Sony still losing on every PlayStation 3 it sells

[GSZX1337]

[I did a search for this topic, didn't find anything.]

That's right, Sony is still losing money on every PS3 sold. (~$18)
Link to article.
For those who can't view the site from work:

Although PlayStation 3 sales have been on the rise and Sony has a rosy outlook for the console's future, it turns out that the company is still losing money on every PlayStation 3 unit it sells.
According to The Wall Street Journal, which examined Sony's fiscal third-quarter financial performance, the company loses 6 cents on "every dollar of PS3 hardware sales." Considering the PlayStation 3 current retails for $300, we can safely assume then, that the company loses about $18 per unit.
Admittedly, losing money on console sales is typical in the gaming industry. But Sony's losses have been slightly out of the ordinary. Not only has it been going on since launch, but when the console was released, iSuppli estimated that it cost Sony a whopping $805 to build the PS3.
For its part, Sony isn't focusing on the past. Sony Chief Financial Officer Nobuyuki Oneda told the Journal that it plans to cut PS3 production costs by "15 percent in the fiscal year ending March 2011." He said that alone would help the company generate "tens of billions of yen."
At least Sony is moving in the right direction. In December, iSuppli, a company that guesses at the cost of building game consoles and other products, said that Sony was losing about $37 per PS3 unit in production costs. If it's losing $18 now, the company seems to be on track to making the PS3 profitable in the near future.
Regardless, Sony's console has enjoyed a resurgence of sorts over the past few months as the device's more affordable price tag has prompted some to pick one up. But once each of those sales turns a profit for Sony, you can bet the company will finally breathe a sigh of relief.

Seriously, it's been four years, and Sony's still losing money on PS3s? Wow.

[RCBH928]

When first Sony put out the ps3 I laughed at them, finally it was going to die. Their ugly bulky console, their stupid price of $600, and no games. Now I want Sony to win, you can't beat free online, bluray , reliable hardware, and more efficient design over the 360 all for the price $300 not to mention it has more new IPs. I was on the Nintendo bandwagon believe it or not, but after the let down games I just stopped .

Its hard for me to believe that companies would products they lose money on, specially that they sold something like 20+ million, they say they can make it up on games but when you think that games like Drake's Fortune need to cover its own costs in the first place, I think its hard to make any profit. The only way I see it is if they charge $1 per game sold from 3rd party developers , maybe then they can cover the costs.

This generations seems to be the longest living generation ever, by this time in the original xbox life the 360 was already out as I believe. Yet there are no signs of any new hardware, in fact they are going to lengthen the life of this generation by releasing motion controls for the 360/ps3. If history repeats itself, that makes a lot of time for Sony to make a lot more sales, they lost money on 20-30 million units, but they will profit on 70 million units.

The only question is, what will Nintendo do with their 2001 hardware and its huge installed based. Will they quit on them and release an HD Wii, or will they compete with ps3/360 for the next 5-6 years .

My guess is that their console will be unwanted due to already saturated market and close price to ps3/360, BUT they can lower their price point to something like $100, for that price and 2 billion people in China and India who can afford it. CAN YOU DIG IT?

[Niode]

I wouldn't feel too sorry for Sony. They still have the only non-piratable console so they're still getting all that lovely money from software sales which is what console manufacturers make the most money from.

[newt42]

I'm not too worried. Considering the fact that Sony's still successfully selling PS2's, they will probably find a good way to get themselves out of this situation.

[J T]

I wouldn't feel too sorry for Sony. They still have the only non-piratable console so they're still getting all that lovely money from software sales which is what console manufacturers make the most money from.

Actually, I've never understood how this works. Do third party game companies have to pay money for the right to use a certain gaming platform?

I've always wondered why companies were willing to lose money on their console sales, when it seems like it would be hard to pick up the slack from their other business endeavours, unless they pulled in some sort of royalty or something for every game using their console.

[MrPopo]

I wouldn't feel too sorry for Sony. They still have the only non-piratable console so they're still getting all that lovely money from software sales which is what console manufacturers make the most money from.

Actually, I've never understood how this works. Do third party game companies have to pay money for the right to use a certain gaming platform?

I've always wondered why companies were willing to lose money on their console sales, when it seems like it would be hard to pick up the slack from their other business endeavours, unless they pulled in some sort of royalty or something for every game using their console.

That's right; companies pay the console manufacturers a licensing fee to be able to release games on their system. That's the benefit of having a closed platform. So the console industry is on the razor and blades model. You should be able to take a loss on the hardware in order to get them in houses and make it up on the software. Of course, Nintendo makes money on both ends thanks to their cheaper underpowered hardware.

[enderfall]

Is there any proof that Microsoft makes money on each sale of the 360? How about when you consider all those 360's they've have to replace time and time again. Seems to me that losing $18 on a sale for something with such a low failure rate is nothing compared to the expense that Microsoft has had to incur.

[the7k]

Yeah... in between not having to deal with either massive hardware failure or pirates, I'd say Sony has nothing to worry about.

When it comes to the PS3, anyway. The PSP? Ugh...

[darthbluntedone]

see the bs is they dont make money off the console. ok so how much of the accessories for the system made by sony are over priced??? hmmm i would say the controllers, the headsets, the keypad and anything else sony makes for the system. if you believe they are losing $18.00 on every system (im not too keen on how many sales but lets just say 28 mill. sold) that would be $504,000,000.00 lost. ok so lets just say all the systems cost $300.00 that would be around $8,400,000,000.00 subtract the $504,000,000.00 that leaves them with $7,896,000,000.00 i dont see the loss there?? am i confused???
and also isnt bluray sony's??? it's the same bs with the gas industry they never make a penny but yet it makes billions in 1 qtr of the year. not to mention if you send in your machine for repairs after warranty theres another $140.00 (almost half the cost of ps3 slim) they are making money hand over fist they wouldnt say hey we made $8 bill. because we would cry foul "lower the price" we would all demand!!! (even more bs in that statement) the fact of the matter is if your dept. doesnt profit you shut it down period!
also a machine makes all these parts not a human a human might press a few buttons here or there. alot of the stuff used in electronics are cheap. plastic is cheap the tin is cheap solder is cheap chips are cheap except if you are the consumer when they get them they buy in bulk all the cost incurred is in r&d maybe that where the loss is?? but i find that hard to believe since that would be in sony's electronics dept and look how many other products they make. i am sorry but it doesnt add up.

look at this http://vgsales.wikia.com/wiki/PlayStation_3 read it very carefully like where it says " iSuppli’s early analysis showed that Sony loses $306.85 per 20GB hard-drive equipped PS3 sold" who would pay $306.00 for a 20 gb hard drive???
or this " iSuppli states the PS3 now costs $448.73 to build while selling for $399 and the PS3 will probably reach the break-even point in 2009." it's almost a $50.00 loss on every unit please lets be realistic these "guesstimations" are way off.

sorry for this wall of text but i just dont buy itbut i did buy a ps3 for $400.00so they must of lost $600.00 because mine is a 40 gb hd

[Niode]

Is English your first language? None of that post makes any sense. At all.