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PS4 hardware loss will be covered by launch purchases, Sony hopes

PS+ sub and single game should negate shortfall

Sony might be selling the PS4 at a slight loss, but the company expects that shortfall to be covered by most customers' initial purchases - specifically a PlayStation Plus subscription and a launch title.

Speaking to Eurogamer, Sony Japan executive Masayasu Ito skirted around specifics on the cost to Sony of each PS4, but was unruffled by the negative margin, saying that an "average" customer's inital investment would cover the gap. He wouldn't elaborate on what that margin is, exactly, but analysis estimates it to be somewhere in the $60 range.

Sony has already said that it expects the PS4 to sell more quickly than the PS3, and that the business will recoup its launch losses on the machine much earlier in its life-cycle. With off the shelf components getting cheaper much more quickly than proprietary hardware like the Cell processor, the PS4 should also find itself turning unit profit on its own before too long.

Microsoft, on the other hand, is selling the Xbox One at break-even or profit from the get-go, resulting in a higher street price but a clear increase in business stability.

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Latest comments (5)

Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.3 years ago
Didn't Pachter state recently that Sony will make a ~$25 - $50 profit per unit sold?

Either way, a single purchase beyond the console is a far better situation to be in compared to the massive losses they accepted with the PS3 at launch.
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Roman Margold Rendering Software Engineer, Sucker Punch Productions3 years ago
@Jim - my thoughts exactly. My best guess is the analysts don't have a damn clue. After all, they don't make HW, and their advisers don't make HW, even friends of their advisers don't make HW. What do they know about how much Sony is buying the gigs of GDDR5 memory for? Rhetorical question.
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Despite the appearance of widespread success (particularly in Japan) the PS3 and PS Vita have not met the profit margins that Sony was expecting. Sony Computer Entertainment president Andrew House addresses the concerns that the PS4 will tread the same path, telling popular Japanese magazine Diamond Online that "Sony Computer Entertainment isn't allowed to fail anymore with PS4."

Read more at http://www.escapistmagazine.com/news/view/127903-PS4-Isnt-Allowed-to-be-Another-Failure-Says-Sony-Exec#ei7Pv5FFpzuisVHT.99
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John Slaughter Student Game Designer, GSC3 years ago
I completely agreed. They have to make money early this go around if they want to stay competitive against Microsoft!
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Jeff Kleist Writer, Marketing, Licensing 3 years ago
I would say it has a lot more to do with how important these divisions are to the bottom line, and that with the economy the way it is, and the parent company's finances, that loss leadering on the consoles is no longer good business sense in the early days anyway. The PS3 took an utter bath the first 6 months of life, they were losing about $300 a console, a big reason being that Blu-ray lasers had godawful yields. Now they crank them out like candy, but back then, only 1 in ten were good, and that was costing up to 3 figures right there. A lot of people forget that it's not just the cost of the parts, but of all the parts that didn't come off the line right in the first place. Anyone remember DVD-18? The double sided double layer discs you'd find in a lot of Universal and WB TV box sets? Well, a big reason why they've gone into disuse is because the coaster rate on them was high enough that they didn't offer a particular fiscal advantage over two seperate discs. While the new consoles are still using off the shelf parts instead of a lot of custom silicon, tweaking the lines is going to take months, and until then, they're probably getting a lot more bad ones than they'd like.
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