PS3 Sales

For the FY ending Mar 31, 2008, Sony has shipped a total of 14.74 million PS3s.

With some approximation, they should ship approx. 2.0 million consoles for the 3 months to meet or exceed their target of shipping 10 million consoles for the year ending Mar 2009. (We will know the actual amount very soon from Sony financials).

Currently they are in a virtual tie with the X360.  By “tie”, I mean that the lead is not significant to affect any 3^rd party game development.  Of course, the same can be said for the X360.  Therefore, in business terms, they are the tied.

Unfortunately for Sony, the PS3 is generally selling at a NET LOSS still.  So the more consoles they sell in the next 6 to 12 months still negative influences their profitability.

(You can check the analysis in previous threads I’ve done, actual and projections)

PS3 Software

Software is generally a bright spot for Sony.  While it may not have the same attach rates as the X360, the numbers that Sony reports is quite positive.

Based on my previous thread, Sony should “ship” about 100(*) million units of PS3 software for the next 12 month ending Mar 2009.  Last FY, they shipped 54.1 million units.

With that much software, this part of the business should be profitable.

PSP Hardware & Software

PSP should be a concern for Sony.  On the one hand, it seems that PSP hardware is profitable.

So selling more PSPs is a good thing.

On the other hand, PSP software is not really improving, given the increase in PSP install base.

For example, FY end Mar 2007 saw 54.1 million units shipped, while FY end Mar 2008 saw 55.1 million units shipped.

Only a 1 million unit INCREASE in software shipped, despite shipping 13.89 million more PSPs!

Clearly, quite a disconnect between hardware and software

PS2 Hardware and Software

It seems like the PS2 is still the golden goose for Sony, generating cash flow and profits, without really needing any additional investments to generate revenue.

Though based on past history, the PS2 should last only about 1 or 2 years, before being completely discontinued.  What happens to the PS2 remains to be seen.

Profitability and Challenges

As everyone knows, Sony has lost billions the past few years.

Going forward, profitability will be difficult to achieve – that is, in relation to past profitability.

PS3 hardware – increasing sales bring about increasing losses

PS3 software – profitable

PSP - By all accounts, hardware is slightly profitable.  However, software may not generate much profits due to weak overall sales in relation to PS3 and their main competitor (DS).

PS2 – This is why I think profitability will be much constrained.

In the past year end Mar 2008 (which has already experienced declines), PS2 sold 13.73 million HW and 154 million software.  Even by modest assumptions, the PS2 generated approx. $300 to $500 million in PROFITS.

If PS2 is eventually discontinued in 18 to 24 months, then Sony Game Division has to make up those numbers just to keep up or slightly improve on their past 2 to 3 years of performance.

The PSP does not seem like it can pick up those numbers.  While the PS3 has to rely on much lower hardware costs to offset those lost profits.

Going forward 12 to 24 months, while revenues may go up for Sony, profitability may not increase much at all.

Please discuss.  Thanks.

PS3 Sales

For the FY ending Mar 31, 2008, Sony has shipped a total of 14.74 million PS3s.

With some approximation, they should ship approx. 2.0 million consoles for the 3 months to meet or exceed their target of shipping 10 million consoles for the year ending Mar 2009. (We will know the actual amount very soon from Sony financials).

Currently they are in a virtual tie with the X360.  By “tie”, I mean that the lead is not significant to affect any 3^rd party game development.  Of course, the same can be said for the X360.  Therefore, in business terms, they are the tied.

Unfortunately for Sony, the PS3 is generally selling at a NET LOSS still.  So the more consoles they sell in the next 6 to 12 months still negative influences their profitability.

(You can check the analysis in previous threads I’ve done, actual and projections)

PS3 Software

Software is generally a bright spot for Sony.  While it may not have the same attach rates as the X360, the numbers that Sony reports is quite positive.

Based on my previous thread, Sony should “ship” about 100(*) million units of PS3 software for the next 12 month ending Mar 2009.  Last FY, they shipped 54.1 million units.

With that much software, this part of the business should be profitable.

PSP Hardware & Software

PSP should be a concern for Sony.  On the one hand, it seems that PSP hardware is profitable.

So selling more PSPs is a good thing.

On the other hand, PSP software is not really improving, given the increase in PSP install base.

For example, FY end Mar 2007 saw 54.1 million units shipped, while FY end Mar 2008 saw 55.1 million units shipped.

Only a 1 million unit INCREASE in software shipped, despite shipping 13.89 million more PSPs!

Clearly, quite a disconnect between hardware and software

PS2 Hardware and Software

It seems like the PS2 is still the golden goose for Sony, generating cash flow and profits, without really needing any additional investments to generate revenue.

Though based on past history, the PS2 should last only about 1 or 2 years, before being completely discontinued.  What happens to the PS2 remains to be seen.

Profitability and Challenges

As everyone knows, Sony has lost billions the past few years.

Going forward, profitability will be difficult to achieve – that is, in relation to past profitability.

PS3 hardware – increasing sales bring about increasing losses

PS3 software – profitable

PSP - By all accounts, hardware is slightly profitable.  However, software may not generate much profits due to weak overall sales in relation to PS3 and their main competitor (DS).

PS2 – This is why I think profitability will be much constrained.

In the past year end Mar 2008 (which has already experienced declines), PS2 sold 13.73 million HW and 154 million software.  Even by modest assumptions, the PS2 generated approx. $300 to $500 million in PROFITS.

If PS2 is eventually discontinued in 18 to 24 months, then Sony Game Division has to make up those numbers just to keep up or slightly improve on their past 2 to 3 years of performance.

The PSP does not seem like it can pick up those numbers.  While the PS3 has to rely on much lower hardware costs to offset those lost profits.

Going forward 12 to 24 months, while revenues may go up for Sony, profitability may not increase much at all.

Please discuss.  Thanks.

that is a good evaluation of sony right at this moment.

I would think another challenge would be from third parties trying to make software for the PS3.  By all accounts it seems like it is more difficult to do than the xbox 360. 

All things considered I think sony and microsoft are doing great things, while the wii is ummmmm.... well lets just hope it gets better before it gets more embarrassing.

Proud owner of a PS3, Wii (remains to be seen after that E3), and an xbox 360

I think the most pressing is the loss of PS2 from their division in 18 to 24 months.

On the one hand, if PS2 is still going relatively strong, just due to its immense install base - more than 24 months from now, then it's good for Sony.

On the other hand, if PS2 remains that strong, consequently PS3 will be much weaker than they would like.

From the previous post:

In a few years, there Game Division Segment might look like this 2 to 3 years from now:

PS2 - gone
PSP - still exists, slight profitability
PS3 - profitable? or just breaking even?

MMO (if they include now in their game division) - profitable??

New "unknown" hardware - R&D?? - expenses = losses

Wait a second;

Sony has shipped a total of 14.74 million PS3s

I thought this was 12.85 million at the end of Fiscal year March 31st 2008.

We are taking Sony's actual reported numbers.

5.5 million + 9.24 million (end of Mar 2008) = 14.74 million PS3s shipped (sold to retailers/distributors)

Hope that clarifies it for you.

Huh, ok, for some reason I had 12.85 million down. Maybe they were referring to actually sold to people numbers then. Now that I remember correctly that call was made during there earnings call, yea. Anyhow, that number would allow them to have shipped perhaps 15.6-16.3 million to date, maybe.

In all my analysis, I usually use shipped numbers by the company - as they would generally recognize revenue when they ship it to a customer.

That's why sometimes companies can channel stuff and make their numbers look a bit better in year ends or quarter ends.

Theres a lot of talk about shipments today. Strange