Next-Gen Shift Costing Sony and Microsoft 80
The shift to the next generation of consoles is costing their parent corporations dearly. GameDailyBiz has an article up claiming that the gaming division at Sony may lose almost $900 million this year, thanks to rollout costs for the PS3. The 360, already in the marketplace, is looking pretty solid. However, in among increased Microsoft revenue announcements (up 13% for the quarter over last year) and a healthy number of shipped systems by the end of June (almost 5.5 million) is a hard statistic. From the Gamastura article: "As for specifics on the Xbox 360 and Xbox's financials, the company's Home and Entertainment division, which includes the Microsoft Xbox video game console system, PC games, the Home Products Division, and TV platform products for the interactive television industry, lost $388 million for the quarter on $1.06 billion in revenue, a sharp increase from the $175 million loss the previous year." A reminder that these systems may be successful, but they're costing to get out there.
well duh.. (Score:2)
"products for the interactive television industry" (Score:3, Informative)
Sony losing money blah blah blah (Score:2, Informative)
Where have I heard this before?
Sony will be losing money maybe for a few months on the ps3, then like its' ancestors, they'll break even and be rolling in cash.
Re:Sony losing money blah blah blah (Score:3, Funny)
Re:Sony losing money blah blah blah (Score:5, Funny)
Poor mathematics skills. You want projected profit per console, you need to divide the $175 million profit by all consoles sold, not just the 1 million shortfall.
I'm glad you're not my accountant.
Re:Sony losing money blah blah blah (Score:2)
Re:Sony losing money blah blah blah (Score:5, Insightful)
Bull. The first console EVER to sell on a loss was the Xbox, that's why the Saturn cost so much; Sega sold at a profit. And it's on record that when Sega lowered the price from $400 to $300, they PAYED the stores the price difference to make up for it (e.g. Store buys console to sell for $400, then Sega says, 'Sell at $300'. Store would normally lose $100, but Sega gave the stores $100 to make up for it.)
The Saturn was the first console that was actively being marketed and the company was losing money. While Sony was building the PlayStation from parts they made themselves, Sega was paying a higher price and buying parts from others.
While that made some of the difference (the video output IC on the Saturn is from Sony!), it's not the majority. The problem was that the Saturn had too many custom parts, almost everything besides the CPUs, RAM, and CD drive was custom, like the TWO video processors and the funny bus to handle four different CPUs (main, slave, sound, CD-Rom (Yes, CD-Rom, it's part of the Saturn's security system)) and other things like MPEG card overlay, controllers, and cartridge port. The Saturn arch. was a hairy monster. The PlayStation was almost entirely made from off the shelf parts. The PlayStation was streamlined. While the PSX was not as powerful as the Saturn (wait, let me finish) it was so much less complicated (and had a much better inital SDK) that it was easier/humanly possible to get good preformance out of it.
With the Saturn, you had two main processors with poor communication to work with, a poor SDK (the first one didn't even natively support light-sourcing!), a DSP for the main CPUs (there was also a seperate sound DSP) you had to program (Well, not had too; most games just let it sit there doing nothing. It was intended for things like calculating projection), a really screwed up and complex video processors; a lot of time is wasted formatting polygon data into the various tables and display lists for the polygon/sprite generator, and funny memory partitioning for video RAM (512kB for texture/sprites and display lists/shading tables/palletes, 512kB for the background processor, and two sets of 256kB for frame buffers. 1.5mB total. The PSX had 1mB in one partition for video RAM). But if you want to see the Saturn out-do the PlayStation, go compare the Saturn and PlayStation versions of Dead or Alive (Saturn has higher resolution, more polygons, better textures and backgrounds). The one of the creators reasons for the Saturn got DOA first that he wanted to put it on the more powerful system of the two. Today, DOA's creator continues to choose the more powerful console, which is, at the moment, the Xbox 360. (Another reason for the Saturn getting DOA first was that the arcade version ran on Sega's Model 2 hardware.) Or you can look at the Saturn Shenmue video which runs on a stock, RAM-upgrade-less Saturn. (To give a timeframe for it, the Saturn version was probably shelved in late 1997 or early 1998, as Dreamcast version footage was around when the Dreamcast was released in Japan in late 1998.)
The Dreamcast was a money losing venture for Sega. Sega went for broke in building the best console they could buy with the Dreamcast, and sold them at less than cost. A lot less than cost. The theory being that scale of economics would catch up to let them rebuild their once glorious market share and, that the margins on their own games would be good enough to justify a loss.
Ahem. The first console EVER to sell on a loss was the Xbox.
Man, you rock (Score:2)
Re:Sony losing money blah blah blah (Score:3)
1.) He doesn't show us this fabled stock report.
2.) Stock reports are written to impress shareholders. They could have been using any number of rationalizations to cook up the $175 mil figure. Considering the '2 billion' spent on the PS2, we can already tell there's numerical gymnastics going on with that report. I have a dollar that says they spent a lot of money in the previouse quarter to produce the machines, and the 'profit' arrived in th
Re: (Score:2)
Re:Sony losing money blah blah blah (Score:2)
Sony sold over 96 million PS2's. This rationale's not strong enough.
Re:Sony losing money blah blah blah (Score:2)
I still don't buy Gord's story, tho.
Re:Sony losing money blah blah blah (Score:1)
Meanwhile at the big N (Score:5, Insightful)
Re:Meanwhile at the big N (Score:5, Funny)
On the day of release, I'll be going to the mall for a Wii, then I'll spend the next few days eating, drinking and Wii'ing. When I'm familiar with it, I'll share my Wii with my friends, maybe take my Wii round to theirs and we can play with each other's Wii. Then when it's old and everyone's got one, I'll put my Wii on eBay and sell it for a small fortune.
I mean what's next - is the Wii 2 gonna be called a Poo? Come and play with my Poo... Not since Free Willy has there been a culture feck up of such laughable proportions...
Re:Meanwhile at the big N (Score:4, Insightful)
Re:Meanwhile at the big N (Score:1)
To a 12 year old.
Re:Meanwhile at the big N (Score:2)
Re:Meanwhile at the big N (Score:2)
No! The Wii 2 is going to be named Wii^2,or colloquially, Wii Wii.
Re:Meanwhile at the big N (Score:2, Funny)
Re:Meanwhile at the big N (Score:1)
Re:Meanwhile at the big N (Score:1)
Re:Meanwhile at the big N (Score:2)
Re:Meanwhile at the big N (Score:1, Interesting)
Re:Meanwhile at the big N (Score:1, Redundant)
Gotta say, not much mystery there...
Re:Meanwhile at the big N (Score:1)
Not only will the people be able to afford to buy it, but Nintendo will also be able to afford to sell it. Nintendo seems to be the only real console producing company where they have some sort of "goal" to make "profit." It's very hard to make profit when your company sells its consoles at loses greater than $100. Not only will the Wii be good for gamers in general, but it will also be good for N
whoa (Score:1)
At some point, Microsoft may have to dump the Xbox (Score:5, Informative)
The stockholders are getting impatient. Microsoft stock has been flat for five years now. [yahoo.com] It's definitely not a growth company any more. Trying to grow into the entertainment sector has been a financial disaster. Microsoft is a high-margin company trying to grow in a low-margin area, and that almost never works.
Re:At some point, Microsoft may have to dump the X (Score:5, Insightful)
Re:At some point, Microsoft may have to dump the X (Score:2)
Re:At some point, Microsoft may have to dump the X (Score:4, Insightful)
At some point the stock holders are going to want the X-Box division to actually turn a profit, not just increase gross revenue. It can't just bleed money forever, and right now its not just bleeding, its gushing money. So the question is, does Microsoft actually have any plans to make any money on the X-Box? It seems they don't.
It's not unheard of to have a division of your company devoted to loss-leader activities. As long as it's valuable to some higher grand strategy (in this case, moving into the entertainment and content industries and into more and more home appliances, thus ensuring embedded markets for MS software, and perhaps new subscription revenue streams) and management can convince the shareholders to trust them, the Xbox division can simply bleed money. And as a small shareholder since '96 and having seen the votes, I can say that nobody's considering deviating away from the "core team" and its vision any time soon. Oh, and about the flat stock price, people forget the big dividends they paid through most of that time. Not this past year, sad to say...
In any case, I'm sure MS (and its shareholders) would be tickled pink to have the X-Box division turn a profit. But with the amount of money they've got sitting around and with the long-term situation as it is, I don't perceive a real serious concern about its losses.
Re:At some point, Microsoft may have to dump the X (Score:2)
Great. So here I go, getting a 4-Informative for sitting around licking Ballmer's balls, and what do I get in return?
MSFT down more than 11% [wtopnews.com]Wonderful.
Re:At some point, Microsoft may have to dump the X (Score:2)
Of course, the console monopoly is just a first step in building a digital
Re:At some point, Microsoft may have to dump the X (Score:2)
Re:At some point, Microsoft may have to dump the X (Score:2)
MS is simply investing in the long-term (Score:2, Insightful)
I certainly ain't a fanboy, or MS lackey, but I can give credit where credit is due.
Anyway, some things to remember about Microsoft's current strategy and direction:
Re:At some point, Microsoft may have to dump the X (Score:2)
Microsoft was forced to jump into the x box line because it's management had no other ideas of where to successfully expand the business (they have managed to pick quite few losers) and where to m
Re:At some point, Microsoft may have to dump the X (Score:2)
I dunno, do you see a pattern maybe? Just a bit? Core buisness? Yes.. hmm.. yes..
360 is costing them a fortune (Score:4, Interesting)
I didn't see anyone actually buying anything 360 related, though. Everyone was browsing the PS2, PSP and Nintendo handheld areas.
Re:360 is costing them a fortune (Score:3, Insightful)
At Nintendo... (Score:4, Funny)
When did they start selling at a loss? (Score:2)
Would be curious to find out!
Re:When did they start selling at a loss? (Score:2)
Re:When did they start selling at a loss? (Score:2)
Re:When did they start selling at a loss? (Score:1)
Re:When did they start selling at a loss? (Score:2)
Sony did not sell them at much of a loss and since they made virtually every part in house the price of the systems decreased quickly and dramatically. I suspect the PS2 were sold at a loss for only the first 6 mo or so while the PSX was problably profitabel very soon after launch.
This little piggy... (Score:5, Funny)
this little piggy has yet to come, (Sony)
this little piggy only had some things, (N-Gage)
this little piggy had none, (Phantom)
and this little piggy when "Wii Wii Wii" all the way to the bank! (Nintendo)
Okay, so I need to work on my rhyming.
Sony and Microsoft will lose console war (Score:4, Funny)
Re:Sony and Microsoft will lose console war (Score:2)
Hope somebody with mods finds you...
The End Of The Playstation Generation (Score:3, Informative)
Here is an article I wrote last year about the coming decline of Sony marketshare in the game biz, and the resulting overall financial disaster for Sony Corp as a whole. [pcvsconsole.com]
Oh and in case anyone wants real, comprehensive financial data, here is a chart [pcvsconsole.com] that shows profits/loss for Nintendo, Sony (game division) and M$ (game division) by quarter for the last 3 years.
Uh-huh (Score:5, Insightful)
I'd say they pretty much failed after pissing away the billions.
On the other hand the ps2 has been enormously profitable. Sony always has a massive startup cost for their consoles as they are a hardware company and spend a ton at the very beginning on research and in building factories.
Re:Uh-huh (Score:1)
Take a look at the chart. The hard data is there. There is a more detailed thread [pcvsconsole.com] that has more info by quarter. All this info is from publicly available financial reports filed by each company.
After you strip away "revenue" (Sony always has big revenue numbers) by balancing it with costs, you get the real operating profits.
Here is the last 3 years:
Sony $1.252 Billion
Nintendo $2.747 Billion*
Also note the star, because Nintendo's la
The Source of Nintendo's Revenue (Score:3, Informative)
When you take out the portables i'm sure the numbers will get a lot closer.
But your right from a busines
Re:The Source of Nintendo's Revenue (Score:2)
I don't have exact numbers
Re:The End Of The Playstation Generation (Score:1, Interesting)
Back in 1998/1999 Microsoft was trying to determine where the next threat to their control of the home-computer market was going to come from. With the upcomming release of the Sega Dreamcast and Sony Playstation 2 Microsoft saw a disturbing reality forming; videogame consoles (wh
Re:The End Of The Playstation Generation (Score:3, Insightful)
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Now, Microsoft believes that their greatest threat comes from web-based systems so do they still believe that losing money on consoles is their best approach?"
There is some truth to that, but there is more to the picture than you are looking at.
M$ realizes that there is an end of the road to their traditional business model. THere is only so many imp
This just in... (Score:2)
What I really want to know is... (Score:1)
The reason I ask is I don't think I can afford three consoles. It seems to me I want to buy whichever one loses the most.
Don't I want my console company to lose money? If they are making money it is coming from me. I would much rather have underpriced hardware.
Re:What I really want to know is... (Score:2)
Re:What I really want to know is... (Score:2)
No chance for the smaller guy (Score:1)
Sega's already caved in, now only selling coin-ops and games; I suggest the next console from Nintendo will be the company's last. The days of being able to rely on the sale of games consoles and
Re:No chance for the smaller guy (Score:2)
Re:No chance for the smaller guy (Score:1, Informative)