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ZhugeEX on 29 July 2016
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Intrinsic said:
ZhugeEX said:

Sure. 

 

So before 2006 (Before PS3 launch), Sony used to report Production Shipments. 


A Production Shipment is from the Manufacturer to Sony's distribution centers. 

A Consolidated Shipment (PS3 & PS4) or Sell In as it is commonly known is a Shipment from the Manufacturer, to the distribution center, then to the retailer. 

 

So Production Shipments are artificially higher as they may not have been purchased or shipped to retailers just yet. Back in the day this was the preferred method by everyone, but in tbhis digital age they use Sell In. 

 

Both are similar, but not the same. 

 

As an example. 

 

Sony reported that they had production shipments of 1.84 million for the first quarter of PS3 sales, but in actuality, only 1.66 million were sold in to retailers. 

 

The above is not to be confused with sell through which is the sale from retail to consumer. 

Hmmmm....

Would it be right to then say that the number here, 3.5M sell in is actually lower than the overall production shipment number?

So for the quarter Sony sold in 3.5M consoles to retailers, but may have made a total of 4M consoles for the whole quater and still have 500k consoles chilling out in their distribution centres worldwide? 

Production Shipments, due to their nature, will always be higher as they include both the amount sold to retail + the amount still in distribution centers. 

But there is a reason Sony don't use Production Shipments anymore. 

They recognise revenue once a PlayStation 4 is sold in and so this is the preferred reporting method. It's better to use this one. Besides, Sony don't even report Production Shipments anymore. 

Production Shipments are only used for historical data as that was the only method reported at the time.