Sony Losing Money on PSP, PS3

[Karloff]

Sony Losing Money on PSP, PS3

Sony's first quarter results are out, and the news isn't good.

Sony has not been doing well. It's suffered four straight years of financial losses and the results for the first quarter this financial year aren't any better. Game sales only added to the dirge this time out; PSP handheld, PS3, and game sales were all down. The PS Vita portable was the sole bright spot, but the money generated there was by no means enough to offset other gaming losses. Future game sales estimates have been revised downward, and according to a Sony spokesman "for the rest of the fiscal year we are taking a cautious view of the market."

During the August 2nd investor conference call, when asked directly whether the results had anything to with the Vita performing below expectations, the response from Sony's senior staff was that "currency movements" alone were to blame. It costs too much to buy Yen these days, which means that Sony's Japanese products - robust sellers though they may be - can't make the margins that had originally been forecast. When asked what changes would be made to offset this loss in future quarters the Sony men said research and development and marketing would take a hit, but refused to go into any great detail as to what cuts would be made. The Sony execs weren't at all keen to break down Vita sales comparisons against other Sony systems, and this reluctance might indicate that currency movements were not the only problem in the first quarter.

Sony's supporting documentation cites "lower sales of hardware and software of the PSP and PlayStation3" as the main reason for the game sales loss. All told, there was an operating loss of $45 million in the quarter, which represents a 14.5% year-on-year drop for their game sales. When Kaz Hirai was brought in as Sony's CEO it was hoped that he could turn things around, and he said at the time that "if we don't turn this around, we could be sitting in some serious trouble." [http://www.escapistmagazine.com/news/view/118130-Kaz-Hirai-Steps-Down-as-Sonys-Director-and-Chairman] Now he knows just how much trouble Sony is in.



Sources: Eurogamer [http://www.sony.net/SonyInfo/IR/info/presen/index.html#block1]


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[BehattedWanderer]

No big game releases,no big console draws. This is a barren time of year for gaming, ironically when a fair portion of the population has the most time. It's hurting everyone.

 

[Trishbot]

This sounds starkly familiar to Sega's Dreamcast days, and the lead-ins from their GameGear/SegaCD/Saturn days as well...

... Do you think Sony would ever go third-party?

 

[Albino Boo]

The big problem that Sony has is the global downturn is really biting. Southern Europe is one big economic blackhole, the US,UK and Japan are bouncing along on the bottom and the BICR countries growth is stalling. Sony's margins weren't that great to start with and they must being squeezed and there is no obvious growth markets to sell into. I wouldn't be surprised if the Vita doesn't get dumped and its not beyond possibility that the PS3 gets dropped before a replacement comes on to the market.

 

[flarty]

it would be a damn shame if Sony backed out of the console market, they've had the best exclusives this generation.

 

[Arkley]

I have to admit, I don't really understand how Sony can be losing so much money. They aren't doing much differently from Microsoft's gaming division, and we've seen a few reports about how the 360 is making money hand-over-fist, outselling the other consoles, and so on. Sony even has the edge in a few areas; more high-quality exclusives on the PS3 than the 360, and free online play. It's arguable that XBL is a superior service to PSN, sure, but "free and good" is a much easier sell for a service than "paid but better".

The two consoles are similarly priced and, while the 360 may have a moderate lead in the West, the PS3 has the entirety of Japan pretty much to itself. It just makes me wonder how badly Sony is managing the whole thing if they're managing to make a loss while Microsoft is doing so well.

 

[shadowstriker86]

right now i mainly use my ps3 to charge my iphone and for netflix because there's no interesting games for it like back when i first got it, all there is now is just call of duty clones and just junk. if they were smart they'd release old school classics onto the psn store like kingdom hearts 2 final mix and the ratchet and clank series for uber cheap like a steam sale

 

[Albino Boo]

This sounds starkly familiar to Sega's Dreamcast days, and the lead-ins from their GameGear/SegaCD/Saturn days as well...

... Do you think Sony would ever go third-party?

I don't think so because Sony isn't a console company only. They make a whole range of other products so I think they will either be in the hardware side or not in the market at all. They are not reliant on gaming, so they can just simply walk away and still have a company.

 

[Richard Allen]

Good, after everything they have done to their customers no wonder people are moving away from them in droves.

 

[Shinsei-J]

I hope they do better later on in this financial year because they seem like the least dickish of all the console building companys.
I mean thier handhelds are damn good and when they do somrthing new it's not just a gimick. (ok move was a gimick but that's it)

 

[GenGenners]

Good, after everything they have done to their customers no wonder people are moving away from them in droves.

Let's not make this personal.

 

[AzrealMaximillion]

Man, ALL of the big 3 are hurting. This isn't a Sony problem. This is a "we need to fix how we sell console gaming" problem. Seriously with the Big 3 showing losses all at once it goes to show something. Console gaming has become either too stagnant or too expensive (depending on which company you look at) for people to put up with. I mean really, does anyone see themselves being really excited for the next gen at all?

No one seems to give a damn about the Wii U and no one really seems to be jumping for joy about the next PS or Xbox consoles. Seriously I think a lot of people have given up hope for console gaming. They got greedy and tried to become home entertainment devices instead of video game consoles.

 

[viranimus]

the response from Sony's senior staff was that "currency movements" alone were to blame.

Or maybe, just maybe there might be a little bit to do with the fact Sony keeps spitting on its customers repeatedly. Perhaps removing features, shutting down/blocking accounts, pushing unwanted products/features/services was not the wisest way for you guys to go.

 

[Epona]

I don't see how they can be losing money on PSP hardware his many years later.

Man, ALL of the big 3 are hurting. This isn't a Sony problem. This is a "we need to fix how we sell console gaming" problem. Seriously with the Big 3 showing losses all at once it goes to show something. Console gaming has become either too stagnant or too expensive (depending on which company you look at) for people to put up with. I mean really, does anyone see themselves being really excited for the next gen at all?

No one seems to give a damn about the Wii U and no one really seems to be jumping for joy about the next PS or Xbox consoles. Seriously I think a lot of people have given up hope for console gaming. They got greedy and tried to become home entertainment devices instead of video game consoles.

I think console gaming is dying. PC's are now cheaper than ever and they can do everything a console can and more.

Why did they move the quote button? Engineers love to make changes!

 

[Trishbot]

This sounds starkly familiar to Sega's Dreamcast days, and the lead-ins from their GameGear/SegaCD/Saturn days as well...

... Do you think Sony would ever go third-party?

I don't think so because Sony isn't a console company only. They make a whole range of other products so I think they will either be in the hardware side or not in the market at all. They are not reliant on gaming, so they can just simply walk away and still have a company.

But that's my point. Prior to the Playstation, Sony had a games division making games for Sega and Nintendo, and even after the Playstation, Sony's got a sizable game market in PC gaming (Everquest, DC Universe Online, etc.)

The thing hurting them most is their systems. They lose a lot on each system they make and sell, and they bank on their games to cover the cost. But if they went games-only, they cut out the huge risk of consoles. Sony has not made a profit on PS3s in over four years... but they have made money on their games.

Now, granted, that would hurt consumers in the long run. Competition is what keeps prices down and companies competitive. I think Sony needs to stick around, if only to give Microsoft and Xbox competition.

But this generation in particular has not been kind to Sony, who ruled the roost with the PS2 a generation ago. The PS3 is still sitting at third place globally (and is far more expensive to make than the 360 or Wii), the PSP is all but dead outside of Japan, and the Vita has failed to deliver thus far. Sony's not dead by a long shot (they have their many other businesses to help bolster costs), but their game division is certainly in some trouble.

Which, well, is the same boat Sega faced with the Dreamcast. They continued to make games that sold well, but the system support wasn't there. They determined that going third-party, games-only, would be more profitable, and they were correct.

Sony, however, still believes their own words that the Playstation brand alone will sell regardless based on its name recognition alone. That's the folly they had with the PS3, the PSP Go, and the Vita. Games sell systems, not company loyalists.

I just think, with how little product they're selling, how expensive and costly their systems are (and they're not recouping those losses), their lone profitable sector is software at the moment.

 

[GAunderrated]

the response from Sony's senior staff was that "currency movements" alone were to blame.

Or maybe, just maybe there might be a little bit to do with the fact Sony keeps spitting on its customers repeatedly. Perhaps removing features, shutting down/blocking accounts, pushing unwanted products/features/services was not the wisest way for you guys to go.

Hate to admit it but i'm one of those scorned Playstation fans. At first they removed backward compatibility which really pissed me off but I got one of the last BC ps3's so I let it slide, then they took away the linux feature they HEAVILY promoted. That pissed me off as a linux fan but that didn't seal the deal. Then came the hack situation, a month of blackout on ps3 side, and you got to see how little sony cared for their fans.

Their welcome back program was nothing more than an upsell of PS plus, and a few old games that had sequels coming out soon (go figure). Since that incident I havent bought a ps3 game or used PSN much. So I don't feel bad or question why sony is doing so poorly when they have been complete dicks since the start of this console generation.

Man, ALL of the big 3 are hurting. This isn't a Sony problem. This is a "we need to fix how we sell console gaming" problem. Seriously with the Big 3 showing losses all at once it goes to show something. Console gaming has become either too stagnant or too expensive (depending on which company you look at) for people to put up with. I mean really, does anyone see themselves being really excited for the next gen at all?

No one seems to give a damn about the Wii U and no one really seems to be jumping for joy about the next PS or Xbox consoles. Seriously I think a lot of people have given up hope for console gaming. They got greedy and tried to become home entertainment devices instead of video game consoles.

This is also another good point. All 3 consoles started straying to try and become the one stop shop for all entertainment (movie, music, TV, and games) and its suffering on the game side. The console market is very stagnant right now and quite frankly it sucks. But when you read article after article of developers and publishers saying crap like photo-realistic graphics is what is needed for games to be good, you realize that these drops in sales is directly reflected of their own greed and ignorance.

 

[cerebus23]

The ps3 launch was what killed the ps3.

Go back to the ps2 when it came out it was wildly out in front, it was woefully short shipped, something sony seems to do habitually on purpose, so there was all this hype for the ps2 people waiting in lines, people mugging each other, so on....

when they tried the same trick with the ps3, that season the xbox 360 was already out, the wii was rapidly selling already, and all the people that could not get that ps3 they waned got an xbox 360 and or a wii, there was no huge need to get a ps3 after that nm the cost of the ps3 at launch.

I love my ps3 i love my exclusives on it, but sony failed itself by dragging their feet to get the ps3 out so long then giving the finger to their customers by giving each store like a dozen units each to sell, i mean common sony.

 

[Shoggoth2588]

This sounds starkly familiar to Sega's Dreamcast days, and the lead-ins from their GameGear/SegaCD/Saturn days as well...

... Do you think Sony would ever go third-party?

They might as well, I mean it isn't like we're living in the 90's when each platform is almost made of exclusive titles. It may be more profitable for Sony to sell what rights they do have and just go into software development. It would get us one step closer to the Everyone vs Everyone fighting game we may eventually get one day. The only major strength PSP, PSV and I think PS3 has is the lack of a region lock and that's only really applicable to people who like to import the games Japan doesn't want to share.