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Sony profits to rise sixfold, how come?

zAndy1

Distinguished Member

MattZani

Banned
the sixaxis cost's about £18 for a retailer to buy them, so sony make a huge profit!
 

Turb007

Prominent Member
and sony dont make a penny on the console :rolleyes: yeh right
 

Mark Botwright

Distinguished Member
Only Sony's accountants will ever know how much they make/lose on each console, however R&D must have already cost the hundereds of millions!
 

Tony Hoyle

Prominent Member
and sony dont make a penny on the console :rolleyes: yeh right

Yes. If you read the article launching the PS3 cost them 200 billion yen.

They've made another 400 billion profit on the other stuff.. so it balances out.

Since most people have bought a bundle with a few games, maybe downloaded some stuff from PSN, a few bluray movies... Sony make a net profit on the deal.
 

dan1979

Prominent Member
Surely it's because the profits were really low due to the marketing and development during last year. Now that's out of the way the meagre profits of last year should improve because they're actually selling the product.
 

Tony Hoyle

Prominent Member
It's good news for next year though. Profit this year means there's more to be reinvested in development next year - and with things like LBP and Home in development it means they'll have the budgets to do it right first time.

Now if only they pump some money into improving the XMB (which lets face it could use some work..)
 

MattZani

Banned
and the amount of other stuff they make for a profit, should easily even it out!
 

Jonstone

Prominent Member
They do make a loss on each PS3 sold, it is a common practice that only nintendo seem to avoid.

The xbox 360 was originally sold at a loss as well.

Over the lifetime of the console it becomes cheaper to make so gradually that loss turns into a small profit.

The money is made off the software sales as Sony take a cut of every software sale for the PS3 through licensing payments.

The main difference with the PS3 and the other two consoles of this generation compared to previous consoles is their ability to generate revenue through their online stores as well as disc sales.

The PS3 may very well not shift as many units as the PS2 but its potential for profit is far greater.
 

Sporran

Prominent Member
umm i guess additional revenues from things like Flow and Rub a Dub wil help too :)
 

MattZani

Banned
the other thing is, it doesn't matter how many PS3's are on the shelf, sony have already made there profit, its the store who hasn't.
 

Jonstone

Prominent Member
the other thing is, it doesn't matter how many PS3's are on the shelf, sony have already made there profit, its the store who hasn't.

In fact it is the exact opposite.

Sony make a loss on the console with the expectation of recouping that initial loss through future software sales.

A PS3 sitting on a retailers shelf is not generating any revenue for them whatsoever.
 

coluigi

Established Member
the other thing is, it doesn't matter how many PS3's are on the shelf, sony have already made there profit, its the store who hasn't.

Stores can return them to Sony. I can't remember what legal status this all takes but with pre-orders and that kind of jazz under certain circumstances stores can complain and ship them back to HQ. Someone might be able to elaborate.
 

harrisuk

Prominent Member
Stores can return them to Sony. I can't remember what legal status this all takes but with pre-orders and that kind of jazz under certain circumstances stores can complain and ship them back to HQ. Someone might be able to elaborate.

It's called "Sale or Return"

It's a common relationship between software and hardware suppliers to retail due to high stock values and limited shelf life of software in particluar.

However Sony stopped running sale or return on video game hardware years ago. By years ago I mean when the original play station was on sale.

I know this to be true as I used to work at a reasonably high level in the supply chain for a leading UK video games multiple.

Although I am no longer in the business it would be inconsivevable for me that this position has changed. Sony were incredibly difficult to deal with on the hardware side of things even then. Their relationship with retailers is likely to have got worse not better due to the success of the ps2.

So in short the stock sat on shelves at retailers at least as far as Sony is concerned is "sold"
 

mnetley

Established Member
People shouldn't confuse making a loss on manufacturing something because of the cost of the parts and labour that go in to it (as supposedly the case with the PS3), and something being unprofitable because of the huge initial cost of development and marketing (as in the car industry in which I work).

With the latter, the more units you sell, the sooner you turn a profit. With the former, the more you make the more you lose, until the manufacturing cost reduces. Of course as other people have pointed out, even though Sony might make a loss on the console itself, they probably cover that loss with the associated sales of accessories, games and blu-rays.
 

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