You have the right information, but you are interpeting it wrongly.

BR players are indeed getting to the $150 price point. You can pick up one next Friday for $128. This indeed devalue the PS3 BR capabilities. All this is true.

However, what it really means is that the PS3 is ending its role in pushing BR to the market. BR is inexpensive enough to survive on its own, standalone. No need for the PS3 subsidy anymore.

That means that the pressure to lower prices is now only related to the gaming market and not to the BR market. And again, the economic circumstances makes it very unlikely that Sony could afford such a move.

Good point... im just saying that now that Blu-Ray has penetrated the mass market and is becoming more mainstream and affordable, it takes some of the appeal of the PS3 away from the ever fickle mainstream and casual audience which both Sony and Microsoft need in order to sustain growth.

Your right about the economics part, and Sony is gonna have to make some tough decisions next year... perhaps instead of price drops they'll do more bundles like what Microsoft has been doing the last 2 years. Maybe pack in LBP... now there's an offer most gamers can't refuse! Hell I'd be tempted to buy one myself.

@Luney-Tune:

I made that exact point in a later part of my post, one you removed from the quote. I know the loss wouldn't be exactly $11 billion, my point was just that the problem is very serious.

Half of that loss would still be big trouble, even a quarter of that loss would...

@amirnetz

By looking the whole picture sony isn't doing well on other sectors either. For example Sony BMG has been losing its sales all the time.

Q1: -$49M sales

Q2: -$57M sales

...

There have been also some unfortunate events for sony, which have made the whole thing even worse. For example that patent infringement, which did cost $18.5M.

Blu-Ray doesn't sell well and ppl are still happy with dvd so no love for Blu-Ray movies either.

HDTVs have sold well, but they might stall soon too.

And when we add current financial crisis...

I am not a doomsayer or anything. This just happens to be the situation right now. Sony just can't do the MS and take big hits from console market. Its way too small company be able withstand such blows. Sony has already tried to soften the landing for example with some project cancels( One of them were eight days ), but this seems not to be enough as we can see it from losses it has made in game division.

(Well, I could have said also something about current gamesales, because they aren't doing well at all too.

LittleBigPlanet = 735k
Resistance 2 = 348k
Motorstorm 2 = 130k
Socom = 302k )

also you forget GT5

@Deneidez: To make matters worse, Sony has a division (Financial services or something like that) which invests in the stock market. That's just asking for trouble for a company selling items which don't do well during recessions.

Even if Sony drops the PS3 early, they're not leaving the console market.

First, they won't drop it until 2010. Maybe 2011. Exclusives are coming out, they just spent god knows how much money developing Home (money sink. If they're losing money, they can't afford to waste on this stuff, no matter how cool it is).

After they do that, they will probably start work on the PS4. Sony knows how to win a gen. They've done it twice. Sony knows how to be profitable. They've done it three times. They just need to wipe the slate clean and start again much like the PS2- reasonably good hardware with killer software.

Of course, I think we're getting ahead of ourselves. Sony made a 500 million dollar profit last quarter, I don't think they're anywhere near bankruptcy.

I say if they did have to make cutbacks, Playstation would be one of the last to go. Sony Music Entertainment would probably be dumped first, followed by Sony Ericsson. But, like I said, that's only if things get extreme. This financial crisis will not last forever. It's not the Great Depression. Experts are saying it'll be over within 18 months.

And they've said from March next year, they will be more competitive with pricing. What can that mean other than a price cut?

Just take out some of the features. Like WLAN.

all SCE's will bring a heavy hitter to the table,,,

SCEJ:GT5
SCEE:KZ2
SCEA:uncharted 2 and GOWIII

i don't see how any gaming line up can compete with that


so to sum it up

HELLLLLLLLL YEAAAAAAAAAAAAAAAAAAHHHHHHHHHHH

They're not near bankruptcy, that's for sure. They still have a cash horde of $12 billion. Their main problem, survivability-wise is really their low profit margin.

Their profit was actually $218 million in the last quarter, not $500 million, but that's not the issue here. The issue is that looking at profit as an absolute value is misleading, and it hides the fragility of these profits.

To put it simply, Sony was making around $1 dollar for each $100 worth of products they sold. Due to the dollar/euro collapse, they're now getting $80 for the same products they sell overseas, which would mean they'd be losing $19 dollars instead (or losing $4 billion instead of making $218m). This naive analysis is too pessimistic in some ways. The drop in the dollar/euro reduces a part their expenses (the part paid for in these currencies, such as European and American employees' salaries). There are also ways to insure against fluctuations in currencies, though they're only a partial protection. We'll only get the accurate picture in January when their next financial report comes out.

However, I can tell you that the naive analysis is surprisingly accurate when applied to the second quarter.

If the situation is even half as bad as the naive analysis makes it seem, that would already mean they'd have to do significant cuts in their business. Otherwise, their $12 billion in cash will quickly run out, and good luck trying to get loans in this environment. I see Sony in big trouble unless the dollar and euro recover significantly during the next year. If they do recover, a big part of their problems is gone.

Lol, love the analogy.

They do own a lot of studios, they will continue to make games and port the stuff in channel over to 360. Worked for Sega. There are many many game developers out there, and only a few hardware manufacturers.  If HW loses money, and you make up for it selling games...why make the HW at all?

PSP will be fine. It has reached critical mass all by itself - before PS3 came out.