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Forums - Sales Discussion - Sony may have a profitability problem from falling PS3 software sales.

kowenicki said:
justinian said:
This guy is a one trick pony.

Shovel through his recent posts and most of them in some way mentions Sony's "profit", regardless of the topic.
He tries to get this in every chance he gets, until he eventually stars a thread about it.

PS3 is trouncing his beloved and with no other angle of attack he resorts to their financial situation, as if no other company in the world is suffering from the recession.

A company (Sony) whose economic resources are up 230billion in 2009 which is 3x bigger than Microsoft (77billion)
can cope better than most.




here we go again, with misunderstanding and misinformation.... 

What???

 

@CGI-Quality

Yeah, so true.

Rather than being a console supporter it has unfortunately now moved on to being about supporting the entire company.

There are those on this site who takes this whole thing to fanatical religious levels with MS\Sony\Nintendo their Gods.

 

 

 

 



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Probably the most surprising aspect of this generation with regard to software is the xbox 360s massive sales .

Despite being pirated, the xbox 360 has the highest attach rate and sells the most software.

Why is this?

It seems the psp gets a free pass for its abominably low software sales becasue sony fans are quick to scapegoat piracy as the excuse.

So why is the same consideration not given to the xbox 360 to illustrate its impressive software sales statistics?

 



justinian said:
This guy is a one trick pony.

Shovel through his recent posts and most of them in some way mentions Sony's "profit", regardless of the topic.
He tries to get this in every chance he gets, until he eventually stars a thread about it.

PS3 is trouncing his beloved and with no other angle of attack he resorts to their financial situation, as if no other company in the world is suffering from the recession.

A company (Sony) whose economic resources are up 230billion in 2009 which is 3x bigger than Microsoft (77billion)
can cope better than most.



Sayyyyyyyyyy what??  You are joking right??? 

Total resources do not mean anything.  Net profit, debt, and cash on hand are the details that indicate company viability.  Sony has no net profit, microsoft has 3.5 billion $$ in net profit every 3 months and between 13-16 billion net profit each year.    Sony has 11 billion of debt.  Microsoft has NEVER had to borrow money, never reported a loss, and has never had any debt.  Microsoft has 30 billion in cash reserves.

Comparing sony's financial viability with microsoft is preposterous and grossly unfair.  Even when sony's financials were good they were still only making 1 billion net profit per year.  Sony is forcasting a net loss for its second consecutive year of 1 billion dollars. 

To make a long story short, microsoft makes more money 3 months than sony makes in 3years



Spedfrom said:
You come back from a ban to post yet another negative thread about the PS3, how refreshing.

Squilliam seems to be making a valid point.  Don't know how the truth can be negative in and of itself. 

 



BoneyBoy said:
justinian said:
This guy is a one trick pony.

Shovel through his recent posts and most of them in some way mentions Sony's "profit", regardless of the topic.
He tries to get this in every chance he gets, until he eventually stars a thread about it.

PS3 is trouncing his beloved and with no other angle of attack he resorts to their financial situation, as if no other company in the world is suffering from the recession.

A company (Sony) whose economic resources are up 230billion in 2009 which is 3x bigger than Microsoft (77billion)
can cope better than most.



Sayyyyyyyyyy what??  You are joking right??? 

Total resources do not mean anything.  Net profit, debt, and cash on hand are the details that indicate company viability.  Sony has no net profit, microsoft has 3.5 billion $$ in net profit every 3 months and between 13-16 billion net profit each year.    Sony has 11 billion of debt.  Microsoft has NEVER had to borrow money, never reported a loss, and has never had any debt.  Microsoft has 30 billion in cash reserves.

Comparing sony's financial viability with microsoft is preposterous and grossly unfair.  Even when sony's financials were good they were still only making 1 billion net profit per year.  Sony is forcasting a net loss for its second consecutive year of 1 billion dollars. 

To make a long story short, microsoft makes more money 3 months than sony makes in 3years

Haven't MS ended up in the red for 8 straight years, and only last year started to make a profit? And aren't they still about 8billion in the red? How does that translate into 3.5 billion in net profit every 3 months? I might be reading it wrong, so please do link me your source.. im refering to this:: http://www.vgchartz.com/forum/thread.php?id=57802



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BoneyBoy seems to be talking about profitability and financial health of Microsoft as a whole, rather than the Entertainment and Devices Division (EDD, containing Games and Mobile, etc).

That's his confusion.



BoneyBoy said:

Probably the most surprising aspect of this generation with regard to software is the xbox 360s massive sales .

Despite being pirated, the xbox 360 has the highest attach rate and sells the most software.

Why is this?

It seems the psp gets a free pass for its abominably low software sales becasue sony fans are quick to scapegoat piracy as the excuse.

So why is the same consideration not given to the xbox 360 to illustrate its impressive software sales statistics?

 

Actually, the 360 is not the software sales monster some make it.

Take hardware total today and hardware total one year ago and average them. Take software sales during the same intervals and divide them by the average install base. Repeat for each platform, and you get a rough average software sales per install base unit during the last year:

360: 3.69

PS3: 3.75

Wii: 3.27

So during the last year -on average- the PS3 has been selling more software per console than the 360, and the Wii sold the least. The PS3-Wii spread is about 15% anyway, so they're not very different.

The total attach rate as in total software sales/total hardware sales -often quoted- is misleading because the 360 had a year headstart to start accumulating a) software sales and b) hardware install base that reflects into increased software sales even in subsequent years.

The 360 surely sells software very well, considering the piracy. On the other hand

a) its main market is the NA, where even the PS3 sells more software than in Others or Japan, so maybe the real question is why software sells so much in America

b) it would be interesting to separate the bundle data



"All you need in life is ignorance and confidence; then success is sure." - Mark Twain

"..." - Gordon Freeman

Why don't we let the professionals worry about profits and losses, stop playing Mr and Ms know it all, Enjoy the games and product then see there things lie. Most opinions in these matters are bogus.



Oh sorry, I didn't read back that far. Should have told them all to pipe down down then.

It's all about the EDD and the NP, yo!



Squilliam said:

PS3 software sales Q4 2009 up til todays date end of 26th Sept to 19th Dec: 39,765,298

PS3 hardware end point: 30,097,783

PS3 software sales Q4 2008 up til 20th Dec 2008 from 27th Sept 2008: 31,690,383

PS3 hardware end point: 18,168,026

PS3 hardware difference: 65.66% increase

PS3 software difference: 25.48% Increase

Peak software comes just after a peak in hardware sales. So overall Playstation 3 software sales will likely peak sometime in 2010 and fall year over year just before the holiday season with overall revenue dropping as Playstation 2, PSP and Playstation 3 hardware sales will all likely drop again year over year as well as the overall software sales for their Playstation family of products as the PSP and PS2 reach the terminal end of their lifecycles. The problem this introduces for Sony is that if SCE loses money for this quarter it will be extremely difficult for them to recoup any losses made on the PS3 slim.

To reach profitability they cannot simply cut the price again as it will unlikely give them the right mix of software and hardware revenue and a price cut may simply delay the overall decline in software revenue by another year. Their best bet is their Gem wand for both increasing hardware revenue and overall software sales for the year in 2010 which will be similar to how Nintendo has kept their overall software sales high this holiday season because of the overall selling power of their Wii Sports Resort software. If they cannot break through with Gem then they would lose all chance of making more than a few mildly profitable quarters which at best means clawing back about a little more than billion dollars worth of losses.

Edit because of Rols request:

Xbox 360 software sales Q4 2009 up til todays date end of 26th Sept to 19th Dec: 47,300,962

360 hardware end point: 35,795,505

360 software sales Q4 2008 up til 20th Dec 2008 from 27th Sept 2008: 48,978,109

360 hardware end point: 25,723,992

360 hardware difference: 39.14% Increase

360 software difference: 3.5% decrease

So essentially the Xbox 360 software differences show that when the hardware rate increase falls to ~33% year over year the sales increase of software stagnates without some extra input.

Wii software sales Q4 2009 up til todays date end of 26th Sept to 19th Dec: 70,406,200

Wii hardware end point: 62,585,048

Wii software sales Q4 2008 up til 20th Dec 2008 from 27th Sept 2008: 66,758,799

Wii hardware end point: 42,016,681

Wii hardware difference: 49% increase

Wii software difference: 5.5%

So what Wii software shows is that you need roughly an increase in hardware of 50% to show an increase of 5% in software sales for this platform at this point in its lifecycle.

If we assume the Playstation 3 follows this model then Sony will need to sell about 15 million consoles for the calendar year to show a similar year over year increase that the Wii platform showed during the q4 holiday season.

i think my point still stands.

 

Squillam, now next time u shud be posting an article that says sony has profitabilty problem even with increasing  S/W sales...well it is highly unlikely until u give us a clear cut picture of what sony's requirements will be then despite reaching required margins. I admire ur style of posting articles that questions general view-point  and invite discussions.