There is no doubt that God of War 2 will make Sony a lot of money. Unfortunitly they make no royalty fees and have to spend on development, marketing, localization, employees and so forth so their margin of profit is as high as you would think it should be hence the hefty price tag on most games. 

Actually, it wouldn't.  By the time that happens, the PS3 will be at a reasonable (relatively, at least) price and have a decent library.  It'll be able to stand on its gaming legs before BR players become cheaper and, let's be honest, when the PS2 launched DVD players were already cheaper.

 Also, if BR players are cheaper than the PS3, that means they are winning (already won) the war with HD-DVD and they are selling an absolute ton of proprietary media.  That's really, really good for Sony.

Except that, sorry to tell you that, but Hus is right for once.

Producing consoles is not free. If it cost them $800 to produce a PS3, that's as much loss for them as long as it's not sold (to retailers). Everything they produce is a loss as long as it's not sold.

Selling the console is money back for Sony. Well right, they don't sell them $600 to retailers (or at least I hope so for retailers' sake), but close to that. 

So, it's slightly inaccurate to say that the loss is less because they sold less.

It would be more accurate to say the loss is less because they made less consoles (thanks to Blu-Ray cells shortage ?). 

i think people know production is not free. the whole point people want to make is that to rake in profits, you have to optimize your production by looking at forcast, how much to produce, how much raw material to buy and reorder points of raw material.  because sony made an error in forecast as to how much to make and the price to set for their consoles, it's actually causing them to lose more money than they expected.  not just on the ps3, but they are mentioning about the price cut of the psp too.

robjoh said: FishyJoe said: You have a LOT to learn how much profit is made from a retail game sale. Do some research before you spout numbers or it makes you sound stupid. That was unnecessery, especially against a mod if you disagre, start with explaining if they don't listen ignore. @roadkiller If you sell 4 million games for 50 USD you got 200 million in total revenue. You have to remove mayby 10-20 USD for retail and so on. Then you have cost for marketing and so on. If it is sonys report that indicates that they are taking a loss, GoW2 should be a part of the equation simple put that they own that game.

It took me two minutes to do this research.

Why Gears of War cost $60

http://www.forbes.com/2006/12/19/ps3-xbox360-costs-tech-cx_rr_game06_1219expensivegames.html

Art/Design: 25% (about $15)
Programming And Engineering: 20% (about $12)
Retail: 20% ($12)
Console Owner Fee: 11.5% (about $7)
Marketing: 7% (about $4)
Market Development Fund: 5% (about $3)
Manufacturing Costs, Packaging: 5% (about $3)
Licensing: 5% (about $3)
Publisher profit: 1.5% (about $1)
Distributor: 1.5% (about $1)
Corporate Costs (quantitative analysis, management overhead): 0.3% (about 20 cents)
Hardware development costs: 0.05% (less than 3 cents)

FishyJoe said: robjoh said: FishyJoe said: You have a LOT to learn how much profit is made from a retail game sale. Do some research before you spout numbers or it makes you sound stupid. That was unnecessery, especially against a mod if you disagre, start with explaining if they don't listen ignore. @roadkiller If you sell 4 million games for 50 USD you got 200 million in total revenue. You have to remove mayby 10-20 USD for retail and so on. Then you have cost for marketing and so on. If it is sonys report that indicates that they are taking a loss, GoW2 should be a part of the equation simple put that they own that game.   It took me two minutes to do this research. Why Gears of War cost $60 http://www.forbes.com/2006/12/19/ps3-xbox360-costs-tech-cx_rr_game06_1219expensivegames.html Art/Design: 25% (about $15) Programming And Engineering: 20% (about $12) Retail: 20% ($12) Console Owner Fee: 11.5% (about $7) Marketing: 7% (about $4) Market Development Fund: 5% (about $3) Manufacturing Costs, Packaging: 5% (about $3) Licensing: 5% (about $3) Publisher profit: 1.5% (about $1) Distributor: 1.5% (about $1) Corporate Costs (quantitative analysis, management overhead): 0.3% (about 20 cents) Hardware development costs: 0.05% (less than 3 cents)

 Does that include Tax in 'Retailer' as the UK has to pay V.A.T of 17.5%?

Probably not, but vat most likely gets added onto the price. So instead of costing $60 US at the retailer, the price would be revised to $60 + vat or thereabouts. I wouldn't take any of these numbers as gospel, but it does give you a rough idea of the breakdown of costs.

You are joking, right? No company in the world other than Microsoft could even afford that. Nintendo and Sony never had to take a billion $ loss when they broke into this business (80s and 90s respectively). They captured market leadership through the strength of their products. So this is what you should advise (aspiring or existing) competitors to work on foremost.

If I am not mistaken the PS2 launch provided similar losses. Sony made profits two years in.

Do you have any data on what the initial losses for the PS2 were? I know they took losses, but I don't know what the amounts were.