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Sony Corporation (SNE)
Sony expects game losses to double
Sony expects game losses to double
GamesIndustry - October 29, 2007
Submitted by welshbloke (60) at 4:19AM PST on October 29, 2007
From JPY 50 billion to over JPY 100 billion
Sony has announced that it expects losses at its videogame unit to double for the year ended March 2008, from JPY 50 billion (303.5 million) to over JPY 100 billion (EUR 609 million).
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1Just_Ben posted on Sony Corporation (SNE) at 12:52PM PST on October 29, 2007. RE: Sony expects game losses to double@pilias_simber,
The loss can't come from the PS3 alone. If so it would mean somewhat of over 500 bugs LOST per PS3. The money has to sink somewhere and to make more software is the only thing I can imagine. Plus thats what the PS3 problem is at the moment, right? The price is right for know, but the big software is missing. So it makes sense to me that buying exclusives or setting up more game developments make sense. They have problems to keep third party on board, so they have to wide their pockets and pay them (at least at some point) money to lower the risk of developing Software for the PS3.[ Oracle ] [ Level 21 ] [ Rank: 112 ]bids
1Laoldar posted on Sony Corporation (SNE) at 10:19AM PST on October 29, 2007. RE: Sony expects game losses to doubleI predict that if the PS's sales don't drastically improve by next summer, Sony will begin to cut back their support for the system, if not completely shut it down.
The company is bleeding money on this and the shareholders can't be happy about it. The losses of the gaming division are now as high as 50% of the profit from the rest of the electronics giant! If this doesn't improve over the next quarter or two, there will be calls to abandon it. Sony isn't a vieo game company...it's an electronics giant with a video game system.
Also, if you look at the revenue report of that quarter, sales of PS2 software fell by 25% and hardware sales are slowing. PS3 inventory is also increasing (31% higher than last year). If these trends continue, losses of the gaming division could skyrocket.[ Oracle ] [ Level 21 ] [ Rank: 182 ]bids
1welshbloke posted on Sony Corporation (SNE) at 8:34AM PST on October 29, 2007. RE: Sony expects game losses to doubleI guess this is a combination of factors. The price cut although probably budgeted was probably brought forward. The knock on effect of course is that software sales have also suffered. In addition even if Mr Tretton said they did not need to buy games they certainly have been shopping.
It will be interesting to see if MGS4 can perform for Sony as well as Halo did for Microsoft. The only problem I see with that scenario is Microsoft were already in a better position when they used the trump card. I am not so sure that Sony will be, although I do sense a turning in the tide.[ Oracle ] [ Level 30 ] [ Rank: 60 ]bids
1pilias_simber posted on Sony Corporation (SNE) at 7:48AM PST on October 29, 2007. RE: Sony expects game losses to double@Just_Ben,
I find it more likely Sony is eating it on a bunch of their games due to high development costs and poor sales.
Next Gen games require a good 500k or so sales to break even, so anything exclusive to the PS3 will have a hard time reaching that goal unless it's a major title.[ Oracle ] [ Level 22 ] [ Rank: 122 ]bids
1Just_Ben posted on Sony Corporation (SNE) at 6:04AM PST on October 29, 2007. RE: Sony expects game losses to double@kspraydad,
Sony also develops games. Maybe they setting up more Dev teams or buy more exclusive content. That would also result to a higher loss for now.[ Oracle ] [ Level 21 ] [ Rank: 112 ]bids
1pilias_simber posted on Sony Corporation (SNE) at 6:00AM PST on October 29, 2007. RE: Sony expects game losses to double@kspraydad,
Keep in mind that Sony doesn't actually lose money on each PS3 sold, they lose money on each PS3 MADE. Its fairly easy to determine how many PS3s they will make, its much more difficult to figure out how many will actually be sold (AKA shipped) because that is more dependent on how many PS3s retailers want in their stores this Christmas.[ Oracle ] [ Level 22 ] [ Rank: 122 ]bids
1welshbloke posted on Sony Corporation (SNE) at 5:52AM PST on October 29, 2007. RE: Sony expects game losses to double@kspraydad,
The article links to the original Reuters report which is for the division as a whole and does not give any detail other than the loss is expected to double.
I would suggest a combination of the two with the pricing adjustment forming the bulk. I say the pricing adjustment only because they say the forecast is doulbled which to my mind means they are taking account of the price cut. Of course it could also mean they are expecting to sell more but if that was the case then they obviously expected to sell less and if that were true that would be news.[ Oracle ] [ Level 30 ] [ Rank: 60 ]bids
3kspraydad posted on Sony Corporation (SNE) at 4:35AM PST on October 29, 2007. RE: Sony expects game losses to double@welshbloke,
Does this indicate that SONY thinks they will sell even more PS3s than planned (since it is the loss on each console that is driving the negative results?). Or are they just now pricing in the recent price cuts.[ Oracle ] [ Level 21 ] [ Rank: 475 ]bids
22welshbloke posted on Sony Corporation (SNE) at 4:19AM PST on October 29, 2007. Article: Sony expects game losses to double
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I can't figure out where else the loss would be coming from. They are making money on the PS2, they're making money on the PSP, so its got to be the PS3 thats losing them money.
I know they lost a ton of money on Lair and likely on Heavenly sword as well. Also keep in mind that the loss on the PS3 is for every unit MADE not every unit SOLD. They launched a couple new SKUs last quarter so thats a ton of new PS3s being made.