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

[Esmicksee]

Chark said:

Dodece said:
@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.

#8 is the reason why you don't understand what you are talking about. The cost to develop the PS4 is already long into their books, they don't build this stuff overnight. They have to hold meetings to determine what the system will be, what it will do, what it is made of, what it looks like, among many other factors. They need to arrange discussions with tech manufacturers, create design schematics, do extensive testing on the devices and several prototypes to ensure quality and realiability. Aside from the cost directly associated with the physical product all of the man hours need to be paid and over the course of years adds to a large sum of money, and yes it takes years. Sony has been well involved in the development process of the PS4. To contrast Microsoft had a leaked document from 2010 outlining thorough preliminary concepts for the Xbox 3. A new console essentially has at least 3 years of planning.

If you think that Sony doesn't have the money in order to finance a product that will be made for the purpose of turning a profit and in an industry where they have a proven record of accomplishing return on investment than you haven't looked into this far enough. Sony is a multi-billiion dollar company, they go through large sums of expenses and revenues and release dozens of new hardware products every year. They will release the PS4 when they find it primed and ready for release. Their entire manufacturing and development process will be geared toward reaching what they determine an ideal launch date which is still far enough on the horizon that they can choose to delay it further or not. Sony would be making a huge mistake if they were to not be concidering spending money on the next generation of home consoles by now regardless of their financial standing. If need be they would finance its development as their gaming division would prove to be self liquidating, especiallly if they made it while knowning it was a financed console and have highlighted gaming as one of the main cores of their business moving forward.

Essentially this is what I was getting at. Sure, from the drawing board to 6 months post-launch the costs will total in the billions, but it's not as if it's a big one off sum that Sony may or may not be able to afford.