How Does Sony Do It?

I don't really understand and it's always made me curious:

They spend millions (billions?) on research and development
They release a console and sell at a loss

They manage big budget games like Killzone, Lair, etc

Those games consequently flop in sales

PSN continues to sell at a loss

They spend millions on advertising

PS+ sells free/half priced content, which seems to work counter-productively with their advertised sales like free K3 DLC

They have a ton of smaller devs like thatgamecompany that manage to make quality games, but how much do they really profit off of these games?

PSN hack has cost them dearly

Lawlsuits for Dualshock, PSN, etc

They fund studios

Sony plans to sell the Vita at a loss for THREE YEARS

I really don't get it. They are continuing to push a variety of exclusives but how do they profit?? MS makes billions off of LIVE and ads and superior sales, Nintendo has captured an entire demographic, and Sony struggles.

How exactly does it work? For both Sony and modest developers. I'm just very curious how money is made and how much is lost.

People say a game needs to sell 1 million to break even, but how? A game like Journey (amazing beta, Flower meets Shadow of the Colossus) costs $X which Sony probably funds in some way. The team is relatively small, I think 12 people. If the game is sold at $10, Sony say, makes $2.

So that's $8 to thatgamecompany, multiplied by how many copies sold... I dont know how much these kind of game sells but compared to what people like these days, I can't imagine much exposure. But if it breaks a million, 12 of those employees make 666,666. But how much is gone towards advertising, development, etc? How much does a publisher put in? And how likely is it that Journey sells a million?

Where are you getting this information from?mrmusicman247

[QUOTE="mrmusicman247"]Where are you getting this information from?Alpha-Male22

They've seemed all generation to be a company scrambling to stay relavent. Theyve done well in the later part of this generation but if I had to guess they've dipped waaaaaay further into that ps2 scrooge mcduck money bin than they ever wanted to just to run with xbox360 and wii. Financially, sony lost this generation by leaps and bounds... but they'll still be around.

They care about core games unlike MS.Heil68

I don't really understand and it's always made me curious:

They spend millions (billions?) on research and development
They release a console and sell at a loss

They manage big budget games like Killzone, Lair, etc

Those games consequently flop in sales

PSN continues to sell at a loss

They spend millions on advertising

PS+ sells free/half priced content, which seems to work counter-productively with their advertised sales like free K3 DLC

They have a ton of smaller devs like thatgamecompany that manage to make quality games, but how much do they really profit off of these games?

PSN hack has cost them dearly

Lawlsuits for Dualshock, PSN, etc

They fund studios

Sony plans to sell the Vita at a loss for THREE YEARS

I really don't get it. They are continuing to push a variety of exclusives but how do they profit?? MS makes billions off of LIVE and ads and superior sales, Nintendo has captured an entire demographic, and Sony struggles.

How exactly does it work? For both Sony and modest developers. I'm just very curious how money is made and how much is lost.

People say a game needs to sell 1 million to break even, but how? A game like Journey (amazing beta, Flower meets Shadow of the Colossus) costs $X which Sony probably funds in some way. The team is relatively small, I think 12 people. If the game is sold at $10, Sony say, makes $2.

So that's $8 to thatgamecompany, multiplied by how many copies sold... I dont know how much these kind of game sells but compared to what people like these days, I can't imagine much exposure. But if it breaks a million, 12 of those employees make 666,666. But how much is gone towards advertising, development, etc? How much does a publisher put in? And how likely is it that Journey sells a million?

Alpha-Male22

I understand your question but there are some things not right in your assumptions. First there weremore games sold on ps3 that 360 in I believe FY 2010. Not feeling like googling but this was posted here many times. LAIR wasn't first party was it? And selling a few million killzone 2's is no sales flop. No homerun either but definetly no flop.

What do you mean with psn sells at a loss?

Most of the income comes from the games. Companies need a license to release a game on a ps. New games that's around $10 a game. So they get $10 of each Call of duty sold for ps3.

Also I think sony is spending alot this gen to make their image better. Last gen they were the greedy guys. That title is now firmly in the hands of MS.Making hardcore games that make little profit but get high praise has helped them gain back some goodwill. Ofcourse its all down to profit in the end too but spending a little for a better image will make a difference in the long run.

And as far as R&D goes for the ps3, they made alot of money by wining the format war. Something that would not have been as easy without the ps3. I don't know if sony calculate bluray r&d into the ps3 price or if it belongs to another divission. Same as I don't know if MS calculate the rrod cost into their games division. Those guys have a way of twisting the numbers to their advatage for whatever they want people to think. They won't lie, but they're very creative.

Though in the end I think they're still in the red with the ps3. But its only half way of its lifecycle.

well you have to spend money to make money :P dont worry about sony just enjoy they games they make.

[QUOTE="Heil68"]They care about core games unlike MS.TheEroica

He's talking about MS's addiction to Kinect and how they want to be casual now.

And Sony does it cause it worked for PS2, if it ain't broke don't fix it.

[QUOTE="Heil68"]They care about core games unlike MS.TheEroica

[QUOTE="TheEroica"][QUOTE="Heil68"]They care about core games unlike MS.Heil68

[QUOTE="TheEroica"][QUOTE="Heil68"]They care about core games unlike MS.HaloPimp978

He's talking about MS's addiction to Kinect and how they want to be casual now.

And Sony does it cause it worked for PS2, if it ain't broke don't fix it.

[QUOTE="Heil68"][QUOTE="TheEroica"] this makes no sense whatsoever...TheEroica

Halo 4, Gears 3, Forza 4, that's all the first party support you're going to get for the core.

All of those other games are on the PS3...

[QUOTE="TheEroica"][QUOTE="Heil68"] Did you see E3 this year?Wasdie

Halo 4, Gears 3, Forza 4, that's all the first party support you're going to get for the core.

All of those other games are on the PS3...

[QUOTE="Heil68"][QUOTE="TheEroica"] this makes no sense whatsoever...TheEroica

Plus isn't it a different company working on Halo 4? I thought Bungie was busy teaming with activision or something?

F1ame_Shie1d

Yeah, what about it?

[QUOTE="TheEroica"][QUOTE="Heil68"] Did you see E3 this year?F1ame_Shie1d

[QUOTE="TheEroica"][QUOTE="Heil68"] Did you see E3 this year?Wasdie

Halo 4, Gears 3, Forza 4, that's all the first party support you're going to get for the core.

All of those other games are on the PS3...

Licencing. Being the guys who own the PS3 and the ones who print the discs for PS3 games, they charge 3rd parties fees for developing on the PS3 at all and charge per hundred discs printed.

As for things like advertising, funding their own studios, etc.? Their games are million-sellers, right? Don't think we need to worry about that.

PSN being free? Don't know. They probably make it back from sales on the store.

PSN+? It's a huge wad of cash upfront that'll more than cover server maintenance for the freebies you get over time. Said freebies are limited-time offers, so new PSN+ users won't jack up maintenance over old offers. You do save money through discounted games, most of which are Sony's to my knowledge, but without those discounts, would you have bought those games at all? More cash in their pockets is more cash in their pockets.

first, back up your statements with some references. seriously. it drives me crazy when people just state stuff without any support for their argument.

second, Sony is NOT just a video game company. they sell a number of other products so be sure to realize this when you make your non-referenced statements. there's more to this company than just gaming and they are respected in the world outside of gaming and this DOES mean something.

Sony makes billions off of other endeavours and their game company SCE, makes hundreds of millions off of software licensing for psp, ps2, and ps3 games, just because a game like Killzone 2 and 3 sustains losses does not mean every game 1st party game sustains losses

Only multiplatform games and big budget games have to have extraordinary sales since developing games on multiple platforms is expensive and creating brand new engines for games is also expensive

And I am completely unaware of any lawsuits about Dualshocks...

Maybe because you are blowing their loss out of proportion? PSN is profitable now, PS3 exclusives are profitable, PS3 is profitable. Yeah I completely understand how Sony can handle the task maintaining studios, advertisement etc. And of course there is a little known fact that Sony is an electronics giant.

Those expenditures are called 'Investments', its what allows Sony to keep bringing fresh content on thier console 5 1/2 years into thier cycle, whilst its competitors are fumbling thier way scrambling desperately into 'next gen' while others are running empty trying to casualize for a quick buck.

Investments are the lifeblood of business,

Games that flop in sales? The sales for first party titles have been strong enough and I have no doubts that they at the very least broke even. A game doesn't have to sell CoD magnitudes in order to be profitable. Also I don't see how PSN is functioning at a loss. The infrastructure is either run on a P2P or developer run server basis. The Dualshock lawsuit settlement was rather small and Sony would have most definitely made that money back when all the people who had replaced their SIXAXIS controllers with Dualshock 3 controllers (like me). LordXelNaga

Flop in the sense that it had a HUGE budget, yet sold relatively low (keyword, relatively)

All the money to make that engine, and paying all those employees... would they profit off of something like that? They even have to continue paying for the servers

[QUOTE="TheEroica"][QUOTE="Heil68"] Did you see E3 this year?Heil68

well considering video gaming isn't the only industry they're involved in...

[QUOTE="TheEroica"][QUOTE="Heil68"] Did you see E3 this year?Wasdie

Halo 4, Gears 3, Forza 4, that's all the first party support you're going to get for the core.

All of those other games are on the PS3...

I love how Sony sells at a loss to start with. I know I am getting a lot for the money I spend and that a big company is actually thinking about what we want. They know they can make the money back later on when the tech drops in price, which they have been doing for a few years now. Factor in controller sales, move, mics etc, psn sales and they'l be making a tonne now.

Those expenditures are called 'Investments', its what allows Sony to keep bringing fresh content on thier console 5 1/2 years into thier cycle, whilst its competitors are fumbling thier way scrambling desperately into 'next gen' while others are running empty trying to casualize for a quick buck.

Investments are the lifeblood of business,

Zaibach

I love how Sony sells at a loss to start with. I know I am getting a lot for the money I spend and that a big company is actually thinking about what we want. They know they can make the money back later on when the tech drops in price, which they have been doing for a few years now. Factor in controller sales, move, mics etc, psn sales and they'l be making a tonne now.

sailor232

[QUOTE="Alpha-Male22"]

elcoholic

I understand your question but there are some things not right in your assumptions. First there weremore games sold on ps3 that 360 in I believe FY 2010.

I know Sony is profitable since 08 I think, but aren't they still at a loss overall?

Not feeling like googling but this was posted here many times. LAIR wasn't first party was it? And selling a few million killzone 2's is no sales flop. No homerun either but definetly no flop.

Sorry about LAIR, but Killzone had a huge recorded budget, do games like that break even?

What do you mean with psn sells at a loss?

Sony was saying it recently, I can source if u like, though u can just google it

Most of the income comes from the games. Companies need a license to release a game on a ps. New games that's around $10 a game. So they get $10 of each Call of duty sold for ps3.

Also I think sony is spending alot this gen to make their image better. Last gen they were the greedy guys. That title is now firmly in the hands of MS.Making hardcore games that make little profit but get high praise has helped them gain back some goodwill. Ofcourse its all down to profit in the end too but spending a little for a better image will make a difference in the long run.

And as far as R&D goes for the ps3, they made alot of money by wining the format war. Something that would not have been as easy without the ps3. I don't know if sony calculate bluray r&d into the ps3 price or if it belongs to another divission. Same as I don't know if MS calculate the rrod cost into their games division. Those guys have a way of twisting the numbers to their advatage for whatever they want people to think. They won't lie, but they're very creative.

Though in the end I think they're still in the red with the ps3. But its only half way of its lifecycle.

I just wonder how it works for devs and Sony. How much does a title like InFamous 2 or Journey cost, how much does Sony make back and how much do devs get, etc. I've always wondered since this generation has gravitated towards 1 side of a genre (shooters) yet quality titles continue to be made that sell much lower.

Maybe because you are blowing their loss out of proportion? PSN is profitable now, PS3 exclusives are profitable, PS3 is profitable. Yeah I completely understand how Sony can handle the task maintaining studios, advertisement etc. And of course there is a little known fact that Sony is an electronics giant.

Swift_Boss_A

Yeah this

and? exclusives aren't the only thing that matter, infact they don't even matter 5% of the time considering that multiplatform games outnumber exclusives like 20 to 1...WilliamRLBaker

I know that Heil is a multiconsole owner, like myself. Why should we buy a multiplat on 360 when we could have a better version on PC, or a free-to-play online version on PS3? Not to mention the fact that the actual amount of 360 exclusives is completely pithy. I can see how owning a 360 alone might not be so bad, but as of now, there's no reason for anyone who owns another HD platform to buy or use their 360, which is a damn shame, because it's a nice machine.

[QUOTE="Zaibach"]

Those expenditures are called 'Investments', its what allows Sony to keep bringing fresh content on thier console 5 1/2 years into thier cycle, whilst its competitors are fumbling thier way scrambling desperately into 'next gen' while others are running empty trying to casualize for a quick buck.

Investments are the lifeblood of business,

Alpha-Male22

Investments, like many in this thread have been saying, is spending money to make money, like acruing talented fisrt party devs in house for a cost, putting forward the capital (money) for them to develop top quality games, and then reaping the benefits of the success of those games which convince more people to buy the sony exclusives ala Uncharted GOW3, ETC which in turn convinces more people to buy PS3s, its thesame argument for the blu ray component. an investment which forced thwem to over-price at launch,but which inevitably won them the format war

[QUOTE="WilliamRLBaker"] and? exclusives aren't the only thing that matter, infact they don't even matter 5% of the time considering that multiplatform games outnumber exclusives like 20 to 1...psn8214

I know that Heil is a multiconsole owner, like myself. Why should we buy a multiplat on 360 when we could have a better version on PC, or a free-to-play online version on PS3? Not to mention the fact that the actual amount of 360 exclusives is completely pithy. I can see how owning a 360 alone might not be so bad, but as of now, there's no reason for anyone who owns another HD platform to buy or use their 360, which is a damn shame, because it's a nice machine.

PSN#### knows what's up.

[QUOTE="Alpha-Male22"][QUOTE="Zaibach"]

Those expenditures are called 'Investments', its what allows Sony to keep bringing fresh content on thier console 5 1/2 years into thier cycle, whilst its competitors are fumbling thier way scrambling desperately into 'next gen' while others are running empty trying to casualize for a quick buck.

Investments are the lifeblood of business,

Zaibach

Investments, like many in this thread have been saying, is spending money to make money, like acruing talented fisrt party devs in house for a cost, putting forward the capital (money) for them to develop top quality games, and then reaping the benefits of the success of those games which convince more people to buy the sony exclusives ala Uncharted GOW3, ETC which in turn convinces more people to buy PS3s, its thesame argument for the blu ray component. an investment which forced thwem to over-price at launch,but which inevitably won them the format war

They care about core games unlike MS.Heil68