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Sony: PS4 losses will be nothing like those of the PS3

Sony: PS4 losses will be nothing like those of the PS3

Fri 09 Aug 2013 4:46pm GMT / 12:46pm EDT / 9:46am PDT
BusinessHardware

PlayStation business will be hurt by currency changes, but smaller investment in hardware will help avoid a repeat of last gen

Sony lost billions on the PlayStation 3 launch, and the company is determined not to see that happen again with the PlayStation 4. As reported by Bloomberg, Sony Computer Entertainment CEO Andrew House assured investors in a conference call last week that history would not repeat itself.

"We will not generate anything like the losses we did for the PlayStation 3," House said. Sony CFO Masaru Kato also noted that the investment in the PS4 is "much, much smaller," a result in part of using PC-like architecture with more standard chips for the new system instead of custom hardware like the PS3's Cell processor.

However, Sony is expecting its game division to post losses due to shifts in currency exchange rates. As the Japanese yen strengthened in recent years, Sony made arrangements to pay suppliers in US currency. However, the US dollar has been gaining value over the yen this year, and is predicted to strengthen further through March. Those losses will be partially offset by the increased value of US PS4 sales, but Sony, which had previously expected its games unit to break-even for the year, now expects those earnings to "deteriorate significantly."

6 Comments

Paul Jace Merchandiser

945 1,433 1.5
So it looks like all three systems will be initially losing money on every unit sold. As long as it doesn't last for more than a year or two it shouldn't hurt either of them that much unless they were already in severe financial trouble.

Posted:A year ago

#1

Sandy Lobban Founder and Creative Director, Noise Me Up

315 208 0.7
I'd say they should expect a smaller profit margin on games. PC games have traditionally been pitched at a lower price point, and they will have to consider this with the machine they are proposing, and the other PC based competition out there. They would do themselves a favour by developing a pc based games portal like steam as well. It would be a no brainer if you can run it on a PC, and it would increase their market reach for software.

Posted:A year ago

#2

Adam Campbell Associate Producer, Miniclip Ltd

1,199 1,012 0.8
I'd say they should expect a smaller profit margin on games. PC games have traditionally been pitched at a lower price point, and they will have to consider this with the machine they are proposing, and the other PC based competition out there.
The thing is Sandy, the machine is only PC in terms of architecture but not spirit or product. The games are set to retail at the same price as existing PS3 and Xbox 360 games.

Most people won't see this as a PC box (I mean, the original Xbox was basically 'a PC' too), just another Playstation that will allow you to play exclusives and third party games instantly and with a low barrier hardware price.

Edited 2 times. Last edit by Adam Campbell on 12th August 2013 4:44pm

Posted:A year ago

#3

Sandy Lobban Founder and Creative Director, Noise Me Up

315 208 0.7
I agree to some extent Adam, but with Steam and other coming to the living room, there in lies a problem for them in terms of pricing. Steam in the living room will be a massive disruptor to any of the traditional consoles, simply because it is device agnostic. The price point will be lower for games too.

Posted:A year ago

#4

Adam Campbell Associate Producer, Miniclip Ltd

1,199 1,012 0.8
Steam in the living room will be a massive disruptor to any of the traditional consoles
It could be, if it ever gets out the door in hardware form, which is looking like an increasing internal struggle for Valve. Though we're not necessarily comparing like for like, the most probably devices or distribution channels to muscle into the living room will be from Apple or other similar manufacturers (i.e. Amazon).

Sure, we can use Steam in the living room now but people are struggling with price and form factor (What's the right balance? What is most practical?), so I don't think that's an immediate threat to the consoles. Really, there isn't a similar device right now to PS4 or Xbox One when it comes to those sorts of games in the living room.

Posted:A year ago

#5

Sandy Lobban Founder and Creative Director, Noise Me Up

315 208 0.7
Time will tell I guess. I worked for Sony for the last nine years before starting myself, so yeah sure I hope they do well so that my former colleagues remain in a job. The management in my experience can do with a kick up the butt though, if they are to remain competitive and agile going forward. They always seemed to hang on to past successes a bit too much for my liking, but hey that's just my personal opinion :) The playstation brand is recognisable for sure and that will ad some weight to the forthcoming PS4 argument, but its in a much busier playing field these days, and up against way more advanced operating systems, capable of gaming and much more.

I'm keen to see what the incentives of developing for this device over a market place like steam or iOS will be, and I'm keen to see if they have got down to work producing an operating system that can do more than gaming this time around. Along with games pricing, both of these factors will be key for them getting traction with the developers and consumers alike.

Posted:A year ago

#6

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