Sony Losses Doubled to...

One-Hundred-Billion-Yen. /strokes Siamese Bigglesworth

"The latest round of financial results for Sony didn't paint the games unit in the warmest, prettiest light. Next time around, though, it might be even worse. Sony announced today that they've doubled the projected losses for the games unit for the financial year (ending in March), the original estimate of a loss of ¥50 billion chucked out and replaced with an estimated loss of ¥100 billion. No reason was given for the rewrite, but the ¥126 billion they lost during the first half of the financial year probably had something to do with it."

A storm is coming!

http://kotaku.com/gaming/sony/sony-predicts-games-unit-losses-will-double-316085.php

Their gaming unit. Sony as a whole company posted a profit.SpruceCaboose

That's what's implied, we're in system wars.Which, doesn't bold well for their current console the PS3. Maybe, it's because their planning to send some kick backs to to some developers that were already off the fence with Sony's game division. Begging and pleading is meaningless if there isn't some hard cash to help your catch a response.

Just like MS's game division lost money for nearly two years and just now posted a modest profit, Sony's PS3 has not yet hit its second year, and both companies plan was to take a loss on the hardware to recoop it back through software for the next 5+ years.

You are looking only at the short term on what is a long term investment.

Console manufacturers typically don't generate much, if any, revenue from hardware sales. Software is usually where the money is made. You have to spend money to make money, as the old saying goes.Jared2720

True, but doesnt the games devision for sony include Software + Hardware?

Just like MS's game division lost money for nearly two years and just now posted a modest profit, Sony's PS3 has not yet hit its second year, and both companies plan was to take a loss on the hardware to recoop it back through software for the next 5+ years.

You are looking only at the short term on what is a long term investment.

SpruceCaboose

[QUOTE="SpruceCaboose"]

Just like MS's game division lost money for nearly two years and just now posted a modest profit, Sony's PS3 has not yet hit its second year, and both companies plan was to take a loss on the hardware to recoop it back through software for the next 5+ years.

You are looking only at the short term on what is a long term investment.

blue_hazy_basic

It does not indicate anything. All it says is that their gaming division is losing money. MS lost money for years (the whole life of the Xbox as well).

Even if the PS3 lost money for years, Sony as a whole could easily cover the loses if they chose to, like MS had to cover the losses on the Xbox platform.

Eventually the PS3 will turn a profit. Maybe not this year, but I would venture a guess that after next years holiday the games division of Sony will be in the green.

[QUOTE="blue_hazy_basic"][QUOTE="SpruceCaboose"]

Just like MS's game division lost money for nearly two years and just now posted a modest profit, Sony's PS3 has not yet hit its second year, and both companies plan was to take a loss on the hardware to recoop it back through software for the next 5+ years.

You are looking only at the short term on what is a long term investment.

SpruceCaboose

It does not indicate anything. All it says is that their gaming division is losing money. MS lost money for years (the whole life of the Xbox as well).

Even if the PS3 lost money for years, Sony as a whole could easily cover the loses if they chose to, like MS had to cover the losses on the Xbox platform.

Eventually the PS3 will turn a profit. Maybe not this year, but I would venture a guess that after next years holiday the games division of Sony will be in the green.

Ummm if a company doubles its expectation for loss in the middle of a year it does indicate that it will be losing money for that time, surely?

I never said Sony as a whole couldn't cover the losses as a company, however they have no where near the overall profits MS do.

Again I said for the forseeable future Sony's gaming division will be losing money, not that it would never turn a profit or operate in the black.

@Blue:
Glitchspot won't let me quote...

I can agree with that, but just like MS took that billion dollar hit, Sony is taking their lumps. They made some poor choices on hardware this generation (moreso talking about cost and not the actual quality of the hardware) and priced their system outside of what the market would pay.

For a while, they will have a smaller market to sell to, but when they get a system down to $300 (the standard "normal" price point for home systems) they should be able to pick up the sales.

Will the PS3 be as huge as the PS2? I highly doubt it, but I would be very shocked if they kept operating at a loss by 2009.

I was not meaning to debate you, I am just tired of the threads about MS and Sony both losing money and how they are going to go under, and its the end of the world. Its somewhat normal, and both companies expected to lose money at the start of this generation. Granted, neither expected to lose this much money, but both companies are on a positive, so its not disastrous.

@Blue:
Glitchspot won't let me quote...

I can agree with that, but just like MS took that billion dollar hit, Sony is taking their lumps. They made some poor choices on hardware this generation (moreso talking about cost and not the actual quality of the hardware) and priced their system outside of what the market would pay.

For a while, they will have a smaller market to sell to, but when they get a system down to $300 (the standard "normal" price point for home systems) they should be able to pick up the sales.

Will the PS3 be as huge as the PS2? I highly doubt it, but I would be very shocked if they kept operating at a loss by 2009.

I was not meaning to debate you, I am just tired of the threads about MS and Sony both losing money and how they are going to go under, and its the end of the world. Its somewhat normal, and both companies expected to lose money at the start of this generation. Granted, neither expected to lose this much money, but both companies are on a positive, so its not disastrous.

SpruceCaboose

And yup the boards seem much glitchier (surely thats not a word is it? lol) than usual this morning

All I can say is what I say when people bring up the billions that MS has lost, it doesn't really affect me as long as good software keeps coming out...oh...wait :lol:

Seriously though it's not much of a factor to us the only people this affects is guys like game industry analyst Michael Pachter who owns a boatload of Sony stock.

In other news:

Nintendo gains 1.16 billion

A month after it first took the honor, Nintendo today was once again named the second-most valuable corporation in Japan. The Kyoto-based game giant has also reported its results for the six months ending September 30, which saw both its revenues and profits double. Sales for the half-year totaled ¥694.80 billion ($6.10 billion), a 132 percent increase over the revenue brought in during the same stretch of time in 2006. Nintendo's net profits grew even faster: The company took home ¥132.42 billion ($1.16 billion) for the half-year, almost 144 percent more than it earned in the comparable period last year.

Link

The funny thing is how people act as if the PS3 losing money is a sign of doom for Sony. When the PS2 was huge, Sony relied wholly on it to pull the company out of the gutter. They were bleeding money from every division and relied on PS2 sales to save them. Now, Sony as a company has turned around and is back on track, but the PS3 is the one area that loses.

So when Sony was losing money as a company...that was not a problem for the fanboys. But now that only the PS3 is losing money, suddenly the company is going under and the PS3 is dead. This DESPITE the fact that MS lost just as much on the Xbox and they hung in there and turned it around with the 360.

Now, as for Sony's PS3 losses, it's not at all surprising. They're selling consoles at a loss, but aren't selling any games to cut their losses. And while the whole point of the PS3 is to get BR players into homes, the cut of profit thatSony makes from BR sales is not as big as game profits and certainly not enough to cut their losses.

This makes for an interesting dynamic. Does Sony care about the PS3 losses or just the sales levels? Will Sony lose on the PS3, like MS did for Xbox, if it means winning the HD war? Do the different skus lose the same amount of money or does the new $399 model see less loss due to the removal of some hardware features?

What do people expect? Sony is heavily subsidizing PS3 hardware and the attach rate for PS3 software is not that great. Sony is losing a lot on the hardware, and they aren't making enough on the software. That, combined with slowing sales of the PS2,
means Sony will be in the red for a while.

Of course, none of this matters really...unless you own shares in the company.