How much money Sony really lost with the PS3

[Scoobes]

Machiavellian said:

thismeintiel said:

This thread is quite hilarious. PS3 fans are rightly pointing out that Sony has turned around the PS3, not only in a financial sense (i.e. making a profit on each sold since ~2009-2010), but in an image sense, as well. Both will help them when in launching the PS4. MS fans, however, continue with the "but the losses" argument they started ever since the PS3 started outselling the 360 yearly, completely denying a comeback.

Here's the question, though. When the PS3 finishes a close 2nd, or possibly 1st, will history remember total consoles sold? Or will it focus on Sony's financials for the span of ~3 years, when the gaming division was losing money? Here's a hint, it won't be the financials. I know it sucks to admit it for some, but it is true.

No one is disputing that Sony has turned the PS3 around.  The point is that the cost of doing so almost tanked the company.  History will probably show the PS3 as a very expensive product for Sony in which they lost a lot of marketshare to their competitiors, and put the company in the red.  I love my PS3 as a product but to say that its going down as a success story for Sony is reaching.  The only thing it did was claw back to being competitive.

I do not know what type of history books you read but if the only thing you or the historian ever care about is numbers without knowing the price then whats the point.  If Sony tanks next gen how do you think history will remember this gen.  If Sony wants to take 5 billion lost to gain some fanboy badge of honor I am sure Nintendo and MS will be more than happy to let them do it.  

Sony's PS3 losses were mostly incurred before they turned the console around. If anything, Sony cut the manufacturing costs rapidly (including cutting some fairly important features) so they could reduce the price of the console faster which in turn helped them make the PS3 a competitive product whilst stopping the haemoraging of money. The way I see it, the following happened:

1. PS3 released at a ridiculous price with the hope it would do well and help them install the Blu-Ray format for the sake of royalties.

2. First 2 years of PS3 lost the company huge amounts of money but won the format war. No idea if this will pay off in the long run as we don't know how much Sony is making from Blu-Ray royalties.

3. Realising the poor market share and the heavy losses weren't a viable business model, they cut features and reduced manufacturing costs. They cut the cost of the console to increase market share and increased the cost of first party games to retailers to increase revenue and reduce losses. This worked somewhat, as the increased marketshare meant more software was purchased which increased their revenue and lead to a few profitable quarters.

4. Reduced manufacturing costs and remodels/slims reduce losses further. Sony is now profiting on hardware as well as software and has a competitive product that is now selling better than the competition. Sony will likely never make the money back (directly) from stage 1 & 2 and we can't be sure if the Blu-Ray royalties will make the whole endeavor worth it.

So most of the losses occured early on. The turnaround of the PS3 probably saved Sony from further losses and kept them relevant in a market that many in 2007 would have said they should leave. It was their initial design and business model which has cost them so dearly.