I saw an article the other day stating that the PS3 will never be profitable for SONY this generation. It went something along this: Since the PS3 is so expensive, and SONY is still losing money on each unit sold, and with the gaming division once again posting huge losses due to it, and the economy currently passed out with its head in the loo, SONY, quite the mirror image its PS2-era self, will ultimately not make a shilling off of the PS3, in fact it might not even break even. My first thoughts upon reading it was, “These god damned analysts with their knee jerk reaction predictions. They are like stock brokers panicking whenever a leaf falls off of a tree.”
That being that, I went on thinking that the PS3 doesn’t even need to break even this generation. As long as it helps SONY maintain a majority market share it will help them make money the next generation over. Why? Because the CELL and Blu-ray disk drive that have cost SONY such Sultan-like sums to develop and implement will most likely (as in with a 99% probability) be used in the PS4, only by then they will be very mature technologies that cost next to nothing because technology has advanced by that much in 2012 or whenever the PS4 launches.
That being said SONY must be doing pretty terribly these days if we are already excusing this generation by explaining how the PS4 will come around and fix everything, and I like to think that SONY only has themselves to blame. Every single time we allowed ourselves to hope for better things, to look forward to some game or event that might optimistically turn the tide and make SONY number one again the PS3, and SONY with it have failed to deliver. Now with seemingly a thousand bloody screaming panicked heads rolling down the hill, yelling, “Hard times ahead! Hard times ahead!”, the last chance to right things has, in my opinion passed SONY by like so many things this generation.
Greed imprisons us all:
Now, I don’t recon I have a pretty firm grip on how the world economy works, I only have the most flimsy of holds on it, in fact, but I understand this much: a whole bunch of very large and bloated banks in a orgy of greed lent out a lot of money to a bunch of hillbillies with a less than dubious credit history and a general lack of respect for the old gentlemanly IOU honor system. Now, usually all that would result in is people like me pointing and laughing at how the filthy capitalist pigs, with their snouts, dug themselves into such deep shitty grave in their sties that they can no longer get their fat bellies out of them. Unfortunatly though, it seems that these greedy swirly tailed bunch form the backbone of the entire western economy.
To make matters worse, news of this snafu (for reasons entirely beyond me) devalued a whole bunch of papers, called stocks, that simply put are imaginary money. These, being imaginary and all, one would expect the devaluation of which would have no more a severe effect on the world than, say, if a warehouse full of monopoly money suddenly went up in flames. Unfortunately, once again, it turns out that these imaginary paper money doodads form the other part of the backbone of the western economy.
Now, at this point one would have to ask oneselves what in bloody hell does this all have to do with games, specifically PS3 games, which we are most interested in here. Well, as it turns out having two of the most silly, but important, backbones of the western economy pulverized by the croquet mallet of stupidity has far reaching implications indeed. As you have it, the yanks squatting down and taking a dump on the economy of the western world for a change means it is going to be though times for the tiny little ant units populating it, and in turn the corporations they support. No, you silly things, not though times in the sense of what the word means in the third world, we won’t all die of hunger face down in a filthy dry ditch. But it is time to tighten in that proverbial belt by a few notches, for SONY also, in fact for SONY specially.
Never were a word uttered sadder than “nevermore”:
Harsh times means nevermore funding of expensive western game projects via their first party developers inyet another failed attempt to reach those seemingly uninterested western gamers. The games out and already in late phase of development are the only thing we are going to get most likely. No more LBP, Killzone or PlayStation Home’s for us in the future I imagine.
This couldn’t have come at a worse time for SONY… well scratch that, if it had happened in 2007 I am sure it would have hurt SONY a lot more. 2007 was a bag of hurt for them due mainly to the PS3 being a super duper costly little luxury yatch to send on an illfated maiden voyage. A maiden voyage in shallow coral reefs crawling with cut throat no-nonsense pirates, no less.
2008 though, to begin with, looked wide open for the taking, though, as I’ve said many times before, SONY decided to put being competitive on the back burner and opted to abstain from any more lavish spending in order to turn that frown on the SCE accounting books upside down and return to profitability, and soon too.
A storm is coming, the brown kind:
To say that the ship that is SONY is sailing right into the sheit storm of the century is I think a pretty good analogy for what is coming shortly. SONY just cut down their profit forecast for this fiscal year significantly and most of the losses, once again, were overwhelmingly due to the incredible vacuum created by their gaming division, helped along with the failing economy. In hindsight it was wrong of SONY to go the high-tech luxury route when developing the PS3. The logic back then was that the PS2 did so well and helped make DVD a success so why not do the same again with Blu-ray, DVD’s successor. At least I think that was the brilliant idea powerpointed forward by some non gaming related arm of SONY at some corporate meeting. In order to make Blu-ray a success they could Trojan horse it into peoples homes via one of their most loyal and successful work horses, their gaming division. Unfortunately it turned out that the combined weight of both SONY’s rather costly and ill fated pet projects the CELL and BD drive being dumped on the back of that noble horse was too much for it to bear and thus the most beloved creature ended up with a broken back and a bullet in the head in waiting.
In reality thought times means that luxury items are the first things to be crossed out of peoples shopping lists and the PS3 and Blu-rays both falling into that category by having cheaper alternatives means neither will fair well in economic hardship, specially if they were already faltering in a good one. The delay caused by sticking Blu-ray drives in every PS3 cost SONY their head start and now the cost of having it in the PS3 is going to cost them their head in a time where a 100$ difference can easily sway people this way or the other.
I bet SONY right now is desperately missing the talents of their former top engineer, Ken Kuturagi, whose talents for cost effective reconfiguring of PlayStation hardware could be put to good use shaving a few bucks off the the production costs of each PS3 made.
The latest sales numbers of both hardware and software bear sad testament to the fact that 2008, for SONY’s lack of efforts to make it so, did not turn out to be the year of the PS3 after all, far from it actually. SONY had a pretty stellar line-up of exclusives this year and none of them performed as expected. Metal Gear Solid 4 sold about half the number of copies on the PS3 than the competitor’s big guns, numerous as they were, each sold a year ago.
I think that it is safe to say that in alignment with my predictions LBP did not pan out at all like SONY had hoped it would. So much for SONY’s defining game, which would have been the poster boy for the validity of Phil Harrison’s Game 3.0 philosophy. In fact none of Phil Harrison’s supported pet projects seemingly turned out as one could have hoped. LBP has the kind of sales numbers traditionally associated with a niche franchise with little or no influence in the big picture or the long run. Meanwhile PlayStation Home has been in purgatory forever and I think I can safely say, having taken the 1.0 Beta for a spin, that when and if it does launch it will be too little too late, and thus flop…
In the next cheery episode of SheitGeist I shall go over more bad news and explain how we all came to be buried neck deep in this mess to begin with.
November 24th, 2008 at 9:17 pm
Jesus, can someone hand me the gun now? I feel so depressed. This post is well written but I just think it’s leaning too far to the negative side of things. Things aren’t hunky dory for the PS3 atm but i don’t think it’s this bad.
And the point about people crossing off luxuries on their shopping list during a recession is true, but not for everything. Some items can benefit from a recession and one of those things are probably games. People tend to spend less on other entertainment and more on what can last the longest, and that nearly always is games.
Sony aren’t stupid and they won’t let the PlayStation brand go far into the shit that it’s irreversible. Sooner or later they will have some aces up their sleeves. It’s also good that Sony has pushed the boundary in terms of technology, yes it’s been a struggle due to the high price tag but with all the features packed into it, it’s well worth it.
I’m not trying to destroy all of the points made in this post, i’m merely trying to play devils advocate
November 24th, 2008 at 9:39 pm
Now, due to this post… i like rusty spoons
The PS3 had a year, good, and bad at the same time. A lot of incredible games came out, especially LBP, which was a breakthrough of the gaming kind, and some other great titles. But, yes, there is ALWAYS a but, the XBOX 360 outsold the PS3 frequently. I think everyone was think, “oh, there was the 360’s 15 minutes”, but no, silly mistake. With GOW 2, Guitar Hero: World Tour, and it’s new Dashboard (which is good by the way), no one would stand a chance against it. But (wow, ANOTHER but) the PS3 stood up, and stayed up, apart from the occasional ’stumble’ in earlier months.
djhsecondnature Says:
November 25th, 2008 at 1:15 am
I thought that the PS3 was outselling the 360 over most of the weeks and months of the year up except oct/sept with the 360 price cut. I’m pretty sure that the PS3 has sold more consoles this year than the 360 but I may be wrong.
November 24th, 2008 at 9:42 pm
I must have read a completely different article or I have it completely wrong.
The way I understood it was Sony’s Video Game division was one of the only divisions in the company that was viable.
http://www.joystiq.com/2008/10/29/sony-profits-sink-game-division-floats-by/
Aitrus Says:
November 25th, 2008 at 1:17 pm
That link is pretty interesting. The PS3 is selling a little better and the software sales are way up. So even in this economic climate the PS3 is moving in the right direction. (And Sony must be making some money of the big PS2 numbers. At this point of it’s lifecycle it has to cost next to nothing to produce it and it sells more than the PS3!)
And Sony can’t be the only company struggling to make a profit in it’s games division. Microsoft lost a lot on the original Xbox and I don’t think the 360 has turned a profit with all the RRoD issues.
Anyway, I don’t give a sh*t. I have my console. It has sold enough to hold the support of the developers, so I’ll have my games. I’m happy with that…
November 24th, 2008 at 9:48 pm
Chin up old chap the Ps3 is far from dead! True its had a kicking from the 360, but its still a console people want. Yes kidneys are being sold and children put to work, but the bragging right of owning the Rolls Royce of the currant consoles is WORTH IT!
aayush Says:
November 24th, 2008 at 10:14 pm
true, the ps3 is far from dead.
the 360 on the other hand really is dying from the new xbox experience!!!
November 24th, 2008 at 10:33 pm
with that in mind, i only hope we keep our exclusives. over wise we b fuked!!!
my ps3 cost bout 500 frm launch n hasnt broke. on the other hand my m8s have had 4 to 5 360s since launch. why dnt ppl think of the reliability of a console instead of bein put off by price.
suicidalllama Says:
November 24th, 2008 at 10:47 pm
Two of my friends had their xboxs break within a day of each other and they both had to buy another. Also they’ve both ended up spending alot more than me on accessories that are included in my ps3. Wireless network adaptors, rechargable batteries, hard drives etc. Also, as far as i know the xbox has had 1 firmware upgrade compared to a huge amount for the ps3 - what the hells the big deal!
November 24th, 2008 at 11:57 pm
Sony aren’t going to be pulling the plug on the PS3 anytime soon, and most major publishers like EA and Capcom are making plenty of money from it. This negativity about sales figures is caused by spending too long on forums. Get back to playing the games and you’ll realise the PS3 is a damn fine console with a damn fine software lineup.
November 25th, 2008 at 12:38 am
Bang on with the “imaginary money” part !
:) However … I’m almost certain that next year holds a very different fate for gamers . Most of 2009’s games have already been 40-90% completed so will still be v/good ! 
And … For about 5 years we’ve had a flash flood in the whole gaming sector between consoles and title’s. This lack of consistancy will then provide an oppertune and otherwise unlikely moment to pause for a breath of air allowing other platforms gamers to look at what’s already surrounding them rather than what’s hitting them next week ! 
November 25th, 2008 at 8:26 am
I’m not sure I agree with very much of this, even to the point where the PS4 comes and saves the day.
Firstly, in a worsening global economy, games sales either hold their own, or go up. This is because the value offered by a PS3 game at £35-40 is better than a trip for two to the cinema (£15 with no extras), dinner (£40+) etc.
As for the PS4. An even cheaper thing to do, rather than use existing, ‘mature’ technology is to actually have that ten year life cycle for the PS3. There’s no need for a launch, new factories, etc. Sony have proved over the last few years they can add much more functionality to the PS3 through firmware updates. It doesn’t matter when you bought your PS3, sit for a moment and think of all the things it does now that it didn’t then. How many of them do you use daily?
Look at the fuss over the New Xbox Experience. Is it more amazing than the changes Sony will have brought in 2008? In-game messages and Cross Media Bar support, trophies, Home, new Flash support for the web-browser. It must be nice to have the advertising spend and glamour that the Xboxers have, but I quite like knowing I’ll get features when they’re ready, and that they will come in a fairly steady stream.
As for the games division making the biggest hole in Sony’s accounts. I know next to nothing about accounting. I know even less about Sony’s accounting. I do know that I’ve read articles that claim both that it is a buoy for Sony, and a lead weight. I’m willing to bet that the truth actually isn’t very clear, and it is difficult to describe the contribution a single division makes.
Finally, for LittleBigPlanet’s sales. I think that you’re looking at its sales the wrong way and analysing it through the same ‘hardcore’ lens that is appropriate for the the latest FPS or something. I think that the game is designed to be a slow burner, and it would be more appropriate to compare it to a Buzz/SingStar title, or even a Wii title. I think that this means that sales will occur over a longer period than a couple of weeks after launch, and I know that Media Molecule are close to Criterion and I’m sure they will have seen the way that Burnout has been supported with DLC, which has given legs to its sales over the year.
It’s a nice article, I just disagree with most of it. Then again, I’m a bit glass-half-full.
nofi Says:
November 25th, 2008 at 8:46 am
Good stuff.
Michael Says:
November 25th, 2008 at 6:37 pm
Sign him/her/it up.
masoke Says:
November 26th, 2008 at 6:44 pm
*blushing*
Nicest thing anyone’s ever said, but I couldn’t possibly say anything interesting - I pretty much get all my (relevant) information from reading this site.
g00nerz Says:
November 25th, 2008 at 10:29 am
I prefer you’re way of looking at it pal. I was beginning to get depressed after reading the initial story.
Also got to stop visiting VGChartz. The figures are getting me down.
TctclMvPhase Says:
November 25th, 2008 at 2:04 pm
I would like to reinforce your intuition about the truth not being very clear on Sony’s gaming division. One of the common problems in accounting comes from the difficulty with quantifying how one product will affect the sales of another. I imagine that taken at face value the games division is losing money…but given the PS3 is not just about games for Sony I think the picture is different. A significant amount of sales in Sony’s movie division could be linked to losses in the gaming division, leading to potential profit (or at very least mitigated loss) in sum. There are also other practices like how to attribute the costs of developing Blu-Ray amongst the divisions that may lead to misleading numbers.
Much like a gas station installing an extra gas pump may lead to increased sales of chips…effects like this are hard to track and even harder to quantify.
As per the main article…stop listening to the media. This goes for the gaming media in particular. There is nothing worse than a bunch of gamers going on about business practices and what numbers mean. Just look at stock prices…last time I checked SNE and MSFT traded for about the same price, suggesting to the average business man (who doesnt know Halo from Half-Life)both companies are doing about the same.
Do you have a PS3? Do you like your PS3? Are you excited about the PS3 games in the coming year? What more do you need?
seedaripper1973 Says:
November 25th, 2008 at 6:32 pm
words via an american accountant…but true nevertheless…
November 25th, 2008 at 9:47 am
I accidentally smashed my glass, but i managed to glue the bugger back together, the trouble is there’s still a few holes in it, and it constantly leaks, meaning i have to refill regularly….er….
sod these analogies.
November 25th, 2008 at 9:57 am
In a time of economic ressesion, the sales of porn and booze go up. For reasons mentioned above. I think the PS3 fits nicely into that ’staying home and drink untill you’re not able to play Burnout anymore, then watch some porn’ kind off way. Or is that just me?