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BengaBenga on 21 June 2008
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starcraft said:
BengaBenga said:
starcraft said:

Its quite possible Sony won't make any money directly from MGS4, if the licencing fees were sacrificed as part of the exclusivity payment.

I don't know. To my mind, I still think Sony will cut the PS3's price in November. I don't think they are going to be willing to just take an MS price cut on the chin. Too much userbase could be lost.

 

The thing is that SCE is bound by Sony to the new strategy of making profit. SCE will have a very hard time to explain to the mother company and the shareholders why the PS3 saw another pricecut that goes directly against the strategy of making profits on the Computer and Entertainment Division.

Remember that for the shareholders only the profits are important. For all they care the whole C&E divison gets sold, if that's better for their value.

If you add to that that the results for PS3 have been far less than expected I think a PS3 pricecut in this Financial Year is out of the question, whatever Microsoft does. Sony is not in the business of beating Microsoft. It's in the business of making money.

But the damage to the PS3's long-term prospects and the Playstation brand at large could become even more pronounced than it is now if they didn't keep up with Microsoft over the holidays.

We've seen that MGS4 can push hardware without price cuts, but short of FFXIII making it into 2008, the PS3 has NO major hardware pushing titles left this year. Another four months pass and all of a sudden most people that are willing to buy a PS3 at $400 already have, and parents looking to buy their kids a PS3 find that its the SAME price as it was when they were going to buy it last year and found it too expensive? I just think Sony will avoid that at all costs, even if it means they don't make a large Q3 (based on their fiscal year) profit. And they should make a profit in their Q3 even if they are losing some money on the PS3, because the PS2 and PSP will keep the division in the black for that quarter as we saw last year.

 

That's why companies develop strategies. Usually you have to choose. In this case it's Profit vs Marketshare/Brandname.
I'm pretty sure Sony overestimated the PlayStation brandname. When you have two consoles selling over 100 million and all of a sudden something called Wii (for $&^%& sake) takes your crown must have been an eye-opener.

So it looks like Sony's strategy is profitability. Of course they have taken into acount long-term prospects etc. but they probably feel that enough is enough.
Again: Shareholders don't like losses. They don't care about the PlayStation brand or videogames. They want the company to be as efficient as possible. If they have to give up market share on PS3 they don't care. Really.