PlayStation 4 Is Already Profitable, Sony Says

Andy Chalk

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PlayStation 4 Is Already Profitable, Sony Says


It's only been on the shelf for six months but Sony President and CEO Kaz Hirai says the PlayStation 4 console is already pulling its own weight.

Historically, it hasn't been easy making money from a game console. Manufacturing costs are high and margins are tight, and there's always the worry about the Other Guy and how long he's willing to take it on the chin just to maintain a little bit of an edge in market share. Companies do it because a large user base allows them to make money on software, accessories, licensing and of course the long-term dream that the hardware itself will eventually start to make some money too, but you may recall that it took the PlayStation 3 more than three years [http://www.escapistmagazine.com/news/view/100656-PlayStation-3-System-Sales-No-Longer-a-Money-Pit] before it stopped bleeding green.

Things are looking a lot better for the PS4, however. Speaking at a corporate strategy meeting earlier this week, Hirai described the launch of the console as "hugely successful" but said long-term success will depend on "how solidly we can continue to grow the installed base."

"In terms of game titles for PS4, as of April 13, 47 titles had been launched with a total of 20.5 million units being sold via retailers and over the network on the PlayStation Store," he said. "From a profitability perspective, PS4 is also already contributing profit on a hardware unit basis, establishing a very different business framework from that of previous platform businesses."

It was estimated last November that the PS4 without the Kinect [http://www.escapistmagazine.com/news/view/129793-PlayStation-4-Costs-Sony-381-To-Build].

Source: Polygon [http://www.polygon.com/2014/5/23/5744344/ps4-already-profitable-for-sony-ceo-says]


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kanetsb

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As a PC gamer - looking at the state of the market right now...
1) The WiiU - I would just apologize and give up...
2) The XBox - I would refurbish the box as an upgraded TiVo ... and then given up.
3) The PS4 - seems ok, also the Vita somehow, magically, resurrected itself. :) "Time will tell", but it's looking good for them.

I just don't get it in the case of MS. Why would you hire such stupid people and let them design anything? TV integration?!? Kinnect, that they themselves just decided to dump?!? The crappy RAM that they were warned about by AMD reps. The insane marketing that tried to go all digital, all DRM?!? Double-u, tee, eff?!? :)
 

dyre

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Well, it's profitable at a per unit basis, at least. I imagine it'll be some time before the entire project is profitable (in terms of making up for the initial R&D, marketing, etc costs and ongoing SG&A costs), but so far so good, I guess.

kanetsb said:
As a PC gamer - looking at the state of the market right now...
1) The WiiU - I would just apologize and give up...
2) The XBox - I would refurbish the box as an upgraded TiVo ... and then given up.
3) The PS4 - seems ok, also the Vita somehow, magically, resurrected itself. :) "Time will tell", but it's looking good for them.

I just don't get it in the case of MS. Why would you hire such stupid people and let them design anything? TV integration?!? Kinnect, that they themselves just decided to dump?!? The crappy RAM that they were warned about by AMD reps. The insane marketing that tried to go all digital, all DRM?!? Double-u, tee, eff?!? :)
I imagine all these things sound great in the boardroom, among business professionals who've never played video games.
 

fix-the-spade

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dyre said:
I imagine it'll be some time before the entire project is profitable (in terms of making up for the initial R&D, marketing, etc costs and ongoing SG&A costs), but so far so good, I guess.
Given that the PS4 is built on a chipset that they bought directly from AMD and it uses existing PC architecture and components, I bet the development cost has been peanuts compared to the PS2 and 3.

It's still a lot of money no doubt, but I'd bet they planned on being 'in debt' to it for less than a year after the financial disaster of the PS3's first four years.
 

dyre

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fix-the-spade said:
dyre said:
I imagine it'll be some time before the entire project is profitable (in terms of making up for the initial R&D, marketing, etc costs and ongoing SG&A costs), but so far so good, I guess.
Given that the PS4 is built on a chipset that they bought directly from AMD and it uses existing PC architecture and components, I bet the development cost has been peanuts compared to the PS2 and 3.

It's still a lot of money no doubt, but I'd bet they planned on being 'in debt' to it for less than a year after the financial disaster of the PS3's first four years.
Ah, I didn't know they outsourced so much of it. If they managed to get a good deal on the parts (and I guess they probably would, given their buying clout), then yeah, you're probably right.
 

Johnny Novgorod

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Well the Wii U and the Xbone are selling like shit, SOMEBODY's making the profit.
 

josemlopes

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Johnny Novgorod said:
Well the Wii U and the Xbone are selling like shit, SOMEBODY's making the profit.
Didnt the Xbone sold more then the Xbox 360, a console that had a good launch?

From what I have seen so far everyone has been selling well enough with Sony taking a big advantage.
 

Johnny Novgorod

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josemlopes said:
Johnny Novgorod said:
Well the Wii U and the Xbone are selling like shit, SOMEBODY's making the profit.
Didnt the Xbone sold more then the Xbox 360, a console that had a good launch?

From what I have seen so far everyone has been selling well enough with Sony taking a big advantage.
Nintendo is doing anything BUT well. Its shares have consistently dropped since 2007, having lost 82% of their value so far, it only managed to sell 5% of its target (Wii U) for the fiscal year and it has recently cut its Wii U sales forecast from 9 million to 2.8 million. That's only 30% of their original intentions. They don't think they'll even manage to make half as much money as they originally thought they would. They've recalculated their profit from 55 billion yen to a comparatively measly 25 billion. Hell, the president of the company himself has been quoted as saying "My duty, more than anything else, is to revive our business momentum".

And the Xbox One may have outsold the Xbox 360, but it's definitely not outselling the PS4, which is its actual competition. The PS4 is leading by a margin of 2 million sales. Not a particularly wide margin, but it's consistent and, well, if we're gauging profitability I would say he who profits more is the winner. And the Xbox One can't seem to do it, even though Titanfall was last month's best-selling game. PS4s just sell more at the moment. Why else do you think they decided to remove Kinect and slash $100 off their product? Do you think it was because they got bored of the extra money, or because people weren't giving them any?
 

MrHide-Patten

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Now all the games console needs is some games... I'd hate to see the "Playstaion has no games" meme pop up again, but thats the way it's looking. Granted Infamous Second Son was a lot better than Heavenly Sword, but I'm more cynical and jaded now.
 

SilverBullets000

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Yeah, with the Wii U lagging behind from lack of interest, third party support, marketing, and first party games and XBone shitting itself onstage, I can't imagine it was all that hard to make a profit considering that it's the only console getting any real attention. Still, congrats. Good to hear someone's doing well.
 

Foolery

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ZippyDSMlee said:
Thats nice but I won't be touching one till it has BWC. The Wiiu looks better to me.
Then you will never touch one. It isn't happening. At least not for PS3 titles. You'll get PS2 and PS1 classics, but making the PS4 backwards compatible means putting in the old hardware with the new somehow, and bumping up the price significantly. The architecture is completely different from the PS3's cell processor. The only reason Wii U runs Wii titles, is because they both use PowerPC.
 

ccggenius12

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So, they make 'em for $381, and retailers sell 'em at $400. How are they splitting the $19 with the retailers?
 

Strazdas

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fix-the-spade said:
Given that the PS4 is built on a chipset that they bought directly from AMD and it uses existing PC architecture and components, I bet the development cost has been peanuts compared to the PS2 and 3.

It's still a lot of money no doubt, but I'd bet they planned on being 'in debt' to it for less than a year after the financial disaster of the PS3's first four years.
i dont remmeber where i read it so i cant give sources but i belive it was said that around 3 billions was spend on RnD for PS4. Thats in dollars.



Johnny Novgorod said:
Well the Wii U and the Xbone are selling like shit, SOMEBODY's making the profit.
PC Manufacturers are. No, really, with new consoles spiking PC component sales as the DIY market is increasing rapidly PC part manufacturers are loving it.

josemlopes said:
Didnt the Xbone sold more then the Xbox 360, a console that had a good launch?

From what I have seen so far everyone has been selling well enough with Sony taking a big advantage.
Xbox Done sold more at launch than Xbox 360. Xbox 360 launch wasnt good though, it was riddled by massive failures and other incompetence. The only reason they sold better than PS3 was because well, they were 1 year earlier and far cheaper. You know, like WiiU but actually had games.

Got to remmeber though that launch sales does not mean anything. The "Hardcore fans" will always buy at launch, first few millions will always be sold. Its the 10-50 million crowd that shows whether you product works or not. And what we see now is that PS4 is still in lack of supply in some places. Xbox Done never was. You know why they stopped touting sale numbers? yeah.....
 

ZippyDSMlee

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Dead Century said:
ZippyDSMlee said:
Thats nice but I won't be touching one till it has BWC. The Wiiu looks better to me.
Then you will never touch one. It isn't happening. At least not for PS3 titles. You'll get PS2 and PS1 classics, but making the PS4 backwards compatible means putting in the old hardware with the new somehow, and bumping up the price significantly. The architecture is completely different from the PS3's cell processor. The only reason Wii U runs Wii titles, is because they both use PowerPC.
The PS3 might not be imposable but I have more PS2 games anyway. From now on if game companies want my money they will have to focus on BWC or I will just stick with the PC and emulation or 100-200 used consoles.
 

Rozalia1

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Well nice to see the obvious happening. A company that failed before should make sure its on the ball next time and Sony have done well in that regard. Microsoft, and Nintendo not so much, but there is always next time.

ZippyDSMlee said:
The PS3 might not be imposable but I have more PS2 games anyway. From now on if game companies want my money they will have to focus on BWC or I will just stick with the PC and emulation or 100-200 used consoles.
So until they cater to you you'll just pirate their games? Well that isn't a good argument at all considering all those PC exclusives out there... what a dangerous viewpoint.
 

ZippyDSMlee

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Rozalia1 said:
Well nice to see the obvious happening. A company that failed before should make sure its on the ball next time and Sony have done well in that regard. Microsoft, and Nintendo not so much, but there is always next time.

ZippyDSMlee said:
The PS3 might not be imposable but I have more PS2 games anyway. From now on if game companies want my money they will have to focus on BWC or I will just stick with the PC and emulation or 100-200 used consoles.
So until they cater to you you'll just pirate their games? Well that isn't a good argument at all considering all those PC exclusives out there... what a dangerous viewpoint.
So buying used is somehow doing something illicit? Wow now that's a much more dangerous viewpoint.
 

Rozalia1

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ZippyDSMlee said:
Rozalia1 said:
Well nice to see the obvious happening. A company that failed before should make sure its on the ball next time and Sony have done well in that regard. Microsoft, and Nintendo not so much, but there is always next time.

ZippyDSMlee said:
The PS3 might not be imposable but I have more PS2 games anyway. From now on if game companies want my money they will have to focus on BWC or I will just stick with the PC and emulation or 100-200 used consoles.
So until they cater to you you'll just pirate their games? Well that isn't a good argument at all considering all those PC exclusives out there... what a dangerous viewpoint.
So buying used is somehow doing something illicit? Wow now that's a much more dangerous viewpoint.
Referring to emulation bud.
 

ZippyDSMlee

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Rozalia1 said:
ZippyDSMlee said:
Rozalia1 said:
Well nice to see the obvious happening. A company that failed before should make sure its on the ball next time and Sony have done well in that regard. Microsoft, and Nintendo not so much, but there is always next time.

ZippyDSMlee said:
The PS3 might not be imposable but I have more PS2 games anyway. From now on if game companies want my money they will have to focus on BWC or I will just stick with the PC and emulation or 100-200 used consoles.
So until they cater to you you'll just pirate their games? Well that isn't a good argument at all considering all those PC exclusives out there... what a dangerous viewpoint.
So buying used is somehow doing something illicit? Wow now that's a much more dangerous viewpoint.
Referring to emulation bud.
Not everything is available to be repurchased and I am sure as hell not re buying shit I already own. Besides by the time the PS3 is emulated as much as the PS2 is today we all will be dead. LOL