Sony: Profitability More Important Than Passing Xbox 360

http://www.industrygamers.com/news/sony-profitability-more-important-than-passing-xbox-360/

basicaly sums up how real life works in the console business. Whyshould they care about something only Fanboys will?System Wars could learn a thing or two.

I believe they said the same thing last year as well. That's good for them. But this is SW. This is the place where you either put up or go home.

A price cut can (although not necessarily always will) lead to larger long term profits, even if it results in a smaller or negative margin on the hardware itself, than a larger margin at a lower price.

Spoken like try losers.

[spoiler] Sorry, I had to. :P [/spoiler]

So the PS3 will stay at $300. I said yesterday in a thread I figured they couldn't afford to drop the price anymore. Looks like that's the case. Though I wonder if they come out with a new SKU that features a smaller 20 or 40GB HDD and sell it for $250? They could probably do that.

So the PS3 will stay at $300. I said yesterday in a thread I figured they couldn't afford to drop the price anymore. Looks like that's the case. Though I wonder if they come out with a new SKU that features a smaller 20 or 40GB HDD and sell it for $250? They could probably do that.

Doolz2024

i only skimmed the article, but I dont think he said anywhere in that interview that theyre will NOT be a price drop this year. At the end the article writer even said that SONY has continuously decreased production cost more and more lately

Looks like they're learning from Nintendo after Sony beat them TWICE.nintendoboy16

So no price cut then.NoobisMaxcimus

Why would you ask for a price cut when Sony themselves can barely make profit from the PS3? Start saving up

[QUOTE="NoobisMaxcimus"]So no price cut then.SwagSurf

Why would you ask for a price cut when Sony themselves can barely make profit from the PS3? Start saving up

I dont think he said that in the itnerview. We dont know how much they are making off PS3 now, so they could potentialy still cut price at E3 and still make money off PS3. For all we know they could be making 100 dolalrs on each PS3 sold, meaning if they cut to 250, theyre still making 50 dollar profit on each sold.

I look at it like this: Lets say SONY says to hell with profitability and cuts price to say 100 dollars. They then sell tons and tons and beat out 360 due to price superiority. Great. But in the process they lost 200 dollars on each PS3 sold and they were bled dry and they cant make another syestem next gen.

So really, what was more important, them winning a stupid console war no one but us cares about, or actualy doing what a business is suppose to do, make money, and be able to stay healthy enough to continue to make new consoles in the future?

[QUOTE="Doolz2024"]

So the PS3 will stay at $300. I said yesterday in a thread I figured they couldn't afford to drop the price anymore. Looks like that's the case. Though I wonder if they come out with a new SKU that features a smaller 20 or 40GB HDD and sell it for $250? They could probably do that.

XboximusPrime

i only skimmed the article, but I dont think he said anywhere in that interview that theyre will NOT be a price drop this year. At the end the article writer even said that SONY has continuously decreased production cost more and more lately

[QUOTE="XboximusPrime"]

[QUOTE="Doolz2024"]

So the PS3 will stay at $300. I said yesterday in a thread I figured they couldn't afford to drop the price anymore. Looks like that's the case. Though I wonder if they come out with a new SKU that features a smaller 20 or 40GB HDD and sell it for $250? They could probably do that.

Doolz2024

i only skimmed the article, but I dont think he said anywhere in that interview that theyre will NOT be a price drop this year. At the end the article writer even said that SONY has continuously decreased production cost more and more lately

yup. All I was trying to get at was that there is still a possibility of a price cut.

"We win on our own terms!"tagyhag

Just thinking outloud again, but don't those two things go hand-in-hand when you get right down to it? :?

Just thinking outloud again, but don't those two things go hand-in-hand when you get right down to it? :?

Basinboy

not really, no. If there priced high because thats the price they need to be to make money and that high price causes them to not sell as much as the other console.

I guess Sony wins by default seeing as they don't give a s*** about the competition.

[QUOTE="nintendoboy16"]Looks like they're learning from Nintendo after Sony beat them TWICE.GodofEmpires

I look at it like this: Lets say SONY says to hell with profitability and cuts price to say 100 dollars. They then sell tons and tons and beat out 360 due to price superiority. Great. But in the process they lost 200 dollars on each PS3 sold and they were bled dry and they cant make another syestem next gen.

So really, what was more important, them winning a stupid console war no one but us cares about, or actualy doing what a business is suppose to do, make money, and be able to stay healthy enough to continue to make new consoles in the future?

XboximusPrime

Hypothetical scenarios:

1. Sony sells-through 2 million consoles making a $60 profit on each unit. Each of those people over the course of the year buy let's lowball and say 4 pieces of software amounting to around $40 in royalties per customer. That's a total of about $200 million in profit.
   
   
2. Sony cuts the price by $50. A lower price results in 4 million consoles sold at $10 profit. Same software numbers, and royalties per customer. That's a total of $200 million in profit.

And the latter strategy will net more long term profit, since each customer you create is now a content consumer.

These are of course completely hypothetical and I've no idea what the margin currently is on the PS3.

agreed 10 thousand. sony gaming division is making so much bank with the ps2, ps3, psp, pspgo, psp 3000, psp2, psphone it doesnt matter what place they are theyre number 1 in profits imho a profit for sony is a profit for us gamers cause we get the bestest games with bestest graphics imho

[QUOTE="Basinboy"]

Just thinking outloud again, but don't those two things go hand-in-hand when you get right down to it? :?

XboximusPrime

not really, no. If there priced high because thats the price they need to be to make money and that high price causes them to not sell as much as the other console.

I disagree. The bulk of the revenue MS and Sony generate comes from software sales and if you have the larger userbase, the amount of sales you can make increases, increasing revenue and profits consequently. Somewhere along the line Sony has to be MS at something (although I'll argue they already are at a few things, but that's for another thread).

I think the reason behind the quote is regarding the PSN and how it hasn't yet turned a profit. Sony is still struggling to figure out how to get more users to subscribe to PSN+ so that they can generate some kind of capital that will absorb the operating costs of the network.

agreed 10 thousand. sony gaming division is making so much bank with the ps2, ps3, psp, pspgo, psp 3000, psp2, psphone it doesnt matter what place they are theyre number 1 in profits imho a profit for sony is a profit for us gamers cause we get the bestest games with bestest graphics imho

_SWAG_

:|

If I knew I weren't speaking to an oblivious fanboy, I might ask when the last time you looked at a Sony financial statement was to clarify where you get the idea that the Playstation division operates profitably (because they don't right now). And if you want to talk about profits, swing by Nintendo sometime so they can show you how to make money because they seem to.

[QUOTE="XboximusPrime"]

[QUOTE="Basinboy"]

Just thinking outloud again, but don't those two things go hand-in-hand when you get right down to it? :?

Basinboy

not really, no. If there priced high because thats the price they need to be to make money and that high price causes them to not sell as much as the other console.

I disagree. The bulk of the revenue MS and Sony generate comes from software sales and if you have the larger userbase, the amount of sales you can make increases, increasing revenue and profits consequently. Somewhere along the line Sony has to be MS at something (although I'll argue they already are at a few things, but that's for another thread).

I think the reason behind the quote is regarding the PSN and how it hasn't yet turned a profit. Sony is still struggling to figure out how to get more users to subscribe to PSN+ so that they can generate some kind of capital that will absorb the operating costs of the network.

I know how they can get more subscribers to Plus: Actualy add stuff we want like faster downloads, cross game chat, improved server stability, party syestem, Party Chat, etc.

Straight from the horses mouth. It's sad to see some users here get so wrapped up in the SW metagame that they become oblivious to this fact. All 3 companies are businesses trying to turn a profit.

ms coulda killed off the ps3. it was almost 2 years before the 360 had a price drop. if ms woulda choose to lose money by having a 100 dollar price cut when wii and ps3 launched then released gears of war 1 ps3 woulda been doa.... next gen all 3 will be charging for online play nintendo done hinted to it and sony has tried everything they can to get ppl to pay this gen. if quore and psn+ both fail to get them what they want and ms still getting good sales with a price raise then you know damn well sony will be charging next gen:P

I see this as a cover for a E3 "surprse" in pricing

ms coulda killed off the ps3. it was almost 2 years before the 360 had a price drop. if ms woulda choose to lose money by having a 100 dollar price cut when wii and ps3 launched then released gears of war 1 ps3 woulda been doa.... next gen all 3 will be charging for online play nintendo done hinted to it and sony has tried everything they can to get ppl to pay this gen. if quore and psn+ both fail to get them what they want and ms still getting good sales with a price raise then you know damn well sony will be charging next gen:P

monson21502

nothing is certain.

[QUOTE="rybe1025"]It seems that Sony has come to terms with being last.XboximusPrime

lol, you took a while getting here. Just sniffed out the title and emerged from underneath your bridge?

Translation:

Sony: At this point, sales is a lost cause. Our concern is to stop our game division from hemorrhaging money.

Words are the veil that companies used to cloud your vision...Look to their actions to see the trueness of their intent...the actions here is Sony is doing their damndest to surpass the 360 in sales so they aren't last in nearly every part of console gaming.
P.S: If profitbility were more important they would have started charging atleast some fee for psn instead of operating Psn at a complete loss.
P.P.S: I expect sony to never talk about selling more then another from now on.. *won't happen*

Atleast I don't have to worry about Sony's next console for a year or two then

Of course, their tune will change when the PS3 inevitably overtakes the 360.

Of course, their tune will change when the PS3 inevitably overtakes the 360.

dommeus

[QUOTE="dommeus"]

Of course, their tune will change when the PS3 inevitably overtakes the 360.

TheOtherTheoG

I agree with Sony. It makes no sense being number one AND still being in the red. Only fanboys care so much about which system is first and last. Making a profit is much more important then positioning. Only a raging fanboy will see soemthing wrong with this comment from Sony.

[QUOTE="rybe1025"]It seems that Sony has come to terms with being last.XboximusPrime

lol, you took a while getting here. Just sniffed out the title and emerged from underneath your bridge?

As far as the topic though-Anyone that believes that statement has a screw loose. You show me a company not worried about being in last place and I will show you a company that is not going to be around long. First off Sony has not made much money off of the PS3 this gen in fact they have lost billions. Sony has lost a TON of market share which no company would ever want. You know why they are saying they are not worried about passing the 360 because two things 1- they have been behind the 360 for several years now and 2- the 360's Kinect is a HUGE success unlike Sony's 3 tries at Eyetoy,Sixasis controller, and Move which all failed huge.