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Sony claims PS3 losses = $3.3+ Billion

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Old 06-27-2008, 07:51 AM   #91  
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Originally Posted by MikeRox View Post
Haha, wonder if they'll start putting Blu-ray releases out before DVD too to try and encourage migration.
Now that would be nice. I read an article the other day that Hollywood Video intends to increase their Blu-ray inventory for each day and date title by the holidays. Right now my Hollywood has about 30 BD catalog titles and 1-3 copies of the day and date titles since the middle of April so I am glad they are getting further into the game.
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Old 06-27-2008, 09:39 AM   #92  
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Wow no replies from the SDF? Well done PFC5

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Gee. Maybe as an accountant looking at charts for too many years I cannot read them correctly anymore, but that 2nd link from Sony no less STILL shows them losing money (as in NET LOSS) for the gaming division. Here is the chart embedded for everyone to see it without going to the link:



Reducing a loss and calling it a profit (or surplus as our politicians do) is WHY we have such a large debt in the USA.

Also remember that the losses are AFTER including the PROFITS from the other products in the gaming division. The PS2 makes tons of profit at this point and I suspect that the PSP also makes a tidy profit now, so I wonder how much of a loss the PS3 has alone BEFORE reducing it by the profit in the "other" gaming products Sony sells.

I suspect that they WILL turn a "current" mfg profit at some point this year with the PS3 due to economies of scale and the repeated scaling back of features to do it, but the hole dug for just the PS3 losses alone will take a very long time to recover and when you consider that possibly more than half of the PS3 owners are only using it to play the reduced software margins of BD movies over the much higher software margins for games, it might never see 1/4 of the success that the PS2 enjoyed and possibly never make much OVERALL profit for the PS3 alone.

Anyone that thinks the PS3 has been the success Sony had hoped for at this point are smoking crack most likely. Sony expected it to be doing much better at this point I would guess and they are likely very careful still in the wording they use when they describe the financial status of the PS3 franchise. It is amazing how some carefully chosen words to describe a HUGE loss can actually have many people thinking it is making money.

Sony DID bet the company on the PS3 and BD and they might never get all that money back, but who knows for sure at this point? It really depends on how long they keep the PS3 on the market. I am not a hardcore gamer, but I know finances and Sony is in deep do do financially right now compared to how they were doing BEFORE the PS3 product started getting a lot of money being spent on it. They have sold off their Cell mfg plant to Toshiba AND they also sold off their insurance/financial division, and lets not forget that they also sold off 20% of the company to Dubai as well to fund the PS3 "fiasco".

Yes it IS a fiasco IMO from a financial standpoint, but it is a great machine IMO. We use it all the time in my house.
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Old 06-27-2008, 09:45 AM   #93  
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There is NO such business model. Don't let the Sony clones tell you that they intended to lose $5 Billion dollars before making money. Look at the Wii, that was how the PS3 was supposed to sell.

This reject of a machine-PS3, is sold at $400 (originally $500-600) so it can play PS2 games? LMAOOO!!! Yea, dont let the Sony clones fool you again here. The PS3 games was supposed to be so good, that nobody should ever even talk about enjoying last generations' games. What a disaster and false that turned out to be.

Now 4 years from now, imagine if Sony was pitching the idea that the PS4 will come out and initially selling $600 so you can play PS3 games, and that they will offer no impressive PS4 titles for the first 2-3 years. What the hell do you think would happen?- I'll tell you, --The fanboys would have rioted and lynched some Sony execs. So how did they managed to pull a fast one on most of us this time around with the BBQ grill PS3????????? !!!!!!!!!!!!!!!!!!!!!! and yet we take it in the ass happily for Sony. ie. awol. Only the Sony sheeples are to blame for this. Blind people unlike a cult. ie. awol

Would you purchase this POS again in another 4-5 years. HELL NO!! This is why I think that there will be no PS4, it is a dead franchise.

and..........................Anybody who bought the PS3 and brags that they use it to play PS2 games is a fucking Tard and basically the ultimate definition of a tool. ie. awol

You're funny!! Like a little monkey dancing around in your monkey speak saying, "Look at me!! Look at me!!"

But there is a point that I have to agree with. Oh my.

If Sony repeats with the PS4 (and there will be a PS4) what they did with the PS3, then I think they will lose even more marketshare than they did this generation. But the fanbois will still eat it up like rice in China. And I think that Sony took a very big risk with the PS3 and putting a BD drive in it. One that ultimately paid off in a sense. BD won. It likely wouldn't have without the PS3. At the same time, Sony sacrificed the success of the PS3 for the success of BluRay. And that one has a MUCH higher potential for long term success than the PS3 itself.

Oh, and next time, the console likely won't have to be as expensive. Relatively speaking, the cost of BD drives should come down to much more reasonable levels than they are now. Not to mention that they will be faster and more reliable.

And to answer you specifically, I've never bragged about the ability to play PS2 games. You made a comment I responded. I wasn't bragging. Look up the definition.

And to clarify, most people here already know this, but just as a refresher, I bought the PS3 for two reasons. BluRay and Games. Games that I could only get on the PS3 because they are produced by Sony owned studios. I have a Wii, and will get a 360 at the next pricedrop. So one thing you can not call me is a Fanboy.

But I can still call you one of the crazies.

Oh.

And you're still a tool.
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Old 06-27-2008, 10:36 AM   #94  
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Commenting on something PFC5 mentioned, Sony gets screwed every time they sell a PS3 that will only be used to play Blu-rays. The games are supposed to dig them out of the hole created by selling the consoles at a loss, and that loss increases every time they sell a console without games. They would actually be better off selling fewer consoles as long as those consoles were only used for playing games.

I wouldn't have put Blu-ray in the console as a promotional tool. Maybe it would work after Blu-ray got established, which might not have happened without the console, and even now still isn't guaranteed. An add-on would have been the way to go.

I would never, ever, get into the console business.
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Old 06-27-2008, 11:48 AM   #95  
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Blu-ray victory means royalties, royalties, royalties

http://news.cnet.com/8301-10784_3-9874317-7.html
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Old 06-27-2008, 11:53 AM   #96  
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Blu-ray victory means royalties, royalties, royalties

http://news.cnet.com/8301-10784_3-9874317-7.html

Thank you Lee, you have helped illustrate my point above very well!
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Old 06-27-2008, 11:55 AM   #97  
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Blu-ray victory means royalties, royalties, royalties

http://news.cnet.com/8301-10784_3-9874317-7.html
Ahem.......
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Blu-ray has a lot of grandfathers. A lot of people call it a Sony standard but by our estimates Sony doesn't even have 30 percent of the IP," Doherty said. The top four intellectual property holders are likely Sony, Panasonic, Pioneer, and Warner.
For future reference (HardD DVD, I am looking at you...)
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Old 06-27-2008, 11:59 AM   #98  
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Thank you Lee, you have helped illustrate my point above very well!
Yes . . . and No.

Yes - there are other revenue streams associated with the PS3 - BD discs themselves - IP's.

No - it is not as much money as people think it is . . . not to recover $3+ billion dollars.
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Old 06-27-2008, 11:59 AM   #99  
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Commenting on something PFC5 mentioned, Sony gets screwed every time they sell a PS3 that will only be used to play Blu-rays. The games are supposed to dig them out of the hole created by selling the consoles at a loss, and that loss increases every time they sell a console without games. They would actually be better off selling fewer consoles as long as those consoles were only used for playing games.

I wouldn't have put Blu-ray in the console as a promotional tool. Maybe it would work after Blu-ray got established, which might not have happened without the console, and even now still isn't guaranteed. An add-on would have been the way to go.

I would never, ever, get into the console business.
This is exactly my point as to WHY it will be difficult for Sony to ever recover the losses on the PS3 WITH the PS3 alone. The PS2 has made millions and millions beyond all costs for the PS2 for Sony alone and that has been a big funder of these PS3 losses and WHY the overall gaming losses are at ONLY 3.3 BILLION through FY 3/08.

Does anyone know the royalty revenue per BD movie compared to the royalty revenue for every PS3 game? I remember a while ago someone stated it was many multiple times higher for the PS3 games over what they get for a BD movie as THEIR cut. With about half (as a guess) used mostly for gaming so far they go further in the hole with every PS3 sold for mostly BD movie player use.

I think most people would agree that BD would have likely not won the HDM format war without the PS3, or the die hard BD fanbois would at least admit that it would have been a much longer drawn out war and would have been a toss up as to who would have won.

A lot of the loss reduction that the PS3 mfg has achieved was done by cutting out features in the later models as much as just economies of scale savings and they likely will not have that feature cutting available to them in later revisions, so I suspect the mfg cost reductions will be much less dramatic for FY 3/09.

The thing is that the BD/Sony fans keep talking about the PS3 either already being profitable or going to be this year, but all the Sony financials released show otherwise. What is really happening is that Sony is HOPING/GUESSING/PROJECTING that the PS3 will be profitable later this year, but that is likely to really be the gaming division as a WHOLE and not the PS3 ALONE. We shall see how it plays out and how the Sony talking points on profit compare to the actual financial reports they end up releasing, but so far their claims of profit are BS accord to THEIR financials.

Last edited by PFC5; 06-27-2008 at 12:07 PM..
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Old 06-27-2008, 12:05 PM   #100  
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This is exactly my point as to WHY it will be difficult for Sony to ever recover the losses on the PS3 WITH the PS3 alone. The PS2 has made millions and millions beyond all costs for the PS2 for Sony alone and that has been a big funder of these PS3 losses and WHY the overall gaming losses are at ONLY 3.3 BILLION through FY 3/08.

Does anyone know the royalty revenue per BD movie compared to the royalty revenue for every PS3 game? I remember a while ago someone stated it was many multiple times higher for the PS3 games over what they get for a BD movie as THEIR cut. With about half (as a guess) used mostly for gaming so far they go further in the whole with every PS3 sold for mostly BD movie player use.

I think most people would agree that BD would have likely not won the HDM format war without the PS3, or the die hard BD fanbois would at least admit that it would have been a much longer drawn out war and would have been a toss up as to who would have won.

A lot of the loss reduction that the PS3 mfg has achieved was done by cutting out features in the later models as much as just economies of scale savings and they likely will not have that feature cutting available to them in later revisions, so I suspect the mfg cost reductions will be much less dramatic for FY 3/09.

The thing is that the BD/Sony fans keep talking about the PS3 either already being profitable or going to be this year, but all the Sony financials released show otherwise. What is really happening is that Sony is HOPING/GUESSING/PROJECTING that the PS3 will be profitable later this year, but that is likely to really be the gaming division as a WHOLE and not the PS3 ALONE. We shall see how it plays out and how the Sony talking points on profit compare to the actual financial reports they end up releasing, but so far their claims of profit are BS accord to THEIR financials.
I am no finanacial wiz but I do understand that Sony is breaking even/making a few $$ on the units they are selling now but in my thinking, they would have to sell 100's of million of more units to recoup the already lost revenue.

If M$ reduces the 360 and picks up steam, will Sony follow suit and put the PS3 back in the red?
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Old 06-27-2008, 12:05 PM   #101  
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Originally Posted by PFC5 View Post
Gee. Maybe as an accountant looking at charts for too many years I cannot read them correctly anymore, but that 2nd link from Sony no less STILL shows them losing money (as in NET LOSS) for the gaming division. Here is the chart embedded for everyone to see it without going to the link:
Correct. I said they made a profit in the last 2 quarters. Not the entire year.
This was in reponse to harddvds comment that the games division will keep losing more and more money until the last year.

So yeah, I hope you get that reading problem checked out.

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I suspect that they WILL turn a "current" mfg profit at some point this year with the PS3 due to economies of scale and the repeated scaling back of features to do it, but the hole dug for just the PS3 losses alone will take a very long time to recover and when you consider that possibly more than half of the PS3 owners are only using it to play the reduced software margins of BD movies over the much higher software margins for games, it might never see 1/4 of the success that the PS2 enjoyed and possibly never make much OVERALL profit for the PS3 alone.
Like I keep saying but no one ever wants to address. The 360 also has losses of 3 billion dollars. Are you saying there is no chance for MS to make back their money?
And like you said since Sony also has the PS2 and PSP in the games division theyre in an even bigger position.

Last edited by ssjLancer; 06-27-2008 at 12:22 PM..
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Old 06-27-2008, 12:22 PM   #102  
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Correct. I said they made a profit in the last 2 quarters. Not the entire year.
Are you saying they made a profit on every PS3 (or the gaming division as a whole) made in the last two quarters of FY 3/08, or the last two completed calendar quarters?

It seems to me what they are saying in their financial reports is that even the gaming division as a whole is was STILL losing money for the last FY ending 3/08, so the losses for just the PS3 ALONE would be much greater.

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Like I keep saying but no one ever wants to address. The 360 also has losses of 3 billion dollars. Are you saying there is no chance for MS to make back there money?

First of all, MS is in a much better financial position compared to Sony. They have financed their losses on the 360 with current revenues company wide WITHOUT having to take out loans OR sell off big pieces of the company to do it.

I would say that the history of MS in the gaming industry is NOT showing they will recover the prior losses completely at all, or maybe they MIGHT break even at some point, but that just shows that Sony cannot do it either. Especially when you consider that MS is basically debt free while Sony is heavily mortgaged and a lot of it has been for the PS3 mfg/subsidy costs.

I guess you might have expected me to say that MS would make a profit to try to show that Sony will also with the PS3, but I do not think EITHER will recover their losses or at least make a profit worthy of the risks taken. Meanwhile, Nintendo is laughing all the way to the bank since they priced the wii to make money on each console sold.

I think the console model of losing tons of money on console sales alone will get changed at some point or at the least they will not make the losses as great with future consoles as the hole has been too great to fully recover it from what I can see.
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Old 06-27-2008, 12:33 PM   #103  
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Are you saying they made a profit on every PS3 (or the gaming division as a whole) made in the last two quarters of FY 3/08, or the last two completed calendar quarters?

It seems to me what they are saying in their financial reports is that even the gaming division as a whole is was STILL losing money for the last FY ending 3/08, so the losses for just the PS3 ALONE would be much greater.
Which I never denied. They made a profit in the last 2 quarters for the FY08.

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First of all, MS is in a much better financial position compared to Sony. They have financed their losses on the 360 with current revenues company wide WITHOUT having to take out loans OR sell off big pieces of the company to do it.
Please give me a link stating that Sony sold off their bd factory to finance the PS3.

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I would say that the history of MS in the gaming industry is NOT showing they will recover the prior losses completely at all, or maybe they MIGHT break even at some point, but that just shows that Sony cannot do it either. Especially when you consider that MS is basically debt free while Sony is heavily mortgaged and a lot of it has been for the PS3 mfg/subsidy costs.
You said it yourself, Sony has the PSP and PS2 making money in the gaming division. Theyre in an even better position to make back that money. Not even counting revenue from bringing Blu Ray into peoples homes.

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I guess you might have expected me to say that MS would make a profit to try to show that Sony will also with the PS3, but I do not think EITHER will recover their losses or at least make a profit worthy of the risks taken. Meanwhile, Nintendo is laughing all the way to the bank since they priced the wii to make money on each console sold.

I think the console model of losing tons of money on console sales alone will get changed at some point or at the least they will not make the losses as great with future consoles as the hole has been too great to fully recover it from what I can see.
You have a huge hole in your argument. You said Sony expected the PS3 to be much more successful, but since theyre losing money on hardware had they sold much more consoles in the first years they would have even more losses.

The loss model will continue, it worked for the PS2 and PS1 and it remains to be seen if it'll work for the PS3. Only way it wont is if MS and Sony adopts Nintendos strategy of using 10 year old technology.
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Old 06-27-2008, 12:44 PM   #104  
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Are you saying they made a profit on every PS3 (or the gaming division as a whole) made in the last two quarters of FY 3/08, or the last two completed calendar quarters?
.
Yes,

http://www.engadget.com/2008/01/31/s...urns-a-profit/
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Old 06-27-2008, 12:45 PM   #105  
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Please give me a link stating that Sony sold off their bd factory to finance the PS3.
Where did he say a "BD factory?"

Sony sold it's Cell BE FAB to Toshiba for $835 million in Feb. They also sold a chunk of the company to Dubai. You should be able to Google the stories with that info.
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