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makingmusic476 on 30 June 2008
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Bodhesatva said:
dallas said:
The PSN is probably losing money and will keep doing so until it starts getting money from:

1. Movies
2. Advertising, which HOME would be especially good for as Sony will be running trailers in its theatre area, and they will probably bring in some kind of advertising for products that gamers like such as energy drinks ( a little Mountain Dew machine lol) , etc

 

 Yeah, I think Home advertising will be the key. I'll be interested to see how they implement it.

Many people in here seem disbelieving or even stunned that PSN could be losing  money; it's apparent that you haven't thought this all the way through. I've mentioned this many times and get virtually no response, which is usually a sign that people aren't listening, and apparently that is the case.

Infrastructures like PSN cost millions of dollars to upkeep. The bandwidth necessary is enormous, and server hardware needs to be purchased, maintained and serviced. Likely over the course of a year, PSN costs 200-300 million dollars to maintain and update, some of which is recouped by store purchases.

 

As a comparable example, consider Blizzard's online game, World of Warcraft. Last year, they made 550 million dollars in profit -- more than EA, Activision, Konami, Ubisoft, Midway, SCi/Eidos, Sega, and Capcom combined. But how much was their revenue? Approximately 1.2 billion dollars. Even putting aside 300 million dollars for future game development and taxes (this is a very conservative estimate, for those who don't konw), that puts server infrastructure for this game at 350 million dollars. 350 million, just for WoW upkeep!

At this point, the entirety of PSN is smaller than World of Warcraft, but it's growing quickly and needs to be upgraded. Again, I'd guess somewhere in the 200-300 million range.

Aside from servers to host PS Store content (which presumably pays for itself and then some), servers to host firmware updates, and the development of new firmware, what would Sony be spending money on?  They only host servers for their own IPs (ie Warhawk, Resistance, and maybe GT5P), none of which have very large player bases. 

Epic hosts the servers for UT3, Call of Duty 4 is P2P, etc.  Sony pays for none of this.

That's the difference between XBL and PSN.  On XBL developers must conform to Microsoft's standards, but they recieve ample help to do so, including XBL toolsets, servers to host patches, leaderboards, etc.  With the PSN, developers are free to do whatever they want, however they have to do it all themselves (which is why UT3 on the ps3 will support mods, while the 360 version will not, for example).

I can't see what Sony could be spending hundreds of millions of dollars on.

Now Home, that's a different matter.  It will require loads of servers, but they'll be paid for by in-service advertising.