As we all know, there have been plenty of rumors as of late hypothesizing a price cut for the ps3 come March. Many have said one is desperately needed, and thus one will happen, while others have said that there's absolutely no way Sony could afford it.
I've been doing a lot of thinking lately, and it seems to me that SCE's financial future is looking pretty bright, barring the ever increasing value of the Dollar and Euro versus the Yen, which is putting an insane amount of hurt on Sony overall. If things improve enough, a price drop isn't out of the question.
There are three factors that could lead to SCE breaking even or pulling a profit by March:
1. Ever decreasing hardware costs.
When Sony initially launched the ps3, all models contained both a 90nm Cell chip and a 90nm RSX chip. When they launched the 40gb SKUs last Holiday season, they had decreased the size of the Cell to 65nms. With the release of the BC-less 80gb SKU this past Fall, we also saw the RSX dropping to 65nm. Soon, both chips should be 45nms. IBM managed to get the Cell down to 45nms as of February this year, with full production of the chips beginning early next year. Around this time we'll probably start seeing them in ps3s as well, with a 45nm RSX to follow sometime around the end of the year.
Decreasing the size of these chips lowers both the power consumption and heat dissipation of the console, leading to both smaller heatsinks and smaller PSUs, in addition to the smaller chips. All of this saves Sony a good bit on each system they manufacture.
2. Big first and second party releases.
One problem Sony has faced this generation is that they've been investing millions upon millions into development, while actually releasing very few games. They have games like InFamous, White Knight Chronicles, and Killzone 2 that have had 3+ year development cycles, with not enough releases to make back all the money spent. Almost all of 2007 was barren for Sony when it came to releases, and 2008 wasn't much better until the end of the year. 2009, however, is looking to be one of Sony's busiest release schedules...ever. They'll finally be making back some of that money invested into large projects like Killzone 2. Let's examine the release lists of the past few years:
The first half of 2007:
- MotorStorm
- MLB '07: The Show
The latter half of 2007:
- Warhawk
- Heavenly Sword
- Hot Shots Golf 5 (Japan only, where it had most of it's sales anyway)
- Ratchet & Clank Future
- Uncharted
The first half of 2008:
- Gran Turismo 5 Prologue
- MLB '08: The Show
The latter half of 2008 (where things FINALLY start to pick up):
- Siren: Blood Curse (PSN, but almost a full title - Blu-Ray in Europe and Japan)
- Ratchet & Clank Future: Quest for Booty (PSN, but almost a full title - Blu-Ray in Europe)
- Wipeout HD (PSN, but almost a full title)
- Socom: Confrontation
- MotorStorm: Pacific Rift
- LittleBigPlanet
- Resistance 2
The first half of 2009:
- Killzone 2
- White Knight Chronicles (In the West. It just hit Japan three days ago.)
- InFamous
- MLB '10: The Show
- Other stuff with unconfirmed release dates?
The latter half of 2009:
- Uncharted 2
- Ratchet & Clank Future 2
- Heavy Rain
- God of War III
- Gran Turismo 5
- EyePet???
- MAG???
- Other PSN stuff not yet announced?
As you can see, SCE is finally starting to pump out titles at a consistent rate. The transition between generations is finally over (creating new engines and whatnot). They have at least twice the amount of releases for the first half of 2009 as they've had for the two years past, and games like Killzone 2 can finally start bringing in revenue, instead of just being giant money sinks. The releases of the first half of the year combined with the legs of the numerous releases over the holidays should be a large source of income for SCE. The 2009 holiday season should be at least as big as 2008's, and it will probably be even bigger. While it's possible that either God of War III or Gran Turismo 5 could be delayed into 2010, it's pretty unlikely, and it's a given that at least one will make it out in 2009. Either should have the biggest opening week for a ps3 title published by Sony yet.
3. Home.
This really ties into point #2, as Home is very similar to the games in which Sony has been investing millions while seeing very little return. Home finally went into public beta earlier this month, and with this event came plenty of $$$ via advertising revenue and microtransactions. According to an interview with Susan Panico, the Senior Director of the PlayStation Network, goods sold through Home generated more revenue in the service's first four days than the new video store did in its first week, despite the disparity in the price of goods for each service. In addition to this, there's the revenue made via third parties through advertising. Red Bull and Ubisoft (for Far Cry 2) already have their own spaces in Home, and both Namco and Capcom have said that they have areas in the works.
The reduction in size of the RSX to 65nm at the advent of the holidays and the reduction of the Cell to 45nm next year, combined with increased revenue via big releases over the holidays and throughout next year, as well as the brand new revenue stream found in Home, could very allow SCE to drop the price of the ps3 early next year.
However, the Euro/Dollar vs Yen situation could make anything of the sort impossible. They could still lose too much on everyone sold, so much that they've can't make it back via other revenue streams.
I know this: Prior to the economic shift, they were probably planning on dropping the price of the ps3 in March, given that they knew of all these revenue streams beforehand.
