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Forums - Sales Discussion - Sony loses $18 per console in US, possible profit in UK

jarrod said:
Twistedpixel said:

Which implies that as the PSP and PS2 are profitable, and likely VAIO computers (thanks to Microsoft, oh how ironic) that the overall PS3 enterprise taken by itself is still unprofitable considering their first party focus on this platform, software royalties, advertising, online costs, management, research and development, shipping, etc. It implies that the PS3 itself will be unprofitable for 4 financial years at the very least, financial year ending 2010. I think to their credit its one financial year less than the Xbox 1.

Yeah, though in fairness Xbox 1 only had 4 FY cycles before 360 hit, and Microsoft pretty much abandoned it asap.

 

Granted the Xbox GPU ceased production in August 2005 which is less than 4 years after first release. So you could say 4 or 5 financial years depending on how you look at it. Technically it was 4 financial years and one quarter. But in terms of calendar years it was fewer than 4 whole years before discontinuation.



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If they launched with the Slim at $300 back in 2006, they would be at the same heights as the PS1/PS2 generation. The first three years are pretty much a lost generation for Sony that they never want to be reminded of.



Currently playing on PS3: God of War III

Currently playing on Xbox360: Final Fantasy XIII

Currently playing on NDS: Chrono Trigger

Certain people have been saying the Ps3 is profitable since pretty much day one. And since day one, Sony has 4+ billion in losses in the game division.



Johann said:
nightsurge said:
Johann said:
nightsurge said:
ethomaz said:
Sony has already said that from March they won't have more losses on PS3 sells for $ 299.

After that the company will begin to seek the profit per console, at least until the next price cut.

"They're hoping to cut production costs by 15 percent by March 2011."

So if it costs ~$318 to produce now (not factoring in marketing, shipping, packaging, stock, etc), I don't think they will be profitable on hardware for another 6 months or so.

How do you know it doesn't factor that? A lot of those costs are usually included.

Based on how they worded it.  They didn't say "6 cents per every dollar of PS3 revenue/PS3 sales."  They said they are losing 6 cents for every dollar of PS3 hardware sold.  That to me means they are not factoring in costs outside of the hardware alone.  I don't know this for sure, obviously, but it's a pretty common business deception tactic so it wouldn't surprise me.

So you assume they're using a deceptive tactic?

Of course I've only studied cost accounting here in my country, but here you're supposed to include stuff like stocking, packaging and even things like the electricity bill from the warehouse in the cost of manufacturing. The law actually requires it.

Of course I could be wrong and it could all be a spin. But you jump right to the assumption that it was and I think that shows your bias.

Assuming that I have bias.... there's your mistake.

I only assume they mean this because that is how Sony always gives their financial related news.  It's how anyone in the videogame business words things.  Everything is in the wording so they can imply something that may or may not be true.



sharky974 said:
Certain people have been saying the Ps3 is profitable since pretty much day one. And since day one, Sony has 4+ billion in losses in the game division.

Certainly not anybody here that hasn't been subsequently perma banned.



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nightsurge said:
Johann said:
nightsurge said:
Johann said:
nightsurge said:
ethomaz said:
Sony has already said that from March they won't have more losses on PS3 sells for $ 299.

After that the company will begin to seek the profit per console, at least until the next price cut.

"They're hoping to cut production costs by 15 percent by March 2011."

So if it costs ~$318 to produce now (not factoring in marketing, shipping, packaging, stock, etc), I don't think they will be profitable on hardware for another 6 months or so.

How do you know it doesn't factor that? A lot of those costs are usually included.

Based on how they worded it.  They didn't say "6 cents per every dollar of PS3 revenue/PS3 sales."  They said they are losing 6 cents for every dollar of PS3 hardware sold.  That to me means they are not factoring in costs outside of the hardware alone.  I don't know this for sure, obviously, but it's a pretty common business deception tactic so it wouldn't surprise me.

So you assume they're using a deceptive tactic?

Of course I've only studied cost accounting here in my country, but here you're supposed to include stuff like stocking, packaging and even things like the electricity bill from the warehouse in the cost of manufacturing. The law actually requires it.

Of course I could be wrong and it could all be a spin. But you jump right to the assumption that it was and I think that shows your bias.

Assuming that I have bias.... there's your mistake.

I only assume they mean this because that is how Sony always gives their financial related news.  It's how anyone in the videogame business words things.  Everything is in the wording so they can imply something that may or may not be true.

I didn't assume. I concluded. There's a diference.

But perhaps it was a hasty conclusion. I apologize for that.

The comment you made about the costs however, that was an assumption. You can't possibly what costs they included.



Quem disse que a boca é tua?

Qual é, Dadinho...?

Dadinho é o caralho! Meu nome agora é Zé Pequeno!

^That is true. I did assume. The other thread where I posted that, I even put "I imagine" or something like that, but I guess I must have left it out in this thread so I apologize for that.



jarrod said:
binary solo said:
Is making a profit everywhere except the USA methinks (sells here for the equivalent of $340 US (after taking off the sales tax)). Which is why the Q3 earnings for their Networked Devices Division were in the black.

Sony already said the games unit was flat for profitability, and that reduction in costs for PS3 were countered by lower sales of PS2/PSP.   The surge for Networked Devices & Services was attributed entirely to a rebound for Vaio.

Exactly. PS3 is losing them slightly more money in the US than they are making in the rest of the world. We moving them up, USA is dragging them down. PS2/P making up the difference. Net result is flat, allowing non-gaming income to put the division as a whole into profit.



“The fundamental cause of the trouble is that in the modern world the stupid are cocksure while the intelligent are full of doubt.” - Bertrand Russell

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Legend11 said:

They're just talking hardware, what about the cost of Playstation 3 advertising? Or the amount of people required just to keep that part of the business running. What about their cost for online, is Playstation Home and other PS3 online sales making enough to pay for it? Remember that other companies get a cut of many of those sales as well.

Also with the amount of layoffs in the video game industry, including at some of Sony's own studios I have to question just how profitable they are as well. Just remember that many of those companies closing are multi-platform while Sony's are basically developing for their own consoles. For every hit they have they also seem to have another game that sells poorly.

About Home: Every item they sell on it, is profitable from day 1. Shouldn't be too hard to make the entire service profitable then



koffieboon said:
How do they know he is talking about the 120GB version and not the 250GB version?

About that 15% reduction for the next 15 months, this means the cost to make a PS3 will not be below 250 dollar at the end of March 2011. Sony might not be able to release a 200 dollar PS3 until somewhere in 2012, at least if they don't want to lose a significant amount of money on it.

should be the 120, the 250 should be profitable.



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