Sony's Gaming Division Posts 2 Billion in Losses

[Triple_6]

Ouch! That's gotta hurt.

Some customers might think the PlayStation 3's $599 retail price is high, but that's chump change compared to what the machine is costing Sony. The electronics giant today posted its financial results for the fiscal year and fourth quarter ended March 31, and as analysts predicted, the game division racked up significant losses.

[...]

The full-year picture for Sony's gaming division was similarly grim, with the PS3 driving an increase in revenue, as well as operating losses. For its full fiscal year 2006, Sony's gaming group posted revenue up 6.1 percent to $8.6 billion, but suffered an operating loss of nearly $2 billion.

According to Sony's financial report, "This deterioration was primarily the result of loss arising from the sale of PS3s at strategic price points lower than its production cost during the introductory period, as well as the recording of other charges in association with preparation for the launch of the PS3 platform."

For the current fiscal year, Sony expects its game division to post better results, but still lose money.

"An increase in sales is anticipated as a result of the full-scale expansion of the PS3 business in Japan, the US, and Europe," Sony said in its quarterly report. "In addition, a significant reduction in operating loss is expected due to rapid reductions in hardware production costs and an enhanced lineup of software titles in the PS3 business."

Link to full article (http://www.gamespot.com/pages/news/story.php?sid=6170827&part=rss&tag=gs_news&subj=6170827)

[Triple_6]

I'm curious, who has purchased a PS3? And are you happy with it? None of the hardcore gamers I know have gotten one. Now I know the previous Playstations have started off slow in sales only to rise to huge successes, so I'm not predicting total doom and gloom just yet, but these losses still seem pretty significant. And I still don't see anything coming down the pipe that warrants a 600 dollar investment.

That's not to say that I'm anti-Sony though. If my house were on fire the first thing I would save would be my PS2. And a catastrophic PS3 failure, only to have Sony leave the console business, can only be bad for the gaming industry. But for me, it's been really hard finding good news on the PS3.

[Thunder]

The only reason I would get a PS3 is to get the newest Final Fantasy game. Once Square Enix gets a clue and releases FF for the Wii I'll be a happy person. Our PS2 is nice but the Wii just beats it hands down and probably beats the PS3 down as well.

[L1veUndead]

I bought one after the death hype died down a little. I picked mine up in Feb or March. I havent had a single problem with the system itself.

The main reason I purchased a PS3 is not completely out of fanboyism, although I do enjoy the PS line. Its mainly due to the fact of my large library of PS1 and PS2 games and the PS2 I had was on its last legs ( Gen 1 PS2 first day of US release ).

The system itself works great. The controllers are the same shape I am used to with the added bonus of them being lighter and cordless if need be. The online capablities work just great. Internet browser if I need to do those sort of things. The playstation store itself updates regularly as well as the system update patches.

The best way to describe the interface of the loading for the console and its capabilites is a larger PSP with a ton more power. It has the exact same option interface.

I havent purchased a game yet because none are available that I would enjoy, but there is a full catalog of games coming out by the end of this year and middle of next that I cant wait for.

So far I am 100% happy with my purchase.

Long live the tax return check or I wouldnt have been able to afford it.

[Nebula]

I think Sony made a few mistakes on the PS3.

They released the PS3 right around the same time that XBOX360 and the Wii came out... Both of which are significantly cheaper than the PS3. I think most people saw potential with the XBOX360 as far as the XBOXLIVE function, and the fact that there was already a huge following for 'next generation games' that were coming out with the system. Moreso, the Wii seemed to pull in those gamers who either still simply adore Nintendo and would probably buy just about any product they put out, or the one who were intrigued by its new game-play style.

With that in mind, it appeared as if the PS3 just simply wasnt "the thing to get" when it came out. It was much more expensive then its competitors, and (although it may seem trivial) many people saw how they were being sued for the rumble function as a draw-back; not to mention the lack of NEW games.

I say once they drop the price a bit, and a few more worth-while games start coming out for it... sales will definitely increase. I personally still dont get what made them think they were going to sell tons of systems with a price tag of roughly $600.

[sylverarrow]

I thought the Xbox 360 was released a year before the others? I could be wrong.

[Hae-Yu]

I think it was too, Sylver.

The Wii just kicked the legs out from under Sony. I don't think I have seen more than 1 in 100 negative Wiiviews. Sony has gotten a lot of good reviews but most are not really enthusiastic in the way the Wiiviews are.

The 360 was lucky because MS at least had word of mouth built up and the Live service is a major draw for steady growth.

[Nebula]

It was... I dont mean they had the same month release... but it was obviously close enough in date for people to make a comparison between Xbox/ps3/wii

[thegreaterbad]

Aha! I have something worthwhile to add to this conversation for once:

Quoting directly from my GameInformer Magazine I just got today:


If you read the gaming blogs during the PlayStation 3 launch, Sony was dead on arrival. It certainly wasn't the smoothest of launches with, with console shortage's, already lofty pricetags inflated due to Ebay Auctions( in my mind were insanely out of control) no online strategy to rival XBox Live, and a dearth of compelling games for the nascent machine.

But did the PS3 really limp out of the gate that badly? Putting its initial sales up against its direct competitor Xbox 360, the numbers tell a different tale. According to NPD Group data, the PS3 sold approximately 902,000 console's during its first 3 months in the United States.
The XBox 360 sold 50,000 FEWER consoles during its first 3 months in the United States coming in roughly at 854,000.
Compared with it's predecessor's it outsold the PSone and PS2 during the same time frame.

The media are just plain stupid," says Michael Pachter, analyst with Wedbush Morgan Securities. People are being overly critical on how well it's doing mostly because their expectation for what the sales should have been were too high."


My input with some plagarism:

Forecasting the the future of consoles, analyst's see PS3 losing in the short term race, but breaking even and eventually overcoming the Xbox 360 and Wii. "It will be a slow build," say's one expert. "I expect the Wii and and Xbox 360 to stay in the lead in North America for the next 2 years. Where that flips is in 2010, 2011, and then the PS3 will have a huge install base and surpass the Xbox 360 and Wii while they are prepping their next boxes. As we see Xbox 360 already doing with their new black version.

Another point they make later in the magazine is that for some reason Nintendo keeps getting a free pass with their none to none-existent ability to offer online multiplayer. While PS3 and Xbox 360 are getting hounded day and night to upgrade their multiplayer ability's.
People are just saying Wii's better even though it has no multiplayer available right now.

[Thunder]

Nintendo is getting the free pass (I think) because they aren't supporting the games that have a large multiplayer base; Halo, Splinter Cell, Madden. The Wii has a more party style gameplay. Multiple people around one system playing together. That said, the Wii does have internet capability and could easily support a lobby style configuration and search software for other game players. I'm just not to sure what games you would want to play against others? Red Steel? My opinion still comes back to how much inferior consoles still are compared to a keyboard and mouse. The only games I think that a worth while on consoles are fighting games and RPGs.

[Hae-Yu]

It depends on how you look at the data

Using NPD data, this article says that in Q1 of 2007, that
Nintendo Wii - 1.029 million
PS2 - 874k
XBox 360 - 721k
PS3 - 501k
http://arstechnica.com/news.ars/post/20070420-first-quarter-console-sales-nintendo-rules-the-roost.html

For December, Jan, & Feb, I see
Wii - 1,375,200
360 - 1,111,000
PS3 - 861,700
I don't see sales figures for the PS2 for January or November, but regardless, it would be #1 or #2.

All of these articles are from NPD figures.

Xmas (Nov/Dec) Season Console Sales
PS2 - 1.4M, 360 - 1.1M, Wii - 604.2k, PS3 - 490.7k.
http://www.geek.com/news/geeknews/2007Jan/bga20070112001407.htm
(This is the correct figures - the earlier Register and CNBC reports were inflated)
Even discounting the 360's Nov sales of 511k (since the PS3 wasn't out for most of Nov), the 360 still sold 99k more consoles over XMas.

January Console Sales
Wii - 436k, 360 - 294k, PS3-244k
http://www.next-gen.biz/index.php?option=com_content&task=view&id=4775&Itemid=2

February Console Sales
Wii - 335k, PS2 - 295k, 360- 228k, PS3- 127k
http://news.digitaltrends.com/article12484.html

March Console Sales
PS2- 280k, Wii- 280k, 360- 199k, PS3- 130
http://www.toabase.com/modules/news/article.php?storyid=71

The PS2 outsold the XBox, but when you add in all consoles, the PS3 only beats the Gamecube. Heck, the Gameboy Advance outsold them in March (see the last article) and that system was obsoleted a year ago.

Maybe after the PS2 goes offline, the PS3 might pick up. In fact, I wouldn't mind picking up a GC or PS2 just to play the older FF or Mario Cart/ Zelda games.

Another critical point is that every single month, the 360 has ruled game sales and we know that's where they make their money, not hardware sales. In Q1, 4 of the top 10 were 360 titles.