I think you have put a lot of thought into these analyses and, although we will never know the exact margin per HW/SW unit, youve done well.

Basically this gives more evidence that PS2/PSP profits are paying for the PS3 hardware business and they are in a race of cost reduction. Thats why I think 2009 will be the first real test of the PS3 business as I believe that the PS2 will have its last hurrah this Christmas. For the PSP, third party developers are jumping ship so I dont know how its going to look next year. Sony must be finding ways to tie the PSP functionality to the PS3 and stepping up first party development alot.

Thanks for the advice.  Unfortunately, there is no other data to do that type of modeling - unless you have other sources.

That's why you can check out my MSFT thread (PLEASE.....) - that gives a bit more detail if we have some line items we can work with.  I would really like some comments there too.  I expect it of you :)

http://www.vgchartz.com/forum/thread.php?id=35336&start=0

Therefore, I can only work with the Sony numbers we have been given.

I suppose you can use intuition to guess the numbers, but of course, just like in any matter, if you have at least some basis to back up your projections, then at least you have a foundation you can build on.

Thanks for the feedback.

It would be interesting to see next quarter.  I think if you compare Q1 this year to last year, both quarters made money.

However Q2 last year lost money, mainly due to selling much more PS3s compared to the previous quarter.  So if Sony sells more PS3s next quarter compared to the 1.56million this quarter, it may turn out that they lose money.

So next quarter:

PS2 HW - profit down

PSP HW - sales up

PS3 HW - sales up most likely

PS2 SW - profit down

PSP SW - consistent - about the same

PS3 SW - sales up

It would be interesting to see if PS3 HW cost reductions and PS3 SW will be enough to offset the lower profit of PS2 - which is definitely possible.

Note, I think last Q2, Sony lost US$34 million.

@kn.

So you see the 8 million variance is basically a rounding error.

If we put something like $2.1(*) net profit on software vs $2(*), the numbers would be pretty much identical - but if you round it down/up to $2 - the bigger numbers would still be basically the same.

Overall, not bad, even if I do say so myself.

What do you think?

I certainly find it pretty interesting that you've come this close but I would suspect that there is more profit in the PS2 HW and SW and more loss in the PS3. From your data above:

PS2 HW = 1.51 million @ $10(*) net profit = $15.1(*)

PSP HW = 3.72 million @ $8(*) net profit = $29.8(*)

PS3 HW = 1.56 million @ loss of $60(*) per unit = $93.6(*) LOSS

PS2 SW = 19.3 million @ $2(*) profit = $38.6(*)

PSP SW = 11.8 million @ $2(*) profit = $23.6(*)

PS3 SW = 22.8 million @ $2(*) profit = $45.6(*)

According to a CNNMoney and Forbes article (forbes in 2k6, CNN 2K1), new release software for Nintendo, Sony, and Microsoft garners a licensing fee of about $7-8 on each title sold. It is certainly less on "budget" titles but I would expect it to be roughly proportional. So, say a $60 PS3 game gets 8 bucks, a $30 ps3 game nets 4 bucks in Sony's pocket. Getting an exclusive might reduce or eliminate it as well. If I had to venture a guess, I'd say something like $3, $4, 5$ would be better numbers for psp, ps2 and ps3 games, respectively. I could be totally in the dark here but that would mean the hardware is burning more cash.

There was another article in VGC somewhere that talked about overall losses in game creation at Sony, MS, and Nintendo. How do those numbers factor into this model?

www.

@kn

remember for sony i used "net profit", meaning i've also spread out the fixed costs and allocated them per unit

but yes, if you think that ps2 or any other item in those 6, especially software is too low, then yes, hardware sucks all those other losses

however, just based on your comments, it seems those numbers are for gross margins, not "net profit per unit"

If you remember my previous sony analysis for previous fiscal years, those $2(*) software numbers and $10 ps2 numbers work well, and is fairly consistent for the past 3 fiscal years.

here is the link again:
http://www.vgchartz.com/forum/thread.php?id=32456&start=100

Ah, yes, net. :)

wow simply great.....

good job!