels and losses to date.
Distributors -- I'm not sure what kind of billing cycle they have to follow (receipt + 90 days? receipt + 30 days? payment only on shipping to retail?) but at the rate systems are moving, there's warehouse space being occupied that may end up costing more than the profit to be had from moving the systems through in a reasonable amount of time. The only way distributors can respond is by limiting or reducing the space they devote to PS3 products until the market picks up.
Retailers -- The retailers have the least at risk, because they can make a per-unit profit if they size their orders carefully and don't tie up too much cash in inventory (they usually get receipt + 30 day pricing at least, so they can make a profit with little risk if the product moves before the bill is due). They do, however, have a cost for their PS3 floor space (a percentage of their total rent/taxes, salaries, overhead.) If that floor space is not being productive (or as productive as it would be if devoted to another product), they may reduce the prominence and footprint of the PS3. That's a real possibility during the next few dry months for PS3 releases.
Publishers -- Right now, Sony may be making a profit on its top first-party titles (depending on development costs), but third parties are not likely seeing a profit at current PS3 software sales levels. Multi-platform mass-market releases stand a better chance (Spiderman 3 will likely do well), but I think it's telling that "Shrek the Third" is appearing on every platform BUT the PS3. I suspect the current install base size is contributing to delays and other release plan changes as publishers try to find ways to make their PS3 projects profitable, perhaps by slowing down development to release when the potential market is larger. Worst case, projects will quietly be cancelled or delayed, perhaps never to be released. Best case, this will provide better-quality results when the titles DO release with a better shot at profitability as the install base grows.
Scalpers -- Some made profits prior to and just after launch, but since then it seems the "scalpers" are either taking a loss on their gamble or cancelling their auctions and returning the console to retail. Serves them right. :)
End Users -- Blu-ray movie watchers are getting good value for the money right now. Gamers are a bit frustrated, and even longtime Sony fans are more likely to add another console to their collections than they were before PS3 reached its current state. The competition is ultimately good for end users, but any substantial wait for new PS3 titles that pushes users to explore other options begins to mean that marginal PS3 games won't sell very well, further reducing publisher interest in the platform.
Time will tell the full story -- I think console pricing is the PS3's biggest obstacle right now, I've seen potential customers inquiring about price drops a lot lately. But two more months with few new releases is not likely to alter ANY of the factors I've listed here. How long can this state of affairs persist before it starts not to matter? Does Sony have a possibility of "re-launching" the system to recapture the early hype and expectations when the platform is actually capable of living up to them?
