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Forums - Sony Discussion - Hirai: PSN to enter black in 2011 fiscal year (i.e. from March)

sieanr on 25 December 2010
Kissinger said:

Home has 17 million users making it more popular than World of Warcraft so it must be making tons of money.  Is it not included with PSN revenue or something??

It has 17 million people who have logged on to home, not active users. A guy on neogaf who used to work on home said he'd be shocked if they had over 500k monthly users.

And it is included in the PSN revenue.



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heruamon on 25 December 2010
Vetteman94 said:
heruamon said:

Hmmm...This is interesting.  I thought the PS3 platform was profitable, but it evidently isn't, since I doubt that it is breaking even on hardware  at this point, when all the marketing and packaging cost are included.  It will be interesting to track this progress to see how PS Plus factors into profitability.


I do believe the article refers to the PSN service and not the PS3 console.

Aaaah...so the PS3, PSP, and of course PS2 are profitable, but PSN isn't...got it.



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arcane_chaos on 25 December 2010
Wagram said:

I'm sorry your currently in the red sony. But from the bottom of my heart. THANK YOU for not charging me to use your service. I really REALLY respect that.


indeed, Sony has gotten some major respect from me!!!



Immortal on 25 December 2010

Does this mean PSN as a whole is breaking even or that it'll produce some profits next FY?

Is it like PS3 in general which will probably profit for the year, but still be far deep in the red?



 

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Degausser on 26 December 2010
makingmusic476 said:

A poster on neogaf has directly translated the original Japanese interview, and has clarified what Hirai was trying to say somewhat.  He's not saying that PSN in its current form is unprofitable, but rather that due to the continued expansion of the wider Sony Online Network through services like the PSN video store, Qriocity, etc., they are still in the red.

Some excerpts from UntoldDreams' posts:

Umm... Hold the horses this is inaccurate.
http://jp.reuters.com/article/compan...49554820101222

The actual Japanese article indicates the online service structure including their music play for QRIOCITY as well as E-Book and no doubt anything digital was not making money YET. That includes the video store.

They use the term PSN as the amalgram of their entire online digital play. That as an aggregate cost assessment and has not yet yielded profit due to the simple fact that its still being built.

This is NOT a quote from Kaz Hirai saying PSN games are not profitable. That's completely out of context for the article.
The context of the article is stating that due to all the expansion they have put into PSN including their Video, Music, Games, E-book... They have yet to be profitable.

Anything else being said is not relevant to the original article and statement by Kaz.
What the original Japanese article is talking about is that the Sony Online Infrastructure is costing a lot of money to phase into existence (music, video, games, ebooks) and that keeps them in the red. Its not specific to PSN gaming or dedicated servers or fighting with LIVE or anything like that.

The article also says they have an 11 year road map to their (world domination) profitable digital future (Sony Online Network). Every stage of their business plan starts in the RED INK due to spin up costs and you can imagine how much it will cost for them to fight it out with iTunes and other digital companies.


 Quoting this as people seem to have ignored it or something >_>.

 I think Sony are doing a pretty good job with expanding the service, now I think about it they could do some really cool stuff with what PSN has to offer and the PSP2, which I'm sure is all in the strategy they've got going. 



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goddog on 27 December 2010
Immortal said:

Does this mean PSN as a whole is breaking even or that it'll produce some profits next FY?

Is it like PS3 in general which will probably profit for the year, but still be far deep in the red?


no PS3 is in the red or losing money right now, but next year they expect it to make money. and as for the PS3 sony said it started making money on the console around april, or rather the unit is not selling at a loss anymore. looks to be a good year for sony, i will be interested to see if they have the production prices down low enough to cut the price of the console around sep



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Silver-Tiger on 28 December 2010

So Sony could have already gotten a lot of money from PSN if they didn't extend it to Qore, Music and Video Store, and the other services. And when Sony says they make money in the next fiscal year already it means that even if they extend the service further (Since they will of course), they make a profit.

That shows that a good supported service like PSN can make a profit without mandatory monthly fees, and that even when they constantly upgrade it.



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nightsurge on 28 December 2010
ssj12 said:
PullusPardus said:
Squilliam said:

Online services cost, I am hoping this will put to rest any preconceptions that they are cheap to run.



not really anymore, you can keep a server going for cheap nowadays.


Not really, first you have to purchase them, which most are PS3s but still, then you have to rack them, program them, and maintain them which costs manpower, then you have to pay for electric costs for the servers and A/Ced room kept at 60F.

 

Not that cheap when you are constantly adding more.

The major costs are actually bandwitdth, among the obvious electrical needs of something that is always running and always putting off heat which needs to be removed.

Apparently the PSN service must cost well over $500 million USD a year to maintain.

I've been saying it for a while now that PSN was likely one of the major reasons for Sony's Networked Devices being in the major red the last few years.



nightsurge on 28 December 2010
Kantor said:

Without a subscription charge, and ads, that's pretty impressive.

But if the PSN (or rather, SON) has been in the red recently, along with the hardware, does that mean that the games alone are bringing in such an enormous revenue that overall, SCE is making a profit?

Seems that way.

Also, I think you forgot about HOME which is bascially an entirely ad driven space for games and products related to gamers, and I'm sure PS Plus is adding quite a bit to keep them out of the red.



nightsurge on 28 December 2010
Silver-Tiger said:

So Sony could have already gotten a lot of money from PSN if they didn't extend it to Qore, Music and Video Store, and the other services. And when Sony says they make money in the next fiscal year already it means that even if they extend the service further (Since they will of course), they make a profit.

That shows that a good supported service like PSN can make a profit without mandatory monthly fees, and that even when they constantly upgrade it.

But it still doesn't offer all the services of Live and it has many ad services within Home and the PS Plus subscription now.

It also took them how many years to finally achieve this profitability from their free service?

If anything it seems to show the contrary... that in order to run a profitable, successful service you have to have subscription and ad income.