BOLD PREDICTION: PS5 and PS5D to be $399 and $349 respectively

[VideoGameAccountant]

Dallinor said:

Dulfite said:

I just read that Sony has had major losses across the board due to Covid-19 and that they are short term not doing well. Game department was pretty much the only profit. While selling PS5 at a lower price than they would have will help them a lot more in the long run, selling the device at a loss or significant loss may put their short term finances, as a whole company, into dangerous territory.

I don't particularly like PlayStation brands/products, and have never bought any, but I want them to be in a healthy situation as they push Nintendo and Microsoft and the whole gaming industry forward, just as the other two do as well.

If Covid-19 keeps up, Sony may have to do a lot of restructuring to stay afloat at this rate. I could see PlayStation spinning off to some other company in order to get the cash they may need. Movies are bombing left and right or simply being delayed from release. PlayStation is safe regardless, but I'm not so sure about Sony.

https://www.google.com/amp/s/www.marketwatch.com/amp/story/sony-profit-revenue-fall-below-expectations-2020-05-13

https://sonyreconsidered.com/sony-q1-2020-earnings-overview-revenue-2-profits-1-f467dafe5609

No, they didn't. They've actually revised their forecast of losses down since May (30%) August (26%).

TOKYO (Reuters) - Japan's Sony Corp surprised the market on Tuesday by reporting just a 1.1% profit fall for the cornonavirus-hit first quarter, as its gaming business thrived while consumers locked down at home looked for entertainment and downloaded more games. The electronics and entertainment firm posted April-June profit of 228.4 billion yen ($2.15 billion).

Sony have been re-structuring for years.

The impact of the novel coronavirus on Sony has been limited compared with Japanese electronics peers such as Panasonic Corp due to its pursuit of recurring revenue such as subscription fees on gaming content. To accelerate the portfolio shift to such revenue streams, Sony recently invested in Chinese video site Bilibili and Epic Games, creator of the popular video game Fortnite.

You have to be joking. Why would they sell off their most profitable division? Its a cornerstone for them that ties to all their other business.

They posted a $230 million profit in Movies. You can't make money if the movies aren't releasing, but you aren't spending money on marketing or development either. The pandemic will hit the movies segment hard over the next few years granted, but SPUOMC, TV shows (Amazon) and future films was looking very promising for that segment.

While I disagree with Sony selling the system, it's not crazy to think Sony could be in trouble again. They had massive issues at the beginning of the Great Recession which almost bankrupted the company. He's right that movies are going to be an issue for a while. If you look at their Q1 reports, every division is down except games and financial services. 

If the PS5 doesn't do well, then it could ripple through the entire company. They wont sell of gaming as it's their best division but if it goes south, then it wipes out all their profits from the other divisions. 

On the bold: first, remember fixed cost do exist so Sony can't get out of all their cost. Second, they may have already incurred expenses already for movies that may not release for a while. This is going to hurt their cash flow and there is no telling if those movies will make back their cost. While they can change distribution, it may result in a different cost structure and that's a change that could impact Sony.