Sony Posts 2013 Profit, Expects to Lose Less on PS4 Than PS3

[Karloff]

Sony Posts 2013 Profit, Expects to Lose Less on PS4 Than PS3

As expected, the big cash injections come from one-off events and a weak Yen.

When Sony's Kazuo Hirai gave up his bonus earlier this month [http://www.escapistmagazine.com/news/view/123681-Losses-Prompt-Sony-Execs-To-Surrender-Bonuses], he said at the time that Sony would post a profit in the financial year ending March 2013. Now we can see how much: Sony's published results show a ¥230.1 billion ($2.44 billion) operating income profit, as compared to the previous year's ¥67.3 billion ($677 million) loss. As expected, this profit was attributed to one-off factors, mainly the sale of office building and stock portfolio assets, and a relatively weak Yen.

Sony's sales were modestly good, but were offset by poorly performing key electronics products; Sony's LCD television units, digital and video cameras were among the poor performers. That said, Sony's game segment also did not fare well. Sales in Japan dipped 12.2%, year-on-year, while sales to external customers dropped 22.5%, and this was attributed primarily to a decrease in unit sales of PS3 hardware, PSP hardware and software, and PS Vita hardware. Only a favorable exchange rate stopped the sales dip from becoming worse than it already is. However Sony hopes to significantly improve sales in the next financial year with the launch of the PS4, even though, Sony admits, research, development and marketing expenses will have an impact on profits.

"At the time we developed PS3, we made a lot of in-house investments to develop the chip, the Cell chip," said Sony Chief Financial Officer Masaru Kato, in an investor call shortly after the results were announced. This meant that the PS3 effectively sold at a loss, a fate Sony thinks it will now avoid, because most of the real work has already been done, or is being done by other companies. "We already have existing technology to incorporate," says Kato, "and also product investment and all the facilities will now be invested by our partners, other foundries, so we don't have to make all the investment in-house."

Source: Sony [http://www.sony.net/SonyInfo/IR/financial/fr/]


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[BrotherRool]

They're not planning to sell the PS4 at a loss? That's huge (but I hope it doesn't mean the PS4 will be expensive). And hopefully it means they have space for a quick price drop if sales are slow

 

[Ruley]

Sounds like Sony feel the PS3 has enough market penetration and a strong enough fan base to justify a higher price tag for the PS4 to try to make back some of the losses. The same tactic as Microsoft had with the 360, just get the hardware into peoples hands regardless and make money back on software and brand loyalty. Seems the latter will now be put to the test for Sony!

I just hope the price isn't as stupid as the PS3 launch (do i remember £500 correctly?). Really put me off being an early adopter personally, went for the xbox instead. Now the PS4 looks like the only next gen console i'll consider (gaming focus, new xbox sounds too media focused). Please don't mess this up Sony!

 

[Vivi22]

Sounds like Sony feel the PS3 has enough market penetration and a strong enough fan base to justify a higher price tag for the PS4 to try to make back some of the losses.

There is nothing in the article that indicates that at all.

 

[SonOfVoorhees]

I think sony would be stupid to make the PS4 to expensive. Especially as most people dont have the money to spend on a console. Remember how much market share they had with the PS2 and pissed it all away making the PS3 expensive. So they need to price the PS4 reasonably.

 

[Ruley]

Sounds like Sony feel the PS3 has enough market penetration and a strong enough fan base to justify a higher price tag for the PS4 to try to make back some of the losses.

There is nothing in the article that indicates that at all.

"Sony admits, research, development and marketing expenses will have an impact on profits [made by the PS4]."

"This meant that the PS3 effectively sold at a loss, a fate Sony thinks it will now avoid, because most of the real work has already been done, or is being done by other companies."

I took from that they they are trying to balance the books on the PS4 so it doesn't sell at a loss, either from as indicated, due to the lower incurred production costs or by selling to retail higher to offset it, as hinted by their own admission of high R&D costs.

The best way to offset production costs on a product is with a high base price, or a long term strategy of software sales. I think Sony will do the former as i have heard no mention of the push for games sales

 

[Remus]

What this tells me essentially is that Sony is using largely pre-existing tech for the PS4, rather than developing their own overcomplicated proprietary processors. This will decrease production costs substantially and make the console easier to program for or to port over PC titles. Nothing in here says that the system is going to be more expensive than the PS3.

 

[Little Gray]

Sounds like Sony feel the PS3 has enough market penetration and a strong enough fan base to justify a higher price tag for the PS4 to try to make back some of the losses.

There is nothing in the article that indicates that at all.

"Sony admits, research, development and marketing expenses will have an impact on profits [made by the PS4]."

"This meant that the PS3 effectively sold at a loss, a fate Sony thinks it will now avoid, because most of the real work has already been done, or is being done by other companies."

I took from that they they are trying to balance the books on the PS4 so it doesn't sell at a loss, either from as indicated, due to the lower incurred production costs or by selling to retail higher to offset it, as hinted by their own admission of high R&D costs.

The best way to offset production costs on a product is with a high base price, or a long term strategy of software sales. I think Sony will do the former as i have heard no mention of the push for games sales

Actually what they were really saying is that since they are not developing the chips in house and instead going to somebody else its going to cost a lot less. They did not say or even hint at the ps4 pricing.

 

[oldtaku]

Yes, everything about the PS4 is being done much smarter than the PS3. It's quite encouraging so far!

 

[RicoADF]

Sounds like Sony feel the PS3 has enough market penetration and a strong enough fan base to justify a higher price tag for the PS4 to try to make back some of the losses.

There is nothing in the article that indicates that at all.

"Sony admits, research, development and marketing expenses will have an impact on profits [made by the PS4]."

"This meant that the PS3 effectively sold at a loss, a fate Sony thinks it will now avoid, because most of the real work has already been done, or is being done by other companies."

I took from that they they are trying to balance the books on the PS4 so it doesn't sell at a loss, either from as indicated, due to the lower incurred production costs or by selling to retail higher to offset it, as hinted by their own admission of high R&D costs.

The best way to offset production costs on a product is with a high base price, or a long term strategy of software sales. I think Sony will do the former as i have heard no mention of the push for games sales

You seemed to miss the part that says they are saving money by using off the shelf parts and thus able to make a profit from a lower price tag. Their using standard x86 PC parts rather than the expensive cell processor. Their making profit without increasing cost to the consumer by cutting production and R&D costs.

 

[Strazdas]

What this tells me essentially is that Sony is using largely pre-existing tech for the PS4, rather than developing their own overcomplicated proprietary processors. This will decrease production costs substantially and make the console easier to program for or to port over PC titles. Nothing in here says that the system is going to be more expensive than the PS3.

this is all true, but cosoles usually sold at a loss as a way to make console cheaper than PC and thus attract audience (ignoring the fact that they make double that back with overpriced games). If they are not selling at a loss, i expect the price to be quite high based on their claim to have high-end hardware. They may be usign an existing technology, but that technology is still not that cheap.