Sony Game Division loses $357,500,000

Discussion in 'Video Games and Technology' started by Omega Supreme-1, Oct 26, 2006.

  1. Omega Supreme-1

    Omega Supreme-1 Autobot Sentinel

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  2. MegaMoonMan

    MegaMoonMan www.megamoonman.com TFW2005 Supporter

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    Are you kidding? Got a link?

    EDIT: That number looked way bigger to me than it was for a second.
     
  3. BigPrime3000

    BigPrime3000 Well-Known Member

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    How can you even post that without a link.
     
  4. Omega Supreme-1

    Omega Supreme-1 Autobot Sentinel

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    http://www.usatoday.com/tech/news/2006-10-26-sony-2q_x.htm Sony reported a 43.5 billion yen ($366 million) operating loss in its gaming division because of charges related to the preparation for the next-generation PlayStation 3 console, set to go on sale in the U.S. and Japan next month.
     
  5. MegaMoonMan

    MegaMoonMan www.megamoonman.com TFW2005 Supporter

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    It sounds like if the PS3 doesn't go over big, they're in big trouble.
     
  6. TheIncredibleHulk

    TheIncredibleHulk Find Gary Busey!

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    ouch
     
  7. McBradders

    McBradders James Franco Club! Moderator

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    Absoloutely standard for the launch of a new console. The same dip occurred as PS2 was preparing to launch.

    ...it -is- a huge number though. o_O 
     
  8. Cast

    Cast Roll the dice

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    Well I wouldn't count Sony out yet but they do seem to be suffering for there over confidence of the past year.
     
  9. Nightrain

    Nightrain Senior Villain

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    Sony could make that money back easily if they put all their PS3s on ebay.
     
  10. flamepanther

    flamepanther Interested, but not really

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    Standard for everyone, or just standard for Sony and maybe Microsoft? Is Nintendo losing money right now? If so, is it by anything even approaching 94% of their profits?
     
  11. funkatron101

    funkatron101 TFW2005 Supporter

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    They will make it up by this time next year.
     
  12. Wing alpha

    Wing alpha <b><font color=blue>I voted for Super_Megatron and

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    thats still up in the air its a make it or break it scenario.....

    like all business of course
     
  13. Omega Supreme-1

    Omega Supreme-1 Autobot Sentinel

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    Well just to break even, assuming they have actually produced this many consoles, they would have to sell 610,000 consoles at the $600 price. To make back the money from the battery recall, they would have to sell an additional 715,000 consoles at the $600 price point. So just to break even on the batteries and PS3 development costs they would have to sell 1,325,000 PS3's at the $600 dollar price point. A more important thing to keep in mind is the fact they are making no money off of those 1.325 million PS3 sales they are only for making up pointed out lost revenue on this areas. This doesn't include the many other areas where they have seen a loss of profit, so it could be possible they could sell 4 million PS3's and not actually make a single dime.
     
  14. flamepanther

    flamepanther Interested, but not really

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    Can they actually break even that way? If Sony is to be believed (which is itself questionable) they are taking a loss on each PS3 sold, even at $600. That means that they can't have made enough PS3s to cover the costs at $600 each, because those costs are above $600 for each PS3 made. They can shrink their losses by selling consoles, but it's still a loss. The only way to recover the loss is software sales, not hardware.
     
  15. Cheetatron

    Cheetatron Eh

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    I remember similar loses being announced when ps2 was announced and I remember merril lynch saying they were gonna lose a ton of money on each ps2 I thought sony was so going down and i was happy cause i was a sega fan boy but boy was I wrong.
     
  16. flamepanther

    flamepanther Interested, but not really

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    While this is true, the PS3 doesn't have everything going in its favor that the PS2 did. Everyone wanted a cheap DVD player, Sony still seemed trustworthy to most of the public, and all of Sony's competitors were floundering on their own even if they hadn't had Sony's help in getting there. None of that is nearly so true now, so only time will tell.
     
  17. Superman_Alpha

    Superman_Alpha TF: Animated FTW!!!

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    There is a substantial loss for the PS3 production costs, but this quarter's massive profit loss was because of the the exploding notebook batteries IN ADDITION to the massive debt they are undertaking for the production of the PS3 and the Blu-Ray.


    http://www.nytimes.com/2006/10/26/business/27sonycnd.html?_r=1&oref=slogin
     
  18. GigatronSama

    GigatronSama Mr. Insomnia Veteran

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    Seems Sony is betting the farm on the PS3 and blue ray. Their strategy is as they stated to take a financial hit on hardware sales and recoup profits when (If) blue ray becomes the standard.

    Even if the PS3 is successful as a game system it may still ultimately cost sony heavily if the blue ray format fails (and personally I think blue ray and HDDVD are doomed to failure)

    Though I despise their company the whole thing tanking like this would be bad for the Japanese economy. This is not a good financial move that Sony is making.
     
  19. flamepanther

    flamepanther Interested, but not really

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    The mess wouldn't be nearly so bad if they didn't make shoddy hardware like exploding batteries. Sony used to be known for quality products, and it's actually quite sad to see them as they've become in recent years. It may surprise some people to hear this, but I hope that they learn from their recent mistakes and change their business practices rather than go belly-up. I'd rather have a reformed giant in the electronics and games industries than a dead one.
     
  20. Kickback

    Kickback Proud father Administrator Super Mod News Staff

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    This is nothing.

    For a company that, yearly, probably makes nearly $10 BILLION dollars, with large Q3 sales because of Christmas, this is a drop in the bucket. You have to spend money to make money.

    The PS3 is already sold out for pre-sales at stores taking them. There's enough hardcore gamers to cause the system to sell out for the first shipment. That creates hype (see 360 system launch), which creates buyers/re-sellers, which creates demand, and the PS3 will still be a force to be reckoned with.

    That's just how it works people. You really think those stupid Elmo dolls were produced at a small number on accident? Hell no. Get a toy hyped, get a toy that sells out like crazy, then produce a ton because people will be caught up in the "OMG I CAN SELL THIS FOR A LOT!" feeling, and you make awesome money off a toy that costs $10 to make.

    Welcome to Business 101.
     

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