Declining PlayStation sales lead to loss for Sony

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

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).

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Latest comments (11)

Terence Gage Freelance writer 6 years ago
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.
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Could be high running operational cost of its various studios?
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.6 years ago
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.
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Ian Brown IT Developer / IT Infrastructure 6 years ago
Well i first bought into the Next Gen systems back in February 2006 with my 360 over 6 years ago!. While its a nice run I think that the amount of consoles they (MS & Sony) can shift has peaked long ago. I only recently bought a PS3 in the last couple of months purely to ease my thirst for something new. Im having fun yes, but this cycle is so long in the tooth I think even the average person on the street knows something else will be coming soon and will hold off. How long can expect to keep selling 6 year old tech for 200 really?
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Greg Wilcox Creator, Destroy All Fanboys! 6 years ago
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)...
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Nicholas Pantazis Senior Editor, VGChartz Ltd6 years ago
@ 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.
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.6 years ago
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 did Amp, well, you know?
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Fyzard Brown Sales Associate, VideoGameAdvantage6 years ago
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.
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David Amirian Writer 6 years ago
Sony did just buy out BMG from Sony BMG and Ericcson from Sony Ericcson. I'd say this loss was a "good" loss.
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Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.6 years ago
David, I don't think the BMG and Ericcson deals are part of the video game division's financial reports.
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Nicholas Pantazis Senior Editor, VGChartz Ltd6 years ago
@ 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.
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