Ben-DutkaIt's all in how you view the numbers. Sony has always operated at a loss early in a generation, so we shouldn't be too shocked when we see the overall numbers to date.
According to the Q2 financial report from Sony, the big news is that the gaming division has lost nearly $4.7 billion thus far this generation. However, if you look at a very interesting and enlightening breakdown provided by VG247 , you will find that such losses are actually on par with the losses Microsoft's game division incurred during the introduction of the original Xbox. As you can see, Sony lost more early but Microsoft's losses were more sustained and they end up right in line with one another; in four full years, Microsoft lost about $4.2 billion and in 3.5 years, Sony has lost $4.7 billion. …gee, that's like, the same and stuff. But anyway, the good news to be taken from the Q2 results is that Sony said they sold 3.2 million PS3 units during the quarter, which brings the total amount to 27 million worldwide to date. The $654 million overall loss is attributed to falling PS2 and Viao sales and the appreciation of the Japanese yen.
Those 3.2 million PS3 units sold means it topped the Xbox 360 in the second quarter, which is exactly what Sony desires at this point. And in looking down the road, it seems very likely that, given the new $299 price point, loaded software lineup, increasing Blu-Ray popularity, and vastly improved marketing campaign, the PS3 will continue to outsell the 360. Like we said at the start, it's all in how you look at it.
i like this post =)
Cool article.
It sucks to lose money, especially when a lot of the loss is due to factors like currency rates that you have no control over. If Sony keep selling PS3s at a good rate, they should be OK, at some point the cycle becomes virtuous and not vicious.
One question. Although Microsoft lost a bunch on the original Xbox, as far as I know they never made a profit on that system, haven't they also lost a bundle on the Xbox360? As far as I know it's only shown a profit in the most recent business year, and that's only because they took an extraordinary loss in a previous fiscal year to cover the RROD. If you look at the total Xbox losses for Microsoft since day 1, you have to wonder how they can continue to justify the program to investors. At least with PS3 the predecessor made money, and the PS3 itself will likely make a profit over it's lifetime, while also being a good source of long term revenue.
Sony sees things differently…10 year life, long term plan, first party development means first party revenue and profit, quality over quantity, all of these things and more are what Sony sees. Like Arnold said at the start, it's all in how you look at it.
Last edited by TheHighlander on 10/30/2009 10:36:45 AM
that was the Benster.
This is what happens evey generation of consoles, people go out and buy the new console (360 and Wii) and wonder what happened to Sony, they buy it thinking Sony has some problem, then there console breaks or have no games, they then go buy Sony's reliable console that they have always trusted but have lost loyalty early on in the next gen war, now they see the PS3 is persevering with the reliable hardware and great exclusive games, and buy PlayStation for the fact it's about quality not quantity, and know Sony is always going to be about the consumer comes first technique, and so far this has been whats helped Sony win every generation of consoles it enters. I actually see the PS3 catching up to and surpassing the 360 in a couple of years, and even the Wii in maybe 8 years or so as the Wii has basically dropped off the consumers field of vision with its lack of games, so its sales are at a stand still right now, now thats not to say that the Wii isn't still selling, as it is, but the console needs games to survive, it's that way with any console, the Wii is not immune to this practice, the fans will abandoned the Wii for a true gaming console, such as the PS3 or the 360 for there fix. I have seen this happen with a lot of my friends, where they will completely dump the Wii for a 360 or PS3, now this could happen because of hardcore gamers, but lets face it, this console was built for small children to families, and kids want games, not just a console that sits there that they can't play because of full priced games for Indie developers and the Wiiware is a joke. But with the PSN still remaning free and the Wii having little to no online and Live costing money, the PS3 does very well stand the chance of dominating sales charts for the future. The eponential sales could be the consumer realizing, that if they want a feature packed, AAA exclusive, and reliable console at a reasonable price, you go with Sony PlayStation.
Last edited by JMO_INDY on 10/30/2009 7:40:57 PM
@worlds
You're so right, it was Ben. My apologies. Considering how my day went today, it's a wonder I was able to type a reply, so I'm only mildly surprised I didn't comprehend who wrote the article I was replying to.
M$ lost 3 billion over RROD. This is not a joke
4.7B..wow…i hope sony can make up for this loss soon.
I do believe that the PS3 will continue to outsell the 360 down the road but I have no confidence in them catching up to the 360's overall sells.But Sony will be making enough money off the brand not care about what place in the console war they are.
How can you not see the PS3's sales catching up to the 360's? The 360 has sold 32.78 million world-wide while the PS3 is only behind by about 7.04 million units (PS3 has sold 25.74 units world wide)
The gap is a result of much lower sales in the United States, but lets be honest here, how many people have extra money to spend right now on a console. I feel once the economy starts getting better (No, I don't think this past quarters increase in GDP means the recession is over) we'll see an even higher spike in sales of the PS3.
Especially with the fact that the PS3 just had a price cut, and with the release of some excellent exclusives this holiday season, despite the economic recession, should be an incredible sales booster.
All in all I think you'll soon start to see this gap narrow, and going off what you said about the PS3 continuing to outsell the 360, you have to take into account how much longer each system is going to be around. The PS3 probably has at least 5 more years in it and if it can't narrow that gap and eventually surpass the 360 in that amount of time, I'll eat my hat.
Over the last few weeks, the PS3 has been outselling the 360 by an average of approximately 100,000 units a week. At that rate, it should take about 72 weeks (1.38 years) for the PS3 to surpass the 360 in total worldwide sales. Of course Christmas sales may very well speed that up considerably.
Lets be honest though, these business are not in business to make a loss… with unemployment in the States and Euro-land not actually getting any better… how can Sony even contemplate it will stop the bleeding next fiscal year. Nintendo also dropped like a stone; and M$ is still suffering and will continue to suffer as the PS3 eats into its lead… all in all, there is still much pain to come unfortunately…
Just keep thanking your lucky stars PSN is still free…
Q!
"i am home"
How can Sony stop the bleeding next year?
Let's see, PS3 manufacture costs dropping gradually meaning that next year PS3 may start breaking even on the console itself. More PS3s sold means more games and accessories and therefore more licensing fees from game publishers and accessory makers. More superb exclusives from in house (first party) studios means more revenue and profit. More PS3s = more PS3 users = more PSN users = more PSN revnue and profit. PSPGo has opened up the flood gates in terms of bring paid PSP content to PSN. Whether you own a PSPGo or an older PSP, the ability to download games to a memory stick is very nice, especially with large 8GB or 16GB capacity memory sticks being reasonably priced now. All that means more revenue and profit. Sony knows that the PS3 has a long life left, so they do not need to invest heavily in the next console, and re-using technology like the Cell in the next console will reduce the cost of developing a future Playstation as well.
All in all, profit next year, and climbing rapidly too. I should think that PS3 will eventually overcome the losses of the first three years.
Imagine if the PS3 had sold twice as well as it has in years 1 and 2, Sony's losses would be double what they are. Would Sony have a chance of overcoming that? When people complain about the price of the PS3, They're not really being fair, Sony sold the PS3 at a considerable loss per unit. Those who bought the 60GB system got a $300+ gift from Sony the day they purchased their system – they paid $599 for a system that cost more than $899, so Sony gifted each purchaser $300+ on purchase to make up the difference. If Sony had dropped their prices more rapidly or come to market at a lower price they'd have lost billions more, and may even have decided to leave the market by now. So, in the end the price they used was right, not dropping prices rapidly was right – for Sony and gamers – because in the end, the losses are manageable and can be overcome in time, and Sony did not leave the market.
I'm sure Sony knew what they were getting into. Long term projects don't always pay off right away, you have to be willing to take hits early on.
Given the worldwide economic state and the fact that the ps3 was the constant pricier system, you have to give Sony credit for being able to move their product as well as they have.
I believe that as of this year they've been able to get a good momentum going with exclusives, more comparable multiplats and the PSN which gets better and better (for free).
Ben, do you know how much profit they make for each ps3 sold at this point? i'm assuming they are finally making money on them instead of taking losses
I don't think that's necessarily true after the price dropped to $300. But at the very least they're pretty close to the break-even point.
nevermind. i just found an article from August 09 that quotes Kaz Hirai saying, "If you're just talking about the hardware alone, the quick answer is yes," in response to being asked if they are still taking losses on each ps3 slim. then he goes on to justify it by saying overall they're making profits because of software and peripheral sales.
guess thats why a dualshock3 is still at least $50
The cut to $299 left them in the hole again on each unit, but over time costs will drop further, and they will break even and move into profit per unit sold.
Don't expect the PS3 to drop from the $299 mark for at least 12 months though.
yeah i'm betting they keep it at 299 for a long time
A recent report from Sony (today?) suggests a 10-20% loss on each unit at present, falling to under 10% by the end of the year and to the break-even point some time next year.
They outsold the 360 before the price cut ? That was unexpected .
That would be the global picture Sir, as many have been saying, MS would like everyone to have a completely US centric view of the console market. But globally, PS3 is healthier than the 360, not that MS would care to admit that.
Maybe this Q2 was according to the financial year , which includes september . Still impressive that they outsold it by more than a million and came very close to the Wii . Q3 should be interesting , with Uncharted in october and FFXIII in Japan , I think the PS3 can bring the lead below five million , maybe even four .
I hope all the people that were whining for a price cut feel sufficiently ashamed of themselves.
Good to see the PS3 selling like it should. Now all that's needed is the software sales to come up abit.
yea it has finally happened since Sept the PlayStation dominance has begun
The consumer electronics business have been taking a beating this year and its not just Sony who is being affected. Its happening to Samsung, Toshiba and Sony's other electronics rivals.
So what do we measure the console war by? Who sells more systems? Who makes more money? Who knows? I'm just glad Sony is in this business to stay.
The ps3 will win the race
But I've said before, those who pass up on the ps3 are missing some of the best games this gen.
Just look at the exclusives this year, and even more one sided next year.
That's ALL you need to do
3.2 million PS3s! That's a lot. The great thing is that 99% are still working too!
If the Xbox360 had a 30% failure rate, and we accept that overall, averaging everything out the rate is lower and some have been repaired, taking a more conservative view perhaps 15% of all Xboxes ever sold are now dead, that's about 5 million (5,000,000) dead Xbox 360s or a decent sized landfill – that's a hell of a lot of dead beige boxes. Either way, knock 5 million of the 33 million Xbox total and you have 28 million working consoles.
Now with Sony, the true reliability is probably not as good as their published claims of 1-2%, so let's assume it's double that (2-4%), split the difference and it's 3%. Three percent (3%) of the 27 million consoles sold by Sony is about 800,000 consoles – not even a million. Of course some of those have been repaired, but it's fair to say that there could be around a half a million dead PS3s around by now (sounds like a lot, but it's less than 3% of all PS3s ever sold). Leaving Sony at around 26.5 million working consoles.
Oddly enough, if you remember the numbers of Xbox Live users (both Gold and Silver) compared to the number of PSN users it's pretty much a wash between the two. Strange, I wonder where all the extra Xbox users are, since there are supposedly so very many more of them. Hmm….
I also consider the sales of a few very prominent multi-platform titles. With the exception of the titles with a clearly inferior PS3 port, sales have been surprisingly even, with PS3 sometimes selling more, and Xbox360 sometimes selling more. If there were really 6 million more Xbox360s out there wouldn't games automatically sell better on the xbox360? Yet EA and others have confirmed within the last year than they make more money from Sony console game sales than Xbox360. Hmmmm…..
All in all, I think you can make a very strong argument that Sony's PS3 has more or less caught up the Xbox360, and may soon overtake it.
Sometimes I love a good train of thought, especially when it's crashing through someone else's living room.
@Highalnder
I love you, lol, and your way of thinking. Keep talking, it never gets old!
HOLY PASTA GAZOOL THATS A WHOLE LOT OF MACARONI!
though i think they should be able to make it back in a few years if there 3D tech comes out and is not to expensive.
if it does go as planned ill be first inline for a 3D TV.
who does not want to play killzone 2 in 3D, with all the bullets, grenades and such flying towards ya.
or imagine the train scene in uncharted 2 chapter 15 where drakes actually running towards the camera, they could make it so it looks like hes leaping at you.
O and imagine horror games like deadspace and the such in 3D, than i would really be sh*tting my pants!
ooooo this has got me all giddily like a school girl.
I read in Gamespot saying that the 360 has sold 35M unit, if it's true then the PS3 is still a hefty 8million behind.
35M shipped minus those unsold, minus those that are now dead, minus those that were purchased as 'spares'….How many million was it again?