The losses from 2006-2008 are irrelevant

It doesn't matter how you swing it really. You could say they are written off, you could say that they are the price Sony paid to win a format war, you could say anything at all, but as it stands so long as the company remains solvent and the crediters are happy there really is no cause for alarm. Sony has plenty of cash reserves to match up to any debt they hold.

The situation as it stands right now is untenable for the future of the PS3.

Not a big deal really, all it means is that they must take action. It doesn't imply at all that they won't or can't take action. They can't sell studios as no-one will buy them, name a Publisher that has the money and inclination at present to make an aquisition? They can't cut back their workforce drasticly because it would effect the morale of their staff to the detriment of the quality of their games. Infact the best course of action here is to stay the course as that sends a big vote of confidence down to the individuals working on their games.

The best long term solution for the PS3.

The very best thing they can do for the future of SCE and the PS3 is to sell PS3s. The more PS3s in the hands of consumers, the more 1st party games and third party royalties they can earn them. Also the more PS3s they sell, the more PS3s they can sell. Its a continuing cycle of positive reinforcement which they will not let themselves fall out of. Its pretty obvious that at some point they will have to bite the bullet and swing a price cut. They do have the option of increasing the value of the PS3, but as it stands right now its not a question of value its a question of price.

They could lose money on every game released in 2009 and still swing a price cut.

I said the losses incurred previously are irrellevant when discussing a price cut earlier, and I just said it again. Essentially they paid the price for swinging and hitting in the format wars and the PS3 paid it. I would throw much of the cost of the game development under the heading "Blu Ray format costs", you don't have to, but at this point it doesn't matter. If Revenue > Costs financial year 2009 with a price cut, they will do it. With a list of 1st party games that makes everyone here wet themselves with excitement the chances of pulling in well over a billion dollars in revenue to go alongside some massive third party software revenues, say at least half a billion are extremely high.

Discuss!

Huh?...

I think you are right,,,400-500 for a gaming console is way too high,,,i m amazed that it even sells this much(you have to drop half a grand or more when it's all said and done)

Do you think shareholders forget losses made previously?

^^^if bluray picks up yes,,,any format change needs investment and everyone knows that.

it's not just sony,last week Panasonic dropped their profit forecast 90%

I am sticking to my prediction.

Sony needs to keep the PS3 at $399 until they release a slim model hopefully around late Auguts or early September. At that point they can drop the price to $299, and still get by with a profit. For the time being they just need to work on software, and marketing. The new Video Download commercial is a great start to maketing PS3 right. If Sony can apply this straight forward maketing technique to the Killzone 2, MLB 09: The Show, and InFamous marketing blitzs' then they should sell fine. Add in a music store, a monthly plan for the video and music sections of the PS STore, and continue to expand Home, all while marketing these more casual products in an easy to uderstand format, and they can do very well at a price that does not loose them a whole lot of money.

Noooooo!!! NOt your final thread on the ps3 situation... it could go on for months!! ... no more popcorn....

Make MOAAARRR!!!

I wonder if ruining one of your top divisions and brandnames as well as losing the amounts of money they have been losing is ever going to repay itself due to BluRay.And you forget that the PS3 development is obviously not the only investment they made for BluRay (not by far). The PS3 was the Trojan horse for BluRay, but the R&D for the format will liekly be in the billions as well.

Besides the fact that losses have to be written of against something the situation is completely different now. Past few years Sony as a company made a profit, which made the losses at SCE a little more acceptable for the shareholders. Now the whole company will likely be in the red, which means something has to be done. If you take a look at the figures you'll see that SCE is one of the worst performers within Sony and if there will be budget cuts (which every company is going through right now) it's highly unlikely SCE will be spared.

A $100 pricecut will mean $1 billion less revenue on 10 million consoles. I don't think SCE and Sony will like this option. This will in all likelyhood be the third year with a loss for SCE, it's hard to see why the company would want to bleed that much money on a division that only provides 13% of Sony's total revenue. That's the thing that's (logically) often missed on a game forum, SCE is not that important to Sony. If they have to make the choice between consumer electronics and gaming they'll choose consumer electronics. I'm not saying at all that SCE will be sold, that's not very likely, but I totally expect them to focus on profitability.

Why on earth do you think they'll do that? It will make SCE look better, but the BluRay division look worse. That's not a very good sign towards your shareholders, if that's the format you've asked your shareholders to invest massively in.

To gain the same revenue for a $100 pricecut you'll have to sell 12 third party games or 4-5 first party games. Eventually that could very well happen on average, but not in the first two years. And money now is worth more than money tomorrow.

Hmm well maybe Sony won the format wars - but so far, people don't really seem to be buying a lot of Blue Ray movies, but rather tend to stick with DVD movies - maybe it's because of the financial crisis, or maybe they just don't see the point in shelling out more, for something that is basicly the same product - after all - the leap from DVD to Blue Ray, is not in any way near as revolutionary as the leap from VHS to DVD - plus a Blue Ray player plays DVD's too, which a VHS player wasn't capable of..

Personally I don't see the Blue Ray ever becomming the new mainstream movie format, the way DVD's did - but rather something similar to what the Laser Disc was in the VHS days - a format for the more devoted and financially established movie fan - but never the mainstream format of movies..

But how this will affect the Playstation Brand I dare not say..