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Forums - Sony - Sony plans on breaking even with PS3 March 2009

etuoyo on 03 December 2007
eugene said:
The problem with HD tv's being the future is that Sony is trying to sell Blue ray and the PS3 today. As of today, HD tv's still does not have mass market penetration although it is growing fast. Another problem is consumer education, most hd tv owners think they are watching in hd even when they are watching a regular dvd movie on their hd tv. The PS3 was in essence too ahead of its time. Many PS3 and Xbox 360 owners today use their consoles on standard tv's in essence not taking advantage of its HD features at all and vice versa. Microsoft did the same mistake in putting a hard drive in every Xbox. It was indeed the future but ahead of its time. One generation too early as many people didnt see a need for 8 gigs of storage at the time.

Plus it's not as if consumers in general care about high definition even if a billion HDTVs are sold in a year.  What they care about is a fancy looking flat screen.  But all flat screens being made now are HDTVs.  Only a small percentage of those who buy HDTVs actually go out and do so because they want to view high definition.  Alot of people think that just because there is high uptake of HDTVs there will be a corresponding uptake in blu-ray, hd-dvd, ps3, 360 and any other source of high definition viewing. but that just ain't going to be the case. 



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Peter Potamus on 03 December 2007
Game_boy said:
jhlennon1 said:
Sony as a company are making money, so I don't care.

 If they get "Xbox 1" losses and no significant improvement from the multimedia (Blu-ray) side, they will exit the game business. You can't run a division at a loss because the rest of your company is profitable. If the Playstation brand's reputation and its big exclusives go, it will not even be worth having a "PS4".


There is significant improvement in Blu ray sales. Also, Sony would NEVER leave the Gaming market after dominating two generations. As long as Sony makes money on everything else besides games, they will keep trying. 

The second part bolded, Did microsoft leave after the first XBox? No, because they seen the opportunity to make a serious dent in the gaming market. And so far its been successful. Should a company give up a division because their not making money on it, even if that division is boosting other divisions to success? (Blu Ray)

Sorry, but Sony is here to stay. Without the PS3, Blu ray would be a dying format.



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hunter_alien on 03 December 2007

Well that is a pretty good expectation IMO ... With all the great games comming up , the PSN getting much batter plus the PSP and the PS2 still going strong , this is a fairly accurate expectation . :)



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outlawauron on 03 December 2007

@ game_boy

Your right, they are going to leave the game business ...



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Game_boy on 03 December 2007
Peter Potamus said:
Game_boy said:
jhlennon1 said:
Sony as a company are making money, so I don't care.

If they get "Xbox 1" losses and no significant improvement from the multimedia (Blu-ray) side, they will exit the game business. You can't run a division at a loss because the rest of your company is profitable. If the Playstation brand's reputation and its big exclusives go, it will not even be worth having a "PS4".


There is significant improvement in Blu ray sales. Also, Sony would NEVER leave the Gaming market after dominating two generations. As long as Sony makes money on everything else besides games, they will keep trying.

The second part bolded, Did microsoft leave after the first XBox? No, because they seen the opportunity to make a serious dent in the gaming market. And so far its been successful. Should a company give up a division because their not making money on it, even if that division is boosting other divisions to success? (Blu Ray)

Sorry, but Sony is here to stay. Without the PS3, Blu ray would be a dying format.


No one is really sure about Blu-ray sales. It's a judgement on the part of Sony shareholders.

"As long as Sony makes money on everything else besides games, they will keep trying."

You can't run a division at a loss because the rest of your company is profitable.

Cast-iron rule there. Do not personify companies by saying, "They'll try to". They are in it to make the maximum amount of money, and if the shareholders think terminating the games division will achieve that, they will. Microsoft is a special case, because they stand to make much more money on OSs by running games at break-even. "Xbox 1 losses" was an amount, not an example. 



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Rath on 03 December 2007
Peter Potamus said:
 

There is significant improvement in Blu ray sales. Also, Sony would NEVER leave the Gaming market after dominating two generations. As long as Sony makes money on everything else besides games, they will keep trying.

The second part bolded, Did microsoft leave after the first XBox? No, because they seen the opportunity to make a serious dent in the gaming market. And so far its been successful. Should a company give up a division because their not making money on it, even if that division is boosting other divisions to success? (Blu Ray)

Sorry, but Sony is here to stay. Without the PS3, Blu ray would be a dying format.


 Atari left after the 5200 failed. Mind you they were far more of a failure than the PS3 will ever be for Sony.

Anyway the reason why MS didn't leave is because they weren't in the game business for the money, they were out to damage Sony. They will only leave if Sony leaves.

 

Oh and I don't think Sony will leave before the PS4, I just think it is possible. 



NJ5 on 03 December 2007

Anyone who thinks the future of Sony's game division isn't in line is deceiving oneself. It depends on how the PS3 does but also on how the company as a whole does.

Right now they have a money eating console (PS3), a handheld which barely sells any software (PSP) and a very successful console which is on its natural decline and is sold for a low price which doesn't allow for much profit (PS2).

Comparisons with Microsoft's Xbox period (Xbox was also a money eating console) are very easy to do but don't prove much. Sony's financial situation is nowhere near as good as Microsoft's is, and Sony's other businesses have lots more competition than Microsoft ever had on its cash cow businesses (namely Windows and Office).

 



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johnsobas on 03 December 2007
Faxanadu said:
johnsobas said:
Rath said:
johnsobas said:
Rath said:
March 2009?

I doubt it to be honest, the PS3 has lost ridiculous amounts up until now and I expect it to keep losing money per unit well into next year - I'd be suprised if they posted a profit from their games division before quarter 3 next year.
I expect that if they do finally break even on the PS3 it will not be before march 2010.

Mind you the PS2 can't have broken even until quite late in its life either?

the PS2 had 1 unprofitable quarter, can't remember exactly but it was either 200 or 400 million in the red, then the next quarter it was already making money. The PS1 was offsetting some of it, but the PS2 and PSP are doing the same thing for the PS3 now.


Are you sure? I remember Sony was loss leading last generation as well and only made around 2Bil off the PS2...?


Meh, maybe I'm wrong.

yes i'm sure, they lost money for 1 quarter, and i think they made up all that money the next quarter, or at worst the quarter after that. Yes the PS2 made just over 2 billion ( i think 2.3 billion), and now the PS3 has lost every cent the PS2 made plus a few more hundred million to boot. If someone would just bring out the financial statement to prove me right i would appreciate it, i can't seem to find it.

edit: omg i've reached 1337, i gotta cherish it for a while


and how much was development cost for the hardware? seems like you didnt take that into account. Huge up front investment that needs to be recouped by profits during lifetime. Essential part to any break even analysis.  just cause it made money does not mean it broke even after 1 quarter.


 

I don't get what your point is, the same thing can be said about the PS3.  I'm not sure how the accounting works on these things like development, but the point is that PS2 had lost 200-400 million and gained it back in 1 quarter.  PS3 is over 2.5 billion in the hole and it's gonna continue digging deeper.  Of course many more losses were offset by PS2 and PSP.  The PS2 despite being profitable every quarter for 7 year except for 1 has made less money than the PS3 has already lost. 

 Anyone saying the PS3 is going to make a cent i'm calling BS right here.



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Astrodust on 03 December 2007
PS-She said:
jhlennon1 said:

If there was a remote chance that Sony might pull out of gaming I would be concerned as well. But I have seen no evidence of that, in fact, gaming has become a big part of Sony's business and that Sony will attempt to correct the problem before they simply abandon everything. Sony are expanding their 1st party status which means that Sony are intending to stick around for the long term.

All that these losses will do is minimize their future risk taking and they will stick to developing much cheaper products. That's all it will do, nothing else.


Exactly.  Funny how the people who are worrying the most about Sony's fiscal future are the ones rooting for other consoles...

Worrying and being critical are 2 different things.  You can be critical of a company like Sega or EA and not be worried about their success. Sony's current business model is flawed to say the least. You can't create a product and expect to lose billions over the first 3 years and hope that things will turn around. It's high risk. Guaranteed the way Sony does things in the future will be different. It goes with all 3 big companies, but expecially Sony. It's what makes these companies special though, their ability to adapt. It you treat them like gods and let them walk all over you, they will never improve.



 

 

Pk9394 on 03 December 2007

Can someone that is very good at accounting tell me how this is possible??? sony's gaming branch been loosing billions of dollar for 2 straight year (assume by march they'll announce another 2 billion lost) how the hell they can manage to fix their balance sheet to break even within a year???? something isnt right here, this assume all of a sudden next year they'll stop loosing money and gain enough for their lost. The Feb really need to look at their balance this looks really fishy.