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Forums - Sony - Sony's financial report is up

NJ5 on 29 October 2008
FishyJoe said:
Yeah, the economic factors won't really show until the upcoming quarter.

Seeing as falling USD/Euro is perhaps Sony's biggest problem, I just went to check the currency charts:

USD to Yen

Euro to Yen

It is pretty clear than currency was not that big a problem until the end of September. The Euro had an especially huge drop since then, ouch. What are the odds that Sony as a whole posts a loss in the last quarter?

 



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FishyJoe on 29 October 2008
NJ5 said:
FishyJoe said:
Yeah, the economic factors won't really show until the upcoming quarter.

Seeing as falling USD/Euro is perhaps Sony's biggest problem, I just went to check the currency charts:

USD to Yen

Euro to Yen

It is pretty clear than currency was not that big a problem until the end of September. The Euro had an especially huge drop since then, ouch. What are the odds that Sony as a whole posts a loss in the last quarter?

 

 

That's only the half of it. I expect conumer spending to be down significantly YOY as there as consumer confidence has dropped significantly because of what happened in October.

 



Jordahn on 29 October 2008
NJ5 said:
Jordahn said:

 

SONY was loosing more money because production costs were greater when the economy was better. Now, production costs have lessen, more PS3's have been sold, the economy is worse, and SONY posted a smaller loss than last time. Two different scenarios.


You said "some users [...] are claiming that the PS3 was a bad move by SONY when in fact we can account a lot of the losses was the cause of a failing economy."

That's the part I don't understand. Most of PS3's losses aren't due to the failing economy.

 

 

We just have to agree to disagree then because the U.S. economy has taken a hit for the past couple of months.  I work in the metal building industry, and I can tell you that work has been scarce for some time now.  And from what I can understand, our situation echoes and cooborates most of what is reflected in the U.S. economy.  Later and peace.



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HappySqurriel on 29 October 2008
Dryden said:
I am not as pessimistic on this as others, because there is a bigger picture to SONY's plan. I think many of us gamers (myself included) sometimes fail to see the forest for the trees. Yes, SONY is still losing money out of the gaming arm in large part due to R&D/manufacture behind the PlayStation 3 (lagging software sales tied to the PSP notwithstanding), but the high price point was long acknowledged as being troubling in the short term, and the division is nearing profitability again. Sales appear to be steady and meeting targets, and the future of Blu Ray and SONY's downloadable content offerings are very bright.

The PS3/gaming division will return to health as consumers get over the initial sticker shock and high barrier of entry and are able to invest in the games and Blu Ray movies in the coming years.

Long term, the gaming division will be fine. SONY's bigger hurdle over the next decade will be their other consumer electronics, which continue to carry premium prices for less-and-less feature differentiation. Really, all the big Japanese manufacturers are at risk with their TV and stereo and camera sales being cannibalized by cheaper Asian imports from Korea and China.

I am a lot more optimistic about the PS3 now than I was a year ago, both as a content delivery system/BD player and as a gaming console. The major brick-and-mortar retailers are slowly trimming DVD shelf space and stocking more and more BD content. That is an encouraging sign for the future of the PS3. SONY's biggest coup in the gaming division had nothing to do with games, but rather the ridiculous sales of Iron Man on BD.

SONY might be battered and bruised for its efforts, but it appears going all-in by tying Blu Ray to the PS3, while having downloadable film available to the next big emerging market, will pay off. I'm sure it's taking longer than anyone at SONY thought or would ever care to admit, but they're getting there.

I have yet to see anyone create reasonable numbers that demonstrate how the success of Blu-Ray can compensate for the losses of the PS3 and the lost dominance of the Playstation brand. From my understanding, the licencing fees associated with movies are far smaller than the licencing fees associated with videogames which is one of the reasons why movies can be sold for $5 while games tend to stay at $20 (or higher). If you make the assumption that Sony makes $2.50 for every Blu-Ray movie (which is amazingly optimisitic in my opinion) they would have to sell 16 Billion movies (or 160 Blu-Ray movies for every household in the United States) to recover the losses from the PS3.

 



FishyJoe on 29 October 2008
Jordahn said:
NJ5 said:
Jordahn said:

 

SONY was loosing more money because production costs were greater when the economy was better. Now, production costs have lessen, more PS3's have been sold, the economy is worse, and SONY posted a smaller loss than last time. Two different scenarios.


You said "some users [...] are claiming that the PS3 was a bad move by SONY when in fact we can account a lot of the losses was the cause of a failing economy."

That's the part I don't understand. Most of PS3's losses aren't due to the failing economy.

 

 

We just have to agree to disagree then because the U.S. economy has taken a hit for the past couple of months.  I work in the metal building industry, and I can tell you that work has been scarce for some time now.  And from what I can understand, our situation echoes and cooborates most of what is reflected in the U.S. economy.  Later and peace.

I don't think that's what people mean. The economy was faltering prior to October no doubt. But in October it was driven off a cliff.

 



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tuoyo on 29 October 2008
HappySqurriel said:
Dryden said:
I am not as pessimistic on this as others, because there is a bigger picture to SONY's plan. I think many of us gamers (myself included) sometimes fail to see the forest for the trees. Yes, SONY is still losing money out of the gaming arm in large part due to R&D/manufacture behind the PlayStation 3 (lagging software sales tied to the PSP notwithstanding), but the high price point was long acknowledged as being troubling in the short term, and the division is nearing profitability again. Sales appear to be steady and meeting targets, and the future of Blu Ray and SONY's downloadable content offerings are very bright.

The PS3/gaming division will return to health as consumers get over the initial sticker shock and high barrier of entry and are able to invest in the games and Blu Ray movies in the coming years.

Long term, the gaming division will be fine. SONY's bigger hurdle over the next decade will be their other consumer electronics, which continue to carry premium prices for less-and-less feature differentiation. Really, all the big Japanese manufacturers are at risk with their TV and stereo and camera sales being cannibalized by cheaper Asian imports from Korea and China.

I am a lot more optimistic about the PS3 now than I was a year ago, both as a content delivery system/BD player and as a gaming console. The major brick-and-mortar retailers are slowly trimming DVD shelf space and stocking more and more BD content. That is an encouraging sign for the future of the PS3. SONY's biggest coup in the gaming division had nothing to do with games, but rather the ridiculous sales of Iron Man on BD.

SONY might be battered and bruised for its efforts, but it appears going all-in by tying Blu Ray to the PS3, while having downloadable film available to the next big emerging market, will pay off. I'm sure it's taking longer than anyone at SONY thought or would ever care to admit, but they're getting there.

I have yet to see anyone create reasonable numbers that demonstrate how the success of Blu-Ray can compensate for the losses of the PS3 and the lost dominance of the Playstation brand. From my understanding, the licencing fees associated with movies are far smaller than the licencing fees associated with videogames which is one of the reasons why movies can be sold for $5 while games tend to stay at $20 (or higher). If you make the assumption that Sony makes $2.50 for every Blu-Ray movie (which is amazingly optimisitic in my opinion) they would have to sell 16 Billion movies (or 160 Blu-Ray movies for every household in the United States) to recover the losses from the PS3.

 

That's what I never get when Sony fans keep on going on about Blu Ray will recoup the money lost on PS3.  If movie royalties were so amazing then Toshiba would be sitting on the biggest gold mine in the history of mankind given how successful DVD has been.

 



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NJ5 on 29 October 2008
Jordahn said:
NJ5 said:


You said "some users [...] are claiming that the PS3 was a bad move by SONY when in fact we can account a lot of the losses was the cause of a failing economy."

That's the part I don't understand. Most of PS3's losses aren't due to the failing economy.

 

 

We just have to agree to disagree then because the U.S. economy has taken a hit for the past couple of months. I work in the metal building industry, and I can tell you that work has been scarce for some time now. And from what I can understand, our situation echoes and cooborates most of what is reflected in the U.S. economy. Later and peace.

I don't see how that contradicts what I said. What does that have to do with PS3 sales? As far as I've seen they aren't suffering due to the economy.

 



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BengaBenga on 29 October 2008
HappySqurriel said:
Dryden said:
I am not as pessimistic on this as others, because there is a bigger picture to SONY's plan. I think many of us gamers (myself included) sometimes fail to see the forest for the trees. Yes, SONY is still losing money out of the gaming arm in large part due to R&D/manufacture behind the PlayStation 3 (lagging software sales tied to the PSP notwithstanding), but the high price point was long acknowledged as being troubling in the short term, and the division is nearing profitability again. Sales appear to be steady and meeting targets, and the future of Blu Ray and SONY's downloadable content offerings are very bright.

The PS3/gaming division will return to health as consumers get over the initial sticker shock and high barrier of entry and are able to invest in the games and Blu Ray movies in the coming years.

Long term, the gaming division will be fine. SONY's bigger hurdle over the next decade will be their other consumer electronics, which continue to carry premium prices for less-and-less feature differentiation. Really, all the big Japanese manufacturers are at risk with their TV and stereo and camera sales being cannibalized by cheaper Asian imports from Korea and China.

I am a lot more optimistic about the PS3 now than I was a year ago, both as a content delivery system/BD player and as a gaming console. The major brick-and-mortar retailers are slowly trimming DVD shelf space and stocking more and more BD content. That is an encouraging sign for the future of the PS3. SONY's biggest coup in the gaming division had nothing to do with games, but rather the ridiculous sales of Iron Man on BD.

SONY might be battered and bruised for its efforts, but it appears going all-in by tying Blu Ray to the PS3, while having downloadable film available to the next big emerging market, will pay off. I'm sure it's taking longer than anyone at SONY thought or would ever care to admit, but they're getting there.

I have yet to see anyone create reasonable numbers that demonstrate how the success of Blu-Ray can compensate for the losses of the PS3 and the lost dominance of the Playstation brand. From my understanding, the licencing fees associated with movies are far smaller than the licencing fees associated with videogames which is one of the reasons why movies can be sold for $5 while games tend to stay at $20 (or higher). If you make the assumption that Sony makes $2.50 for every Blu-Ray movie (which is amazingly optimisitic in my opinion) they would have to sell 16 Billion movies (or 160 Blu-Ray movies for every household in the United States) to recover the losses from the PS3.

 

I think you're severely overstating the losses on the PS3 here. They are big, but not $40 billion. More in the order of 5 billion. Still significant. I expect BluRay lisence fees to be under a dollar, so you're definitely right that it will take a lot of BluRay discs to compensate for the PS3 losses. And of course it took a lot of R&D to develop BluRay.

 



FishyJoe on 29 October 2008
tuoyo said:

That's what I never get when Sony fans keep on going on about Blu Ray will recoup the money lost on PS3.  If movie royalties were so amazing then Toshiba would be sitting on the biggest gold mine in the history of mankind given how successful DVD has been.

 

 

Indeed, while the sales of movies are huge, the money is split amongst a lot of different parties. In addition, the margins are much thinner. With video game sales, the money is only split between a very few parties and the margins are much better.

This makes it unclear if a tradeoff between video game and blu-ray market share was worth it. I'm not saying either way, just with the available data one cannot make that assumption.



HappySqurriel on 29 October 2008
BengaBenga said:
HappySqurriel said:
Dryden said:
I am not as pessimistic on this as others, because there is a bigger picture to SONY's plan. I think many of us gamers (myself included) sometimes fail to see the forest for the trees. Yes, SONY is still losing money out of the gaming arm in large part due to R&D/manufacture behind the PlayStation 3 (lagging software sales tied to the PSP notwithstanding), but the high price point was long acknowledged as being troubling in the short term, and the division is nearing profitability again. Sales appear to be steady and meeting targets, and the future of Blu Ray and SONY's downloadable content offerings are very bright.

The PS3/gaming division will return to health as consumers get over the initial sticker shock and high barrier of entry and are able to invest in the games and Blu Ray movies in the coming years.

Long term, the gaming division will be fine. SONY's bigger hurdle over the next decade will be their other consumer electronics, which continue to carry premium prices for less-and-less feature differentiation. Really, all the big Japanese manufacturers are at risk with their TV and stereo and camera sales being cannibalized by cheaper Asian imports from Korea and China.

I am a lot more optimistic about the PS3 now than I was a year ago, both as a content delivery system/BD player and as a gaming console. The major brick-and-mortar retailers are slowly trimming DVD shelf space and stocking more and more BD content. That is an encouraging sign for the future of the PS3. SONY's biggest coup in the gaming division had nothing to do with games, but rather the ridiculous sales of Iron Man on BD.

SONY might be battered and bruised for its efforts, but it appears going all-in by tying Blu Ray to the PS3, while having downloadable film available to the next big emerging market, will pay off. I'm sure it's taking longer than anyone at SONY thought or would ever care to admit, but they're getting there.

I have yet to see anyone create reasonable numbers that demonstrate how the success of Blu-Ray can compensate for the losses of the PS3 and the lost dominance of the Playstation brand. From my understanding, the licencing fees associated with movies are far smaller than the licencing fees associated with videogames which is one of the reasons why movies can be sold for $5 while games tend to stay at $20 (or higher). If you make the assumption that Sony makes $2.50 for every Blu-Ray movie (which is amazingly optimisitic in my opinion) they would have to sell 16 Billion movies (or 160 Blu-Ray movies for every household in the United States) to recover the losses from the PS3.

 

I think you're severely overstating the losses on the PS3 here. They are big, but not $40 billion. More in the order of 5 billion. Still significant. I expect BluRay lisence fees to be under a dollar, so you're definitely right that it will take a lot of BluRay discs to compensate for the PS3 losses. And of course it took a lot of R&D to develop BluRay.

 

Oops!

You're right, that should have been 1.6 Billion or 16 per household in the United States ... (I was assuming $4 Billion, which was only actual losses and didn't include R&D or opportunity cost)

I suppose that is a number that could be obtained but is (probably) higher than the number of DVDs sold, and (as I said before) $2.50 per movie is optimistic with the number of people involved in the Blu-Ray consortium and with how low the Blu-Ray licencing fees probably are.