Andrespetmonkey said:
They won't make a $1 billion loss. They'll lose that much on consoles, but make it back within maybe a year through software sales and to a much lesser extent peripheral sales (if they make a profit), give it another 6 months oon top of that for R&D, manufacturing and what not. Viper buys a PS4, Sony loses $100. Viper then buys 5 or 6 retail games over the next year, a few smaller downloadbles and maybe some Minis, subscribes to Netflix, maybe a new streaming service or PS4 or PS+, he makes some microtransactions on F2P games, possibly buys another controller or PS eye/Move 2 (or whatever they may have)... etc. That money is definitely made back (unless it's PS3 scale money), it's just a matter of how long it takes. A year/year and a half due to $100? Not a problem. |
Except the average consumer doesn't spend nearly that much money on games ...
For every year they owned their system the average Wii owner bought 2.81 games, the average PS3 owner bought 3.01 games, and the average XBox 360 owner bought about 2.75 games; all very rough calculations. Being that you can really only associate the licensing fees to cover the costs of the hardware, if you assume $10 in licensing fees it would take (on average) about 3.5 years to cover that $100 loss for the average consumer.
If your system is like the PS2 and launches before the competition, manufacturing costs are dramatically reduced prior to facing price cuts so the $100 loss on a system is a temporary thing, and you eventually build a massive userbase that buys games to cover your initial losses a $100 (or even $200) loss can probably be justified. In contrast, if you're like the XBox and you launch later than your competition who forces you to lose money on hardware throughout the system's life you will probably lose $4 billion in a generation off of a $100 loss per system.
