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

PS-She on 03 December 2007
Astrodust said:

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 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.


Same difference.  Don't be pedantic.

As for the whole "you can't created a product and hope things will turn around" stuff, Microsoft did it with the xbox/xbox 360.  Now they have made themselves a niche in the gaming industry and the 360 is showing signs of profiting.

Either way, Sony is a company that has been in business for over 50 years so I think it has to have been doing something right.  Decisions which you may or may not view as wise today may very well turn out fortuitous in the future.

Still, when you own your own multibillion dollar company, feel free to tell them how they should run theirs.



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SlorgNet on 03 December 2007
Pk9394 said:
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???? 
 
 

There's no magic involved. Three reasons:

(1) massive cost reductions in the PS3 hardware (Sony is very good at this). The original units cost $800 to make, but after one year, smaller die sizes, hardware changes, and the mass production of BluRay drives, the cost has come down to $500 or less. So they're not losing more than $100 on the 40BG model, and they're breaking even on 60/80GB models.

(2) The PS3 is selling like hotcakes in Europe. The Euro is at 1.45 to the dollar, so they have a profit cushion they can use to cover losses elsewhere. (399EUR=$578).

(3) HDTV sets are finally affordable, so PS3 sales are getting a speed boost from consumers who want a top-quality BluRay player at an affordable price.

 



Blackhawk FSI on 03 December 2007

how much money will they have lost by 09? good lord i don't know how they will make up for it



xbox 360, ps2 are my consoles 

 end of generation predictions: wii 106 million Xbox 360 59 million PS3 57 million  

 

Rath on 03 December 2007
SlorgNet said:
Pk9394 said:
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????

There's no magic involved. Three reasons:

(1) massive cost reductions in the PS3 hardware (Sony is very good at this). The original units cost $800 to make, but after one year, smaller die sizes, hardware changes, and the mass production of BluRay drives, the cost has come down to $500 or less. So they're not losing more than $100 on the 40BG model, and they're breaking even on 60/80GB models.

(2) The PS3 is selling like hotcakes in Europe. The Euro is at 1.45 to the dollar, so they have a profit cushion they can use to cover losses elsewhere. (399EUR=$578).

(3) HDTV sets are finally affordable, so PS3 sales are getting a speed boost from consumers who want a top-quality BluRay player at an affordable price.

 


(1) Any evidence of such dramatic cost reductions?

(2) The PS3 isn't selling like hotcakes in Europe, its selling reasonably though. The extra cash is lost largely though taxes however.

(3) I havent seen any evidence of the speed boost? 



TWRoO on 03 December 2007

like i said before, i don't think this means SONY will have recouped their losses by then (2 billion before it launched, probably 3 billion now, and 4 billion by 2009)
I think it means that SONY expect to start getting profit from PS3* in 2009...which means they won't get their 4 billion back for a long time.

(*i would think they meant PS3 brand, but they could just mean hardware)



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Ricardo221 on 04 December 2007

Anyone know how much Sony actually makes in third party license fees per game (or Sega/Nintendo for that matter)? I know I've read it somewhere but can't find it. The dev kits for PS3 used to cost $20,500 - now Sony only charges $10,000 for them. So in addition to revenue from the dev kits, I'm guess they make like $6 or $7 per game sold? Maybe that's a PS2 figure and they make more at the $59.99 price point.

Using that figure, Sony has made about 2.5 million dollars from Assassin's Creed alone. A small dent, but shows the power of software sales.



sinha on 04 December 2007

Will the PS3 still break even at $399 in March 2009 if the Wii HDDVD is released by then at $250?



We don't provide the 'easy to program for' console that they [developers] want, because 'easy to program for' means that anybody will be able to take advantage of pretty much what the hardware can do, so the question is what do you do for the rest of the nine and half years? It's a learning process. - SCEI president Kaz Hirai

It's a virus where you buy it and you play it with your friends and they're like, "Oh my God that's so cool, I'm gonna go buy it." So you stop playing it after two months, but they buy it and they stop playing it after two months but they've showed it to someone else who then go out and buy it and so on. Everyone I know bought one and nobody turns it on. - Epic Games president Mike Capps

We have a real culture of thrift. The goal that I had in bringing a lot of the packaged goods folks into Activision about 10 years ago was to take all the fun out of making video games. - Activision CEO Bobby Kotick

 

aceninja007 on 16 December 2007

I would be amazed if that were true. Quite honestly, I don't believe that the PS3 will be profitable for a few years at least.



PSN ID: aceninja007

Kasz216 on 16 December 2007
eugene said:

http://www.videobusiness.com/article/CA6508789.html?industryid=47215

"The steps Sony is taking to bolster its game platform, moreover, are likely to make the cash drain worse in the short term. At $399 including a Blu-ray drive, Sony Computer Entertainment is taking an even bigger haircut on its entry-level console than it was before as it tries to buy market share. The company recently pushed back its estimate for when PS3 will reach breakeven until the fiscal year that ends in March 2009, and even that could be optimistic."

interesting considering.... Hirai told the Yomiuri he would like to see Sony's game division "escape as soon as possible from the red and return to the black in fiscal year 2008." Guess they expect to sell a lot of software/PS2 still selling/PSP selling software?

Kasz216 on 16 December 2007

Also i take "Break even point on the PS3" to equal

Selling the PS3 for what it costs to make. I'm like 90% sure that's what they mean. Not about making back what they've lost.