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Forums - Sony - How much does sony make on the PSN?

Gnizmo on 30 April 2010
leo-j said:

yes ofcourse they wont make as much money on the PSN cards, but they end up selling like hundreds of them per store, and there are like thousands of stores that stock PSN card in the U.S alone, so they end up making millions on the PSN cards alone. Also they make money off 3rd party software, and they also make money off 1st party ip like FF VII which is published by SONY in the americas on PS1, as was the re release.

PSN cards cost Sony money. There is no two ways about it. First you have the cost of manufacturing and shipping them, and then they are sold at a discount to retailers. If Sony sees even $15 of revenue off a $20 card then they lose $5 for every card purchased in terms of opportunity cost. If everything purchased with PSN cards was bought straight off the PSN then Sony would absolutely make more money. The only reason they are carried is because it brings in a certain percentage of sales that would be completely lost otherwise.



Starcraft 2 ID: Gnizmo 229

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nightsurge on 30 April 2010
supercat said:
Nobody here really knows, unless you're an exec at Sony. Anyway my best guess is that it might be turning a small profit, independent of taxes.

-Home has transactions all the time
-Games, movies, music videos and music are sold on PSN. Sony makes all four while MS makes only one of these so it has to pay others to become a vendor while sony pays nobody.
-premium services are about to come out so the PSN is clearly in a state of growth

But really, the online services can run a loss because the real reason that they are there is to facillitate more game sales. Having online gaming makes you want to get that FPS or whatever and this is why the big 3 have online services in the first place. All of the stuff that they sell online can certainly help but i'm not sure if that really matters so much but it will help.

I agree with this except for your second point.  Sony still pays quite a few people to be a vendor of their content.  The only things Sony wouldn't have to pay for is their first party stuff and stuff they publish.  However there are many movies, games, music videos, and music sold on PSN that are not limited to Sony owned media.



outlawauron on 30 April 2010
nightsurge said:
leo-j said:
DM235 said:
leo-j said:
they are making money for sure..

FF VII sold 100k it's first week in the americas alone.. and that isn't the biggest debut on PSN, so I'm sure it's profitable, plus selling PSN cards to retailers really covers up the cost too

I think Sony only got a small percentage of those sales, as it's Square Enix that own FF7.

And PSN cards are a money losing operation.  If a retailer sells you a card for $20, that means Sony would have sold it to the retailer for less than $20 (no retailer would go to the trouble of receiving, unpacking, handling and selling something for free).  The only real benefit to Sony would be that they get your money before you actually buy something, so they get to earn interest on it.  With today's low rates, I do not know if this would cover the retailer's portion (unless you kept a card for a long time before using it).

yes ofcourse they wont make as much money on the PSN cards, but they end up selling like hundreds of them per store, and there are like thousands of stores that stock PSN card in the U.S alone, so they end up making millions on the PSN cards alone. Also they make money off 3rd party software, and they also make money off 1st party ip like FF VII which is published by SONY in the americas on PS1, as was the re release.

I think you are misunderstanding something.  Sony takes a LOSS on PSN cards.  They sell a $20 card to retail at probably $14/15.  So if each store is selling 100 cards, Sony is losing $500-600 per store on cards alone.  They make no money on cards regardless.  The only way they make profit with this venture is if that $20 spent by the user racks up more than $5-6 in profit.

For example:  Lets say you buy 2 $10 arcade games where Sony's profit margin is 30%.  If you use the Sony card you purchased, that means Sony only got $6 profit, which means they only broke even by having to sell that $20 card for a loss to begin with.

Eh, I wouldn't count on that. Whenever I worked retail, we had a 0.10 discount on the PSN/XBLA/WiiWare cards. I highly doubt they're sold at that big of a loss.



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DM235 on 30 April 2010
leo-j said:
DM235 said:
leo-j said:
...

...

yes ofcourse they wont make as much money on the PSN cards, but they end up selling like hundreds of them per store, and there are like thousands of stores that stock PSN card in the U.S alone, so they end up making millions on the PSN cards alone. Also they make money off 3rd party software, and they also make money off 1st party ip like FF VII which is published by SONY in the americas on PS1, as was the re release.

Sonly probably made $4 per copy of FF7 sold (based on Sony getting 40% on 3rd party games they publish for their console as reported by Patcher).

I don't know if Sony sees any money for the PSN cards until they are sold to a consumer.

And given that Sony's game division has been losing money for a while now, if PSN makes a lot of money, then the PS3 loses a LOT of money.



supercat on 30 April 2010

Well, Sony will still make a lot of money selling movies like Titanic, Superman, Aliens, and so forth, it doesn't really have to matter if these are sony productions or not. But all else equal for an average movie with X amount of sales and an average Sony movie wtih X amount of Sales, sony will want to put the Sony choice in because it will have a greater margin. It would be stupid not to take advantage of the places where you do have an advantage, read some Sun Tzu my friend.

So, if it isn't a sony movie then it's probably a more recent movie or a big one. Similar concept with music.



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nightsurge on 30 April 2010
outlawauron said:
nightsurge said:
leo-j said:
DM235 said:
leo-j said:
they are making money for sure..

FF VII sold 100k it's first week in the americas alone.. and that isn't the biggest debut on PSN, so I'm sure it's profitable, plus selling PSN cards to retailers really covers up the cost too

I think Sony only got a small percentage of those sales, as it's Square Enix that own FF7.

And PSN cards are a money losing operation.  If a retailer sells you a card for $20, that means Sony would have sold it to the retailer for less than $20 (no retailer would go to the trouble of receiving, unpacking, handling and selling something for free).  The only real benefit to Sony would be that they get your money before you actually buy something, so they get to earn interest on it.  With today's low rates, I do not know if this would cover the retailer's portion (unless you kept a card for a long time before using it).

yes ofcourse they wont make as much money on the PSN cards, but they end up selling like hundreds of them per store, and there are like thousands of stores that stock PSN card in the U.S alone, so they end up making millions on the PSN cards alone. Also they make money off 3rd party software, and they also make money off 1st party ip like FF VII which is published by SONY in the americas on PS1, as was the re release.

I think you are misunderstanding something.  Sony takes a LOSS on PSN cards.  They sell a $20 card to retail at probably $14/15.  So if each store is selling 100 cards, Sony is losing $500-600 per store on cards alone.  They make no money on cards regardless.  The only way they make profit with this venture is if that $20 spent by the user racks up more than $5-6 in profit.

For example:  Lets say you buy 2 $10 arcade games where Sony's profit margin is 30%.  If you use the Sony card you purchased, that means Sony only got $6 profit, which means they only broke even by having to sell that $20 card for a loss to begin with.

Eh, I wouldn't count on that. Whenever I worked retail, we had a 0.10 discount on the PSN/XBLA/WiiWare cards. I highly doubt they're sold at that big of a loss.

Really? Why would you even sell them if you only received a $.10 profit?  I am able to purchase stuff like XBL 12 month cards for close to $30 from my distributor, which they retail for $40-50.



Gnizmo on 30 April 2010
outlawauron said:

Eh, I wouldn't count on that. Whenever I worked retail, we had a 0.10 discount on the PSN/XBLA/WiiWare cards. I highly doubt they're sold at that big of a loss.

Manufacturing and storage costs factor in too. $20 on the PSN is straight $20. If it costs $2-3 per card shipped then that comes out of the amount put into the PSN on top of any retailer discount.



Starcraft 2 ID: Gnizmo 229

outlawauron on 30 April 2010
Gnizmo said:
outlawauron said:

Eh, I wouldn't count on that. Whenever I worked retail, we had a 0.10 discount on the PSN/XBLA/WiiWare cards. I highly doubt they're sold at that big of a loss.

Manufacturing and storage costs factor in too. $20 on the PSN is straight $20. If it costs $2-3 per card shipped then that comes out of the amount put into the PSN on top of any retailer discount.

Of course, but those costs seem quite exagerrated. I mean, there's no way a small box containg hundreds of cards (there's very slim and there is no packaging on them) would cost that much. I know Sony probably loses a little bit of money on the cards, but I has to be a miniscule amount (same with XBLA and WW stuff)

 

Although, discounting on the cards would come at a retailers loss.



"We'll toss the dice however they fall,
And snuggle the girls be they short or tall,
Then follow young Mat whenever he calls,
To dance with Jak o' the Shadows."

Check out MyAnimeList and my Game Collection. Owner of the 5 millionth post.

cmeese47 on 30 April 2010

Just a heads up Sony has sold over 200,000 RTS points for MLB 2010 at .99 and virtually free to produce they are making a nice profit off of stuff like that and all the little toys found in home. Xbox charges because they do not charge companies for demos, which is why more games and demos come out on XBL than PSN. Furthermore, XBL is keeping Xbox afloat otherwise financially by taking a loss on hardware, a huge loss from rrod, and very few first party games for software sales the system would be in a much worse place. Dont believe it check out the profit report Windows 7 and XBL made money that was essentially it.



Gnizmo on 30 April 2010
supercat said:
Well, Sony will still make a lot of money selling movies like Titanic, Superman, Aliens, and so forth, it doesn't really have to matter if these are sony productions or not. But all else equal for an average movie with X amount of sales and an average Sony movie wtih X amount of Sales, sony will want to put the Sony choice in because it will have a greater margin. It would be stupid not to take advantage of the places where you do have an advantage, read some Sun Tzu my friend.

So, if it isn't a sony movie then it's probably a more recent movie or a big one. Similar concept with music.

Sony does not, apparently, like cutting deals with Sony. Ghostbusters, a Sony IP, was a multi-platform game. Logically it should make sense, but the company seems very divided to me at this point. I don't think its the smartest move they could make, but I am not paid billions of dollars to decide such things so I could very easily be wrong.



Starcraft 2 ID: Gnizmo 229