Is the PS3 a success?

[Alby_da_Wolf]

crissindahouse said:

Alby_da_Wolf said:

As a product it's already almost a success, it will be in a few years, considering its whole life and how it resurrected from the initial deep troubles.

Strategically, it helped Blu Ray winning the format war and it resisted MS' attack also in the gaming world, keeping the PS brand alive and forcing Sony to strengthen its 1st party, that will be very useful also next gen. In addition, now that next gen approaches, PS brand is in a far better shape than during the worst troubles, early this gen, and its currently the strongest amongst home consoles, this should help a lot when PS4 launches.

Financially it's not, maybe it will become, but it will take some more years, not earlier than 2014, to recoup all the losses, and only with the help of SW sales, HW alone would take many more years and need very high sales. Currently, though, it's profiting: thanks also to the increased user base and SW sales, since it stopped losing money on HW, during Spring 2010, it became better for Sony to sell it as much and as long as it can.

When PS3 stopped losing money, it already sold around 50 million units, with losses initially in the hundreds $ per unit, decreasing in three years and a half to zero, on top of this losses, initial investments must be added, but profit per unit on HW in the second half of its life, with a low retail price, won't ever be as high as the loss per unit in the first year and will probably always be in the tens $, so HW sales alone would need to sell a lot more than another 100M, very, very unlikely, to recoup losses. Luckily for Sony, SW sales, with lots of 1st party games, to boot, and with the help of peripherals too, will make possible what for HW alone would be almost impossible. But not before 2014, and it's an optimistic estimate.

i don't believe this will happen until the yen will lose a lot of it's power. i mean they started to win money per console in 2010 but then there was last years tsunami, the strong yen and the hacker shit. don't know what they lost because of that but i don't believe they made money in 2011.

so i believe the only time they made money with the ps3 was some months in 2010 and maybe a few in 2011.

i really don't know it with 2011 but i  believe it putting all these things in the calculation.

ok i believe the yen was strong since 2010 so it seems they started to make money with a strong yen but they could really need a stronger euro and dollar. europe is very important for playstation and the euro/yen course is really not what they need atm

 

edit:

and even with a strong yen in mid 2010 it's even worse now.

just looking at mid 2010 compared to now:

mid 2010: $1 = 91yen and 1€ = 113yen

now: $1 = 77yen and 1€ = 98yen

 

Yes, strong Yen and tsunami are huge problems. Luckily, though PS3 isn't losing mone anymore, but the "Business Segment" including it and other products, like TVs, does, and it loses a lot of money. Sony stated PS3 HW stopped losing money in Spring 2010 (WW average, it did it sooner in EU and later in USA), but the losses accumulated until then are huge and after the last price cut profit margin must be again very thin. PS3 previous losses are now blurred in the overall bigger one of "Consumer Products and Services", the "Business Segment" of which "Games", that includes PS3, gaming peripherals, games development and publishing, etc, is a "Product Category" (and not a Division anymore if Sony ever called a Division with this name, while smaller Business Segments can be equivalent to single Product Categories and larger ones, like CPS, include more Product Categories). Currently PS3 isn't losing, despite the strong Yen, but weak Dollar and Euro and price cut reduced its revenue, and obviously profit too. Sony anyway clearly admits strong Yen is jointly responsible with many other factors of the huge current losses of CPS business segment. In particular, strong Yen and fierce competition forced Sony to cut TV prices below profitability.

http://www.sony.net/SonyInfo/IR/financial/fr/11q2_sony.pdf

The biggest trouble for PS3 is that now it must not just help recouping its past losses, but that with the crisis of Sony's TV business, it must help balancing the other products losses too, but as HW price needs to stay competitive, its profit margin won't ever be higher than a few tens $ and Sony will have to keep on counting mainly on SW profits.

It's quite obvious next gen Sony will have to absolutely launch at breaking even or at worst small loss price, HW becoming profitable later than two years after launch is clearly unsustainable for more than a gen, while the razor-blade model can give huge profits only once the installed base is huge too (edit: and if the "razor" losses are a lot lower than "blades" profits)