Alright, I'm obviously too idiotic to understand these things (i'm a philosophy major who can't use math for anything). Can anyone help me answer these questions:

1.) how does a strong currency make a local company lower their profits? i.e., sony lowering profits because of the yen being strong.

2.) when i buy a game, where does the $59.99 actually go? i.e., how much goes to the developer, the publisher, the retailer, and who else gets a piece.

3.) how much is the production cost of the consoles today?

1) The strong currency you are referring too is the Yen. If it is high versus the dollar and Euro, then me paying Sony $400 actually gives them less than if the Yen is low versus the dollar and Euro.

1) japanese companies get paid by the Yen,,,, 3 quarters of sony sales are outside japan ,
when the Yen rise against the Dollar and Euro they get less money from the sales outside japan

that's what i don't understand. can you detail it to me?

no one can answer u the third one except Sony or MS :P

So if the yen is strong then the dollar is weak so here is two examples

The yen is weak dollar is strong
one dollar = 1.5 yen you sell the system for $400.00 it becomes $600.00 yen

The yen is strong the dollar is weak
one dollar + 1.1 yen you sell the system for $400.00 it becomes $440.00 yen

Profit down $160.00 yen. The numbers are made up but you get the picture

ps3 = 400 $
sony gets 400 yen for exapmle

when the yen rise they get less money despite selling it for the same price
ps3= 400$
sony gets 350 yen for example

Simplify it... if you live in Chicago and you have a good job there... 90k/yr a 360 or PS3 really isn't that expensive comparitivly... where as I was making 35/yr... my 360 was a major purchase even though I was living in NW TN at the time and my rent was much lower... it's not the same, but it has the same thought process behind it.... sort of... come to think of it...that's probably a bad example nvm

I discussed question 1 a little in this thread

At 29 607 Yen, is Sony losing more money per PS3 sold in Canada?

Since the Yen has strenghthened 30% versus the Canadian $, when you convert the money I pay for a PS3 in Canada into Yen, it comes out to 29 600 Yen, yet they can sell it to the Japanese for 39 900 Yen. So since their sell the majority of their units in countries where they receive less Yen equivilent units per console then they used to, they make less profit in Yen despite their prices staying the same and units remaining the same.

1. When preparing consolidated financial statements, foreign exchange rates cause what is called translation risk. This risk stems from the possibility that your profits will be higher or lower depending on the current exchange rates.

Sony lowered their profits due to a strong Yen. When consolidating all subsidiaries, the consolidated financial statements are presented in the currency of the parent company, in this case, SONY Japan hence the Yen.

If the Yen is strong, the consolidated profits are lower due to the fact than when you convert the USD subsidiary's profits to Yen, due to the Yen been stronger, you need more USD to buy Yen.

e.g. say 1 USD = 100 YEN
Consolidated profits = 100 Yen

When the Yen is strong, say 1 USD = 95 YEN
Consolidated profits = 95 Yen

2. Its been speculated, however no one really knows. I provided a link before but that was just a general article.

3. No one knows