Sony: PS4 "Economics" Closer to the PS2 Than the PS3

Sony: PS4 "Economics" Closer to the PS2 Than the PS3

PS4 Console 04

Sony's Fergal Gara believes the PS4 is in a much more "favorable" position than the PS3 at its launch.

The PlayStation 3 was an expensive console when it first launched, a fact that arguably left it struggling until Sony dropped its price in the years following. As expensive as it was for gamers however, it was even pricier for Sony. The company was still losing money on the PS3 awhile after its release, with it taking nearly four years before the console would turn a profit.

Sony, in turn, has understandably been careful with the PS4 to make sure it doesn't repeat the same mistakes. Estimates are already pegging the new console as being mildly profitable with the parts and labor required in its construction costing only $381, $18 less than its retail price of $399. That in mind, the company is predicting a cycle of profitability far more favorable than it experienced in the last generation. "The economics of PS4 are far closer to the economics of PS2 than they are to PS3," said Sony's Fergal Gara. "If you consider with PS3, it was a highly bespoke architecture; it was expensive to make. And we weren't making money on many of those devices, even at a high price point. With PS4 we come at it at a very lean price point and our economics will be far, far [more] favorable."

It might not be an inaccurate assessment. With the PS4 already profitable and selling like hotcakes, the console is already off to a better start than its predecessor. Whether or not it will attain the same massive success of the PS2 however, is something we'll have to wait and see. After all, there's successful and then there's record breaking.

Source: Bloomberg via GameSpot

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Believe me, anything is generally in a better position than how the PS3 was at launch. It was completely overpriced, there were practically no games for a while, and it was at the onset of the economic collapse. Really the PS3 lost Sony a lot of money, but they were able to turn it around after a while.
However, I don't see any home consoles breaking the record of the mighty PS2 ever again. There is a chance, but with how the PS2 is still selling now I doubt any home console would come close. (DS is the second system closet to the record of the PS2 for most sales)

Is it really bad if I kinda wanted it to be less profitable?

Hell, if it had been selling at a $100 loss then it might at least have been a decently powerful machine.

I know lower prices are better for the general consumer, but as an enthusiast consumer I find it exceedingly difficult to give a crap about the general consumer when this probably means a fucking decade of games tech being horribly help back, and the divide between PC and console gaming growing ever wider.

StewShearer:

With the PS4 already profitable and selling like hotcakes around the world,

At this point the PS4 is still only available in North America, tomorrow on the 29th it will be released outside of that continent.

Ed130:

StewShearer:

With the PS4 already profitable and selling like hotcakes around the world,

At this point the PS4 is still only available in North America, tomorrow on the 29th it will be released outside of that continent.

Eep! How did that get in there. Thanks for the catch!

StewShearer:

Ed130:

StewShearer:

With the PS4 already profitable and selling like hotcakes around the world,

At this point the PS4 is still only available in North America, tomorrow on the 29th it will be released outside of that continent.

Eep! How did that get in there. Thanks for the catch!

You were only one day off before that phrase would have been correct, there is less than 9 hours before the PS4 midnight launch occurs in New Zealand.

Ed130:

StewShearer:

With the PS4 already profitable and selling like hotcakes around the world,

At this point the PS4 is still only available in North America, tomorrow on the 29th it will be released outside of that continent.

Well in theory at least. There are a few X Box ones here and there, but a PS4 is much harder to find.

bringer of illumination:
Is it really bad if I kinda wanted it to be less profitable?

Hell, if it had been selling at a $100 loss then it might at least have been a decently powerful machine.

I know lower prices are better for the general consumer, but as an enthusiast consumer I find it exceedingly difficult to give a crap about the general consumer when this probably means a fucking decade of games tech being horribly help back, and the divide between PC and console gaming growing ever wider.

I absolutely get what you mean and I feel the same deep down, but to be honest, were the PS4 $100 more expensive than it is right now, 1) it would still be behind PCs by a large margin and 2) it would still be held back by the XBONE. Most games now are cross-platform so developers try to aim for that sweet spot where they can put a game on multiple platforms at once. Of course, having a bigger edge over the XBONE would help the PS4, but this edge would be less than expected because it would be held back by a slower console in its generation. Yes, I consider the Wii U to be last gen, but a good console nonetheless.

StewShearer:

Ed130:

StewShearer:

With the PS4 already profitable and selling like hotcakes around the world,

At this point the PS4 is still only available in North America, tomorrow on the 29th it will be released outside of that continent.

Eep! How did that get in there. Thanks for the catch!

I mean, it's still technically true.
European pre-orders were through the roof as well. And really, without a pre-order you ain't getting one.

Weaver:

StewShearer:

Ed130:

At this point the PS4 is still only available in North America, tomorrow on the 29th it will be released outside of that continent.

Eep! How did that get in there. Thanks for the catch!

I mean, it's still technically true.
European pre-orders were through the roof as well. And really, without a pre-order you ain't getting one.

I like the way you think!

Ah nuts. I read that title wrong. I thought it meant that PS2 games may be playable on the PS4 after a while. Guess not. :-(

Have to agree though. The PS3 launch was a PR and company disaster. This time around, Sony seems to be aiming for the fences and it's working. I doubt it will have the same run as the PS2, but I wouldn't be surprised if it comes close--reasonably speaking.

It is selling at a loss, every time the escapist talks about this they get it wrong, there is no profit if the parts alone cost 380$. In fact there must be a significant loss when you account for all the logistics costs let alone marketing.

I completely agree! The PS2 did well for being a simple inexpensive system for anyone and everyone. Sony wanted the PS3 to be the thing the wealthier of us bought to feel good about their 20 foot wall unit, and that angle really didn't work for them.
Is it me, or have Sony and Microsoft completely switch places this generation in terms of how they pushing their systems?

they are not being sold on profit. the difference between retail price and only the manufacturing price is 18 dollars. that 18 dolalrs have to support research and developement, packaging, shipping, retail cut, administrative fees and static costs of Sony (like office building upkeep), only after all that it can be profit. and even then, it needs to be profit because other divisions are loosing.

You know what would've made the PS4 sell even better?

GAMES! Freakin' lovable, playable "right-now" games. I mean, yeah, inFamous: Second Son and Final Fantasy 14: A Realm Reborn come out eventually for it, still...

Just imagine how much more they could've sold if they had a game library, digital OR physical, like the one the PS2 had when it came out.

And don't even get me started on how friggin' awesome Timesplitters might have been if it were released for the PS4.

they have been giving away tons of free dev kits...the supposed numbers of games in development are huge...500-600 games apparently...if that even partly comes to fruition...there is a chance we may see a PS2 like generation...personally i've certainly been picking up a weird "PS2 like" vibe from the machine i can't really explain for a while...

fingers crossed...and not as any kind of "a sony fanboy" but simply as "a gamer"...

CrazyCapnMorgan:
like the one the PS2 had when it came out.

i think your personal memory of events might be misleading you.

initial PS2 launch games were not actually that great...it had staggered regional launch dates something the PS4 doesn't...you can point to Timesplitters, SSX, and Tekken Tag if you like but the fact is the US/EU launch was in October/November while the console actually first hit the streets in Japan in March a full 6 months previously with basically no games of lasting note available at initial launch.

dochmbi:
It is selling at a loss, every time the escapist talks about this they get it wrong, there is no profit if the parts alone cost 380$. In fact there must be a significant loss when you account for all the logistics costs let alone marketing.

Thank you! This has bothered me for a while now, if the retail price is about the same as the production value then we have to expect that they are losing money from selling it or the retailers are working non-profit. Actually, the retailer would have to be working at a loss.

Guess making a profit is kinda important I just hope this era is more like ps1/ps2 as they felt some how more purely about the games.

We will see how well sony have done on Friday evening it seems sony are on par or beating microsoft for preorders but we shall see whne the final count is in :)

Sleekit:
they have been giving away tons of free dev kits...the supposed numbers of games in development are huge...500-600 games apparently...if that even partly comes to fruition...there is a chance we may see a PS2 like generation...personally i've certainly been picking up a weird "PS2 like" vibe from the machine i can't really explain for a while...

fingers crossed...and not as any kind of "a sony fanboy" but simply as "a gamer"...

CrazyCapnMorgan:
like the one the PS2 had when it came out.

i think your personal memory of events might be misleading you.

initial PS2 launch games were not actually that great...it had staggered regional launch dates something the PS4 doesn't...you can point to Timesplitters, SSX, and Tekken Tag if you like but the fact is the US/EU launch was in October/November while the console actually first hit the streets in Japan in March a full 6 months previously with basically no games of lasting note available at initial launch.

Looking at the Wiki for the launch titles proves your post entirely accurate. Granted, when it came out for the US is the only time I considered the library for games. Looked at the launch titles for Japan and...yeah, nothing really of note there. So, I'll say the US launch had some decent titles to go along with it. But you are correct about Japan's PS2 launch library and timing.

ps2 was woefully short shipped when it came here also, the library meh at launch think i got ridge racer on ps2 launch night, but there was nothing else out, ps2 were going for 500 600 dollars on ebay, even with no games because it was the only game in town. Took months for demand and supply to intersect.

sony tried to do the same thing with ps3 but wii AND xbox 360 were out so when ps3 were sold out instead of going on ebay, or waiting months to get one many people just got a wii or a xbox 360.

But yea the only thing ps2 really had going for it was it was the only thing in town at the time. But because of that crazy install base my god the games that came for it.

Personally, I just hope that the PS4 does well. I personally do enjoy the specs of the PS4 and the potential it has, and I hope that Sony doesn't somehow screw that up.

dochmbi:
It is selling at a loss, every time the escapist talks about this they get it wrong, there is no profit if the parts alone cost 380$. In fact there must be a significant loss when you account for all the logistics costs let alone marketing.

They also make a bigger profit outside of the US per console.

They bundle ones with 1 game are for sale in the UK are 385. 385 in USD is 628.98 so they are making way more. Can't really blame shipping costs either as I seriously doubt they are being made in the States or Europe. Taxes are not that bad in the UK either.

bringer of illumination:
Is it really bad if I kinda wanted it to be less profitable?

Hell, if it had been selling at a $100 loss then it might at least have been a decently powerful machine.

I know lower prices are better for the general consumer, but as an enthusiast consumer I find it exceedingly difficult to give a crap about the general consumer when this probably means a fucking decade of games tech being horribly help back, and the divide between PC and console gaming growing ever wider.

As a PC gamer myself I'm really not that bothered by it. True, much of the tech for games is being held back by the consoles, but I just can't find it in me to be bothered by it. We are still moving forward and regardless of the current state of console tech, there will always be dedicated companies really putting their pc's through the ringers for those consumers who demand it and there will always be consumers who demand it. I think the main thing about consoles is that they are great introductory products for people looking to expand their gaming horizons or simply fun things you muck around with every so often for others and keeping it cheap will be to the better of the community.

In saying that , I do think that there are a lot of poisonous practices that are growing on these devices which are definitely to the detriment of the general gaming community, but I'm hoping as the community grows larger and people really start demanding more bang for their buck that these will change. While I can't be certain of this and economics is an inexact science at the best of times, I really do believe that as gaming continues to garner further recognition as a legitimate art form these effects will definitely lessen. I don't think we'll ever be completely rid of them, but hopefully they'll become less ubiquitous.

Rainbow_Dashtruction:

CrazyCapnMorgan:

Sleekit:
they have been giving away tons of free dev kits...the supposed numbers of games in development are huge...500-600 games apparently...if that even partly comes to fruition...there is a chance we may see a PS2 like generation...personally i've certainly been picking up a weird "PS2 like" vibe from the machine i can't really explain for a while...

fingers crossed...and not as any kind of "a sony fanboy" but simply as "a gamer"...

i think your personal memory of events might be misleading you.

initial PS2 launch games were not actually that great...it had staggered regional launch dates something the PS4 doesn't...you can point to Timesplitters, SSX, and Tekken Tag if you like but the fact is the US/EU launch was in October/November while the console actually first hit the streets in Japan in March a full 6 months previously with basically no games of lasting note available at initial launch.

Looking at the Wiki for the launch titles proves your post entirely accurate. Granted, when it came out for the US is the only time I considered the library for games. Looked at the launch titles for Japan and...yeah, nothing really of note there. So, I'll say the US launch had some decent titles to go along with it. But you are correct about Japan's PS2 launch library and timing.

Regardless if you consider it basically having a good launch because it had a good launch in America, the consoles actual launch was still utter shit, and you were wrong, because America is not the center of the fucking universe.

hey, hey that was not the jist of my comment (it was meant to be causally informative) and i don't appreciate such an abrasive and argumentative intervention/addendum to my post.

definitely, but the PS3 is still selling at a loss. Thing is, they still have to split profits with retail partners with that. Better than the PS3, though pretty much EVERYTHING had a better margin than the PS3 did.

Sleekit:

Rainbow_Dashtruction:

CrazyCapnMorgan:

Looking at the Wiki for the launch titles proves your post entirely accurate. Granted, when it came out for the US is the only time I considered the library for games. Looked at the launch titles for Japan and...yeah, nothing really of note there. So, I'll say the US launch had some decent titles to go along with it. But you are correct about Japan's PS2 launch library and timing.

Regardless if you consider it basically having a good launch because it had a good launch in America, the consoles actual launch was still utter shit, and you were wrong, because America is not the center of the fucking universe.

hey, hey that was not the jist of my comment (it was meant to be causally informative) and i don't appreciate such an abrasive and argumentative intervention/addendum to my post.

Ah, I misread then. I apologize, it looked like you were literally saying a system doesn't count as released until its released in America.

Yopaz:

dochmbi:
It is selling at a loss, every time the escapist talks about this they get it wrong, there is no profit if the parts alone cost 380$. In fact there must be a significant loss when you account for all the logistics costs let alone marketing.

Thank you! This has bothered me for a while now, if the retail price is about the same as the production value then we have to expect that they are losing money from selling it or the retailers are working non-profit. Actually, the retailer would have to be working at a loss.

It isn't hardware that brings in main profit
Games are the ones that bring in cash
All Sony needs is to keep selling consoles at ~400USD price, while making sure there is enough games for PS4 to keep up the console sales.
In a year or two there will be profit from PS4 itself.

blackrave:

Yopaz:

dochmbi:
It is selling at a loss, every time the escapist talks about this they get it wrong, there is no profit if the parts alone cost 380$. In fact there must be a significant loss when you account for all the logistics costs let alone marketing.

Thank you! This has bothered me for a while now, if the retail price is about the same as the production value then we have to expect that they are losing money from selling it or the retailers are working non-profit. Actually, the retailer would have to be working at a loss.

It isn't hardware that brings in main profit
Games are the ones that bring in cash
All Sony needs is to keep selling consoles at ~400USD price, while making sure there is enough games for PS4 to keep up the console sales.
In a year or two there will be profit from PS4 itself.

I know, I think everyone does. I just get annoyed when people say Sony is making a profit on selling hardware because retail price is higher then the production cost.

I always enjoyed Sony products, especially the Playstation. However due to the lack of backwards-compatibility i'm passing on the PS4 for now at least. I still have plenty of games on PS3 to play so really no point in getting PS4 for quite a while. Really disappointed too, truly how difficult would it have been to allow the PS4 to play prior console games, at least PS3 ones. If it could i'd be down to get the PS4 right now.

 

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