Forums - Sales Discussion - Is ANYBODY profiting on the PS3 right now?

I've been thinking about the PS3 situation at the moment, and it occurs to me that right now it doesn't seem like anybody involved in its production, distribution or sale is making much of a profit, which is likely to have some long-term effects.

Sony -- as the designer and manufacturer, we know they've been losing money on the PS3 console hardware to date.  If the losses are indeed in the $100-$200 range, then the successful first party titles they're publishing and third-party royaties together aren't yet bringing in enough money to make up the difference.  (And in some markets, people aren't buying games for the PS3 at all, so those consoles are currently at a "permanent loss.")  Sony also has a lot of money tied up in warehoused PS3's according to their most recent official reports, so Sony will not be making a true profit on the PS3 for a while.  A price cut appears to be a smart move, but that has huge financial ramifications given current inventory levels and losses to date.

Distributors -- I'm not sure what kind of billing cycle they have to follow (receipt + 90 days?  receipt + 30 days? payment only on shipping to retail?) but at the rate systems are moving, there's warehouse space being occupied that may end up costing more than the profit to be had from moving the systems through in a reasonable amount of time.  The only way distributors can respond is by limiting or reducing the space they devote to PS3 products until the market picks up.

Retailers -- The retailers have the least at risk, because they can make a per-unit profit if they size their orders carefully and don't tie up too much cash in inventory (they usually get receipt + 30 day pricing at least, so they can make a profit with little risk if the product moves before the bill is due).  They do, however, have a cost for their PS3 floor space (a percentage of their total rent/taxes, salaries, overhead.)   If that floor space is not being productive (or as productive as it would be if devoted to another product), they may reduce the prominence and footprint of the PS3.  That's a real possibility during the next few dry months for PS3 releases.

Publishers -- Right now, Sony may be making a profit on its top first-party titles (depending on development costs), but third parties are not likely seeing a profit at current PS3 software sales levels.  Multi-platform mass-market releases stand a better chance (Spiderman 3 will likely do well), but I think it's telling that "Shrek the Third" is appearing on every platform BUT the PS3.  I suspect the current install base size is contributing to delays and other release plan changes as publishers try to find ways to make their PS3 projects profitable, perhaps by slowing down development to release when the potential market is larger.  Worst case, projects will quietly be cancelled or delayed, perhaps never to be released.  Best case, this will provide better-quality results when the titles DO release with a better shot at profitability as the install base grows.

Scalpers -- Some made profits prior to and just after launch, but since then it seems the "scalpers" are either taking a loss on their gamble or cancelling their auctions and returning the console to retail.  Serves them right. :)

End Users -- Blu-ray movie watchers are getting good value for the money right now.  Gamers are a bit frustrated, and even longtime Sony fans are more likely to add another console to their collections than they were before PS3 reached its current state.  The competition is ultimately good for end users, but any substantial wait for new PS3 titles that pushes users to explore other options begins to mean that marginal PS3 games won't sell very well, further reducing publisher interest in the platform.

 

Time will tell the full story -- I think console pricing is the PS3's biggest obstacle right now, I've seen potential customers inquiring about price drops a lot lately.  But two more months with few new releases is not likely to alter ANY of the factors I've listed here.  How long can this state of affairs persist before it starts not to matter?  Does Sony have a possibility of "re-launching" the system to recapture the early hype and expectations when the platform is actually capable of living up to them?

 

 



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Hard to say, maybe some of the game developers like Insomniac that have had higher software sales



 

Predictions:Sales of Wii Fit will surpass the combined sales of the Grand Theft Auto franchiseLifetime sales of Wii will surpass the combined sales of the entire Playstation family of consoles by 12/31/2015 Wii hardware sales will surpass the total hardware sales of the PS2 by 12/31/2010 Wii will have 50% marketshare or more by the end of 2008 (I was wrong!!  It was a little over 48% only)Wii will surpass 45 Million in lifetime sales by the end of 2008 (I was wrong!!  Nintendo Financials showed it fell slightly short of 45 million shipped by end of 2008)Wii will surpass 80 Million in lifetime sales by the end of 2009 (I was wrong!! Wii didn't even get to 70 Million)

Insomniac Games, Evolution Studios, and TGC. Activision, EA, and Koei maybe. On the Wii, Nintendo's making a killing, but I can't think of anyone else who's definitely making much money.



Shane said:
Insomniac Games, Evolution Studios, and TGC. Activision, EA, and Koei maybe. On the Wii, Nintendo's making a killing, but I can't think of anyone else who's definitely making much money.

Except for Ubisoft, EA, SEGA, Atlus, Activision ...

Every third party publisher has sold similar numbers on both systems, the main difference is that Wii games cost less money to make ...



Lots on wii are happy.  Ubishot for one who had better then expected sales of Rayman and others.  Excellent sales for low-medium budget games.  The only 3rd parties that are not happy are the ones that did not make any games because they spent all their time working on PS3 games.



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jlauro said:
Lots on wii are happy.  Ubishot for one who had better then expected sales of Rayman and others.  Excellent sales for low-medium budget games.  The only 3rd parties that are not happy are the ones that did not make any games because they spent all their time working on PS3 games.

RR7,resistance ,motorstorm all made money for ps3 in Japan ,Us and Eu

unlike all x360 games .for instance Lost planet ,AC 4 and BlueDragon have caused Sagaguchi and Capcom millions in losses.



The 360/PS3 multiplat games are doing fine 'cause the devs/pubs only have to cover the cost of porting to the PS3 which is smaller than making a new game on the Wii. And whatever division of Sony handles Blu-Ray players/movies is probably seeing a lot more profit due to the PS3 owners buying movies. Sony's HDTV division is probably seeing a slight boost as well with the emphasis on 1080p graphics. Larry - care to actually back up your statements with facts someday?



Guys, this is a thread about PS3 specifically. If you want to make a thread about whether or not people profit from Wii or 360, make that a separate thread. This particular kind of stray from the topic is borderline trolling, so far as I'm concerned.



I dont think many people make money on hardware in general.  I remember speaking to my local shop owner about the PS3 and he told me how he made about £10 profit on each hardware unit sold and that this was common with all consoles.  Also that he could make £10-£15 per game.

So for example you buy one console and over a period of a few years say ten games.  You do the math.  Goes to show why games/software matters!!



larry said:
jlauro said:
Lots on wii are happy. Ubishot for one who had better then expected sales of Rayman and others. Excellent sales for low-medium budget games. The only 3rd parties that are not happy are the ones that did not make any games because they spent all their time working on PS3 games.

RR7,resistance ,motorstorm all made money for ps3 in Japan ,Us and Eu

unlike all x360 games .for instance Lost planet ,AC 4 and BlueDragon have caused Sagaguchi and Capcom millions in losses.


Do you like lying through your teeth Larry? MS financed the developed of Blue Dragon and paid for its exclusivity. Sakaguchi has made his money. It must have been a good sum because he is planning Blue Dragon 2 for 360. Mistwalker planned to sell 100,000 units of Blue Dragon in Japan. They have sold more than 180,000 units. They may actually make MS's goal of 200,000 units. The 360 continues to sell MORE software than the PS3 in Japan. So tell me again how third party developers are losing money? Do I even need to bring up software sales for the US? If Capcom lost so much money on Lost Planet, how come they have been unwilling to port the game to PS3? You do realize they've sold 1.26 million copies of Lost Planet worldwide right?