GameStop expects only one new console for 2013, another one in 2014

[Dodece]

@Esmicksee

How I reached my estimate.

1) Five million launch units at three hundred dollar cost per unit components, and manufacturing $1.5b
2) Accessories a one to six cost ratio, or fifty dollars worth of accessories per launch unit $250mil
3) Game development two top tier, and five low to mid tier titles for the launch. $200mil
4) Advertising/Marketing Global commercial/print/web/events/promotions $200mil
5) Data infrastructure facilities, networking, licensing, servers, security, software, and bandwidth $200mil
6) Distribution/supply chain/repair/tech support/misc associated services facilities and staff $100mil
7) Margin for error cost overruns/ hardware issues/ calamities $.5b (Yes Sony absolutely needs a cushion this big)
8) Another word for R&D is the bullshit someone pulls out of their ass to make the numbers work $0.00

That is entirely conservative, and entirely in line with launching a new console. Three billion dollars is really the safe low end bet regardless of the manufacturer. Before you bitch about number seven I have two examples for the current generation. The Red Ring of Death due to poor quality control, and the manufacturing shortfalls of the BluRay drives in the PS3, and the Cell processors. Both caused significant cost overruns for both competitors, and you have to allow for such things with any major undertaking. Twenty percent of projected cost is really a fair allowance.

It is really the old axiom about anything that can go wrong will go wrong. Which is why you need that much cash up front before you start the ball rolling. Since you need to get to the end. You don't want to get half way there, and find the cash you expected would come through doesn't. It wouldn't do any manufacturer any good to be a couple months from launching a console with games. Only to find out that the money for the advertising isn't there, or that you cannot afford the staff, or resources to make the whole thing run.

Anyway it is conservative, and isn't allowing for anything truly ambitious on the part of Sony. There are really a lot of things that Sony could do to drive up costs, but not much to be done to drive them down. Welcome to the console market it costs a lot of money to play.