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Declining PlayStation sales lead to loss for Sony

Declining PlayStation sales lead to loss for Sony

Thu 02 Aug 2012 7:59am GMT / 3:59am EDT / 12:59am PDT
Hardware

Game segment posts operating loss of $45 million, full-year operating income expected to "decrease significantly"

Sony Computer Entertainment

Sony Computer Entertainment is a Japanese videogame company specialising in a variety of areas in the...

playstation.com

Sony's Game division posted an operating loss of $45 million as sales of its PlayStation hardware line continue to fall.

In the first fiscal quarter - ending June 30 2012 - the company's Game segment posted revenues of 118 billion ($1.49b/967m), down 14.5 per cent year-on-year. The decline was partially aggravated by the strength of the Yen, but overall sales were still down 10 per cent on a constant currency basis.

The segment posted an operating loss of 3.5 billion ($45m/28m), versus an operating profit of 4.1 billion in the same quarter last year. The company claims that further losses due to the ailing fortunes of its PlayStation 3 and PSP hardware were "partially offset" by revenue from the PlayStation Vita.

In light of these figures and trends, Sony has tempered its full-year expectations for its games business.

"Primarily due to the lowering of the annual unit sales forecast for portable hardware, sales are expected to be significantly lower [for the Game segment] than the May forecast," the company stated. "Sales are expected to be essentially flat and operating income is expected to decrease significantly year-on-year."

Overall, Sony posted revenues of 1.5 trillion ($19.18b/12.42b) for the quarter, up 1.4 per cent over the same period last year. The company made a net loss of 24.6 billion ($312m/202m), significantly more than the loss of 15.5 billion in the prior quarter.

The company has lowered its revenue expectations for the fiscal year ending March 31 2013 by 8.1 per cent to 6.8 trillion.

UPDATE: Sony's hardware and software sales both saw year-on-year declines. The company posted only combined sales figures for its console and hardware lines, rather than separate totals for each platform.

Sony sold a combined total of 2.8 million PlayStation 3 and PlayStation 2 units, down from 3.2 million units in the same period last year. The Vita and the PSP sold a combined total of 1.4 million, a significant drop from the prior year quarter's 1.8 million units given that the Vita had not been launched at that point.

Software sales also declined, with 20.1 million units sold across PlayStation 3 and PlayStation 2 (down from 27.6m y-o-y) and 5.8 million units sold across Vita and PSP (down from 6.6m, despite the absence of the Vita).

11 Comments

Terence Gage
Freelance writer

1,288 120 0.1
Worrying figures. Is the PS3 in trouble too, as well as the Vita? Or is this as spurred on by a result of a lack of big software releases over the quarter? I mean, obviously there has been releases like Max Payne 3 and Ghost Recon FS, but they too seem to have been relative sales disappointments. Would be interesting to see how the 360's sales compare over the same two quarters.

Posted:2 years ago

#1
Could be high running operational cost of its various studios?

Posted:2 years ago

#2

Jim Webb
Executive Editor/Community Director

2,265 2,397 1.1
End of console cycle saturation should also be considered.

Demand at X price is not constant over a long period of time.


This is odd, their games division is now their least profitable across all of Sony Group. With that, it looks like they've realigned their division so Games are separated from Consumer Products again.

Posted:2 years ago

#3

Ian Brown
IT Developer / IT Infrastructure

107 26 0.2

Posted:2 years ago

#4

Greg Wilcox
Creator, Destroy All Fanboys!

2,173 1,121 0.5
And I'll bet a dime that this sort of article comes about three to four years into the next console cycle about all three companies (just you wait)...

Posted:2 years ago

#5

Nicholas Pantazis
Senior Editor

1,019 1,467 1.4
@ Jim But the end of console cycle is supposed to be the time when they can sit back and let money roll in on cheap production costs, good software sales, and solid, if unremarkable hardware sales. You're not supposed to lose money at the end of a generation... especially Sony, who is about to lose a lot more when they launch their next console, judging by their standard of pushing graphics technology and loss-leading.

Posted:2 years ago

#6

Jim Webb
Executive Editor/Community Director

2,265 2,397 1.1
Nicholas, I agree that that is the typical cycle but Sony pushed the razor and blades sales model so hard this generation that it has left them at a loss...financially speaking. The Yen to Dollar situation isn't helping at all at this point which is not something easily predictable in 2005 when the model was being finalized.


By the way....how did Amp, well, you know?

Posted:2 years ago

#7

Fyzard Brown
Sales Associate

39 6 0.2
This may also have to do with more people buying an used PS3 rather than a new one to save money. At the store I work in, we sell about 7 used PS3 to every 1 new one. That and the fact that Retro games are starting to slowly creep back up in popularity.

Posted:2 years ago

#8

David Amirian
Writer

59 3 0.1
Sony did just buy out BMG from Sony BMG and Ericcson from Sony Ericcson. I'd say this loss was a "good" loss.

Posted:2 years ago

#9

Jim Webb
Executive Editor/Community Director

2,265 2,397 1.1
David, I don't think the BMG and Ericcson deals are part of the video game division's financial reports.

Posted:2 years ago

#10

Nicholas Pantazis
Senior Editor

1,019 1,467 1.4
@ Jim I agree, this was caused by Sony making some genuinely terrible decisions when designing the PS3, but my point is that they've done nothing to suggest that they won't be pushing technology yet again on the PS4 (and they've already pushed technology on the Vita, and look where that got them). To be sure they won't do something as dumb as the Cell ever again, but they're still likely looking at releasing a new game system at $400... and selling at a loss at that price, or at best, breaking even.

Posted:2 years ago

#11

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