Sony Losing Money on PSP, PS3

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Sony Losing Money on PSP, PS3

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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." Now he knows just how much trouble Sony is in.

Sources: Sony Documentation, Eurogamer

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I guess their strategy paid off well. >.>

I wonder if they will use Nintendo's strategy of using lower powered hardware and making a profit to attract a greater audience this time.

Doubt it.

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.

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?

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.

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

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.

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

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.

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

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)

Richard Allen:
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.

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.

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.

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

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.

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!

albino boo:

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.

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.

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.

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.

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.

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.

This is bad news. I think many forget how important to the gaming industry Sony actually are. They are one of the few companies able to foster 3rd party studios and build great games under that umbrella. Insomniac, Naughty Dog and others have been pumping out super high quality games for over 10 years. They foster new IPs (unlike that other Japanese console maker who just makes the same 4 games over and over again)

If Sony's gaming arm where to go under we would miss it more than we realize.

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?

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.

AzrealMaximillion:

...
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.

It might also be that gamers feel they are just seeing the same ol' shit for games coming out for these systems, and they're just tired of it all. You can only make the same game just so many times before people are just no longer enthused about its release. It's hard to get excited for the upcoming Call of Duty: Ad Nauseum or the next Mario Bros.: Aren't They Dead, Yet? when one has already played the last umpteen releases, which all turned out to be the same game with a different coat of paint each time.

Maybe nows a time to cut the psp price?
I used to have one but it was stolen I've been wanting one but 130 feels like a lot to invest especially considering I still need a memory stick too.

Shoggoth2588:

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?

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.

For years it's baffled me that every single movie came out on DVD, but games couldn't do the same. You'd never hear the end of it if Sony only released Sony movies on their Sony-brand Sony-produced DVDs or something...

I'm with you. An "everyone vs. everyone" style market is what the games industry is heading towards. And I think that's a good thing.

You mean that the Online Pass Scheme didn't solve all their problems with game sales?!
That's Shocking!!!

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

That's true (I still think Valkyria Chronicles is the most original game to come out this generation) but they've also had the worst firmware support this generation. If they really opened up the ps3 and gave it some of the great features we've seen on other consoles, I might've gotten a Vita.

Couldn't have happened to a nicer company...

And there goes the PS4... I still think that Sony could have avoided such an abysmal defeat (lets face it, the PS3 was this generations Dreamcast) by putting a little more effort on the PS3 online experience.
Seriously, no custom avatars, limited library, no sales or discounts, late release dates for PSN games. What the hell??

Not to mention the whole Linux thing...

Unless the next gen console turns up to be something like the PS2 Sony will probably drop out from console manufacturing market (assuming there still is a home console market by then).

Trishbot:

albino boo:

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.

You forget one thing Sony as whole company needs money. They may be losing money on each unit but PSN and the playstation brand is worth money. They could simply sell the rights to the PS3 and the playstation network. Someone like Foxcon could easily stump $250 million for the name and EA etc could buy their PC gaming stuff. I think they will either invest heavily in the next gen or just sell their gaming division in general for maybe $350 million.

To be honest, I don't care now. I took a punt at picking up the PS Vita early because it looked like a really nice, well designed piece of hardware (which it is!) and had a few unique quirks to it. It had a few decent games on launch and I was quite impressed that they could make an uncharted game work on it. I thought that they'd have quite a few decent games coming soon since the launch line up wasn't too bulky.

Then I waited.

And waited.

Aaaaand waited.

And almost NOTHING was released for it. Gravity Rush didn't seem to be my sort of thing and their promised PSOne classics are nowhere to be seen. The only redeeming thing about it seems to be that you can buy old PSP games over the internet that you wouldn't be able to obtain otherwise. Even then it's overpriced and it takes up so much storage space, which the Vita doesn't have by default and it only accepts vita only memory cards which cost a bomb compared to Micro SD cards. Way to motivate people to buy games by making them pay even more to store them. I really want to use my Vita but I just can't!

This was my first Sony purchase since my Playstation One. And my god am I disappointed. If they think releasing a handheld without having anybody saying "yes, we will make games for it" is a good business strategy, this doesn't come as a surprise to me.

Owning a PS3, I can tell you exactly why their gaming division is flailing: they make slow, boring products. I get so bored of waiting for my PS3 to load something, download something, install something, go through some ridiculous update process and so many more mundane tasks that it decides it must do before I play a game that by the time it moves on to what I want to do, I am already playing a new game that I downloaded onto my PC in that time. If I am given a choice of what platform to play on, I always choose the PC. It looks better, starts faster and runs smoother than anything the PS3 does. What Sony hasn't figured out is that the digital era isn't about having the best hardware or some sort of format victory. It's about providing the best experience to the player and that's the part they have completely ignored.

I have a PS3, had to buy a 2nd one after the first died suddenly. I have no intention of EVER getting an Xbox, or a PSP/V, and my Wii is gathering dust having played maybe 8 games on it since I got it.

That being said, Sony has had their head so far up their ass that they almost beat EA's current record.

The list of their failed hardware is growing. While PS1 and PS2 did phenomenally, PS3 has more or less barely squeaked by in comparison.

Initially things looked great. When I got my first one I was super excited. I picked up Oblivion Goty, Heavenly Sword, Resistance, and Folklore as my first games. Three of which were PS3 exclusives.

Leaving aside the fact the I've still never finished Folklore like 7 years later, I was really happy with my purchase. It also had an online store and played bluray *yay*

Over the years I've played and loved numerous games, but few of them were PS3 only. More often than not we get the shitty port from Xbox, whose inferior disk storage medium and hatred for multi disk games has been dumbing down this generations games to fit on one DVD. Sony has the superior bluray media, yet they have gotten screwed over time and again because their system is some kind of "impossible to develop for" torture device.

Rarely are games on both systems on par with each other.

Also M$ simply bribes just about everyone to withhold DLC, make games XBLA exclusive etc. so that Sony is left with shit like our version of The Orange Box, Oblivion, and without games like Shadow Complex.

With almost no decent 1st party games (I cant even think of a franchise atm) and an online store that month after month fails to have anything I would even impulse buy...I'm just kinda waiting for something decent to play again.

Alongside the PS3's gradual downward trajectory they have tried and failed to make the case now the existence of the PSP family of handhelds. They are usually overpriced, underpowered, lacking any playable games, and about as durable as a Faberge egg if you actually intend to take them somewhere. I speak from my friend's experience as he is the only one that I know that got one. He got like 4 games, and traded everything in for a fat DS back at the time.

The new Vita may be underperforming by their expectations, but the fact that it is selling at all exceeds my own considerably. I mean it has touch screens on both sides of it...what exactly is the fucking point of that?

Playstation Move...do I need to elaborate on how it is a total Wii copying cash grab that has ended up costing them more in R&D/Marketing and consumer confidence in their business direction than it has benefited them? At least when M$ thought to simply copy Nintendo's success they made something innovative. Sony's big contribution to motion control was to add colored balls and require you to buy A SECOND WAND! Brilliant!

Sony's only current saving grace is that Nintendo has loooong since gone insane and chosen to take wild stabs in the dark when designing their hardware. Everyone, myself included took one look at the original DS and thought WTF. It was heavy, battery life was crap, and it had TWO SCREENS. I got the DS lite eventually and have not been happier with any console since probably ever. Despite hating 3D being forced upon us from all media currently, I will even be getting a 3DSXL eventually because thats where the games I want are being made. Or will be made eventually *looks at Etrian Odyssey 4*

The Wii U is currently 78% guaranteed to fail spectacularly and take Nintendo out when it does. They have been held up by Miyamoto's series pretty much for their entire modern life, and after Twilight Princess, Skyward Sword, Other M, and increasingly redundant Mario games that cash cow is almost out of milk.

EDIT: I've mostly been playing Skyrim, or at least making new characters obsessively for months now. When I actually use my PS3 that is. September 18th, and Borderlands 2, cannot come soon enough Q_Q

Well what'd they expect when their main platform this generation was an over-priced, under-supplied blue ray player that also just happened to play a few games?

The PSP news doesn't surprise me. I haven't seen a new PSP in ages, I picked one up pre-owned earlier in the year for 20 in the wake of GAME's struggles. Neither does the PSP games, because they're pretty much in the same position. At most, I've seen ten "chart" new PSP games in a store recently. Honestly, I thought they had already left the PSP alone.

PS3, however, is worrying. It's been cut down to a reasonable, if still expensive, price. It's got a host of great exclusives. Some of it's downloadable stuff is on the cutting edge of gaming innovation. Yet, still sales aren't doing well.

As much as the thought of sony franchises coming to other platforms excites me, sony backing out of the console race would leave microsoft without competition for the hardcore console market. This can't be good. So here's hoping they turn it around.

Sony cannot die fast enough.

Their relationship with their customers is antagonistic at best - and even people who try their best to avoid being their customers sometimes get caught in the crossfire.

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.

I know Ive never understood why console release were so barren this time of year. It seems counter-intuitive.

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