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Captain Obvious: Sony profits fall photo

In the most obvious story since the invention of the word obvious, Sony announced today that their operating profits have fell a shareholder-jumping 68% for the financial year. But, we all knew that would happen. Sony already said they'd take a loss with each PlayStation 3 sold and hell, when you take a chance and release the most expensive and technically advanced machine on the market, it's gonna happen. Sony had this to say about the sour low profits:

According to Sony's annual report, "In the Game segment, there was a significant operating loss as a result of the sale of PS3 at strategic price points lower than its production cost during the introductory period." Sales of the console have not been overwhelming either - it has been outsold by Nintendo’s Wii by two to one since its release in November 2006.

"It was not an ideal launch. Our focus is to strengthen our software lineup this year," said Sony senior VP Takao Yuhara at a press conference in Tokyo.
Focus on software? Yeah, that's pretty much a little Captain Obvious post right there. You rock Takao Yuhara! 

 


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28 comments | showing # 1 to 28

Necros's Avatar
Necros at 05/16/2007 09:53
I think one of their main problems is that they didn't even consider focusing on software. They were too busy trying to do the whole multimedia center thing a la Xbox 360 and forgot that the main reason people buy a system is to play games. I guess they did make up some of their lost sales with people who just wanted Blu-Ray, though.
Artadius's Avatar
Artadius at 05/16/2007 10:08
Shouldn't this also have the PS3 Drought tag?
TheStripe's Avatar
TheStripe at 05/16/2007 10:09
No one "just wanted Blu-Ray." Gamers are being passively railroaded (albiet unintentionally) into buying Blu-Ray discs because there aren't any games for their $600 movie player. I really really wanted to be able to justify getting a PS3, but they keep making it harder and harder. Let's hope that the utter lack of an installed base or library of titles doesn't hinder development, seeing as how those are both crucial in any system being able to stretch it's legs and push it's limits.
World Famous's Avatar
World Famous at 05/16/2007 10:11
I haven't been railroaded into buying anything. I get all my Blu-ray hi-def content via Netflix. Why is a better quality movie a bad thing?
BluDesign's Avatar
BluDesign at 05/16/2007 10:29
Summa, that's 6 of dozen there. For the lack of content in games, you're renting. Someone pays those licensing fees, so Sony gets paid either way.

You're not ducking that point by using the renting vs buying excuse.

If I had friends over to look at a potential PS3 I might own in some Bizarro World, they'd want to see the movies, and then they'd want to know what the games played like. I'd show them Motorstorm and then possibly Resistance. And then what? Who wants to see my avatar in Home?

(crickets)
Jim Sterling's Avatar
Jim Sterling at 05/16/2007 10:35
This is the same problem the PSP had at first. As I said when I eventually got rid of mine - "I'm a gamer, I don't need to watch Spiderman 2 on the bus."

Nintendo are doing the same thing to a certain extent as well, focusing on all these channels that really don't offer gamers a heck of a lot. Nintendo, however, are at least working on a good deal of future titles.

Sony do like to go ahead with a "jack of all trades, master of none" philosophy, it seems.
BluDesign's Avatar
BluDesign at 05/16/2007 10:37
Yeah, well, Sony at least was able to dodge this on the PSP a lot longer by having a really good puzzle game on the console at launch. A good puzzler is critical to a handheld. Without Lumines, I doubt I'd have even bothered with the PSP.
Mxyzptlk's Avatar
Mxyzptlk at 05/16/2007 10:46
I'm one of the people who just don't care if my game console can play movies. I think I popped a DVD into my PS2 one time, and that was to see what it looked like.

Focus on software is what they should have been doing from the start, but they convinced themselves that bluray and the Sony name alone would make PS3s fly off the shelves at launch.

BluDesign's Avatar
BluDesign at 05/16/2007 11:08
@Mxy

I totally agree. I just recently started using my 360 as a DVD player because I got sick of unplugging shit from the back of my TV, and my stereo doesn't support 1080i passthrough.

Prior to this, when I had a PS2, I had like 6 things that could play DVD's. why would I need more?
some_dude's Avatar
some_dude at 05/16/2007 11:09
Sony's main problem right now is that they don't have any "system-seller" titles dropping in the near future. We all know how games get delayed, it's possible we won't see a new FF or MGS on the PS3 for a while. In the meantime the PS3's are collecting dust in the warehouses.
hexix's Avatar
hexix at 05/16/2007 11:23
I actually think Sony's main problem is there aren't a lot of games for people who bought the PS3 to buy. Sure, there are games, but not many most would want to spend $60 on.

I don't think the loss in profits is due to the PS3 itself not selling well, since more PS3s sold would mean more that need to be manufactured, which would then mean more of a loss in profits. What they really need are better games so they can increase the money they make off of software per PS3 owner.

With that said, they obviously need to sell more PS3s to make sure developers make good games. However, I think too many people are attributing the profit loss to lack of PS3s sold. Unless you're Nintendo, you don't make money off of console sales, you make it off of software sales.
DanGale's Avatar
DanGale at 05/16/2007 11:35
Sony fell into the trap of an all purpose multimedia machine. Personally I don't care if it plays Blu-Ray movies, folds @home or creates an army of machines to destroy John Connor. I want a system that can actually play games. Anything else is just for initial interest that soon fades after a couple of days.
908peruvian's Avatar
908peruvian at 05/16/2007 11:38
if they had ONE good game i would buy a PS3!
oh wait...
shit i bought a 3DO for more!!
and only for street Fighter!!
hahaha
that was stupid!
Necros's Avatar
Necros at 05/16/2007 12:02
@ TheStripe: When I refer to some people "just wanting Blu-Ray," I was referring to sales made to non-gamers who wanted a $600 Blu-Ray player instead of the $1,000 players available at the time. I certainly don't think any (intelligent) gamers bought it simply because "Blu-Ray is next gen" or whatever ridiculous PR line Sony was spouting.

@ Dan Gale: I don't know about you, but I still haven't gotten tired of watching YouTube videos on my Wii on a TV screen. Otherwise, I agree.
Pistolaero's Avatar
Pistolaero at 05/16/2007 12:13
Yeah, Sony is fuckin' up right now but last year at this time, 360 was in the same boat. It had like, 2 solid titles and that was it. Then Fall rolled around and things picked up for it. This will be the same for the PS3. Just give it some time.
DanGale's Avatar
DanGale at 05/16/2007 12:17
@Necros
Well it sure was a novelty for a couple of days, and I had to use the Wii as my browser for a week when my laptop went down, but still I could live without it. I guess the Wii isn't too much of an issue considering they aren't charging a small fortune.
SuperDave's Avatar
SuperDave at 05/16/2007 12:31
Drop the price on this $600 "most technically advanced machine on the market" AND come out with some must-have exclusives and they have something. Otherwise, I'm quite content with my 360 for $200 less, not to mention this "most technically advanced machine" has yet to show me anything much better than the 360. And no, movies don't count. I could care less.
TheStripe's Avatar
TheStripe at 05/16/2007 12:50
" 360 was in the same boat."

It was never in the $600 boat.
Pistolaero's Avatar
Pistolaero at 05/16/2007 13:01
I was talking about the lack of software, not the price boat.
Aex's Avatar
Aex at 05/16/2007 14:15
600 million in profts, and the games division losses 1.9 billion. Hmm, we all know the PS3 is the cause of that. How much is actually because of the 5 months the PS3 was available to consumers? Even at 3million sold, lets say they lose $400 on each, thats only 1.2 billion lost... How'd they lose an extra .7 billion? Did they misplace it? Did Krazy Ken mail the drop the deposit in the mailbox instead of the bank? Where else are they bleeding from? What else were they losing money on? Perhaps it includes some R&D cost, or perhaps it includes some game building costs on games that havn't been released yet... I unno, but alot of money went somewhere o.o

I'm curious as to what Sony was expecting to lose on rolling out the PS3. They had to know they weren't expecting profit from selling it at a loss.
donkeykong's Avatar
donkeykong at 05/16/2007 14:58
The captain obvious tag is my favorite.

When I watch a movie on DVD I don't have a problem with the quality. I don't think we really need HD DVD or BluRay. Maybe just... not yet? I guess they both just want their foot in the door for when average consumer has a desire for it. If either company lets the other get a head start, they'll be the clear winner when the time is right, seeing as how there isn't much difference in perceived quality. ok
Joe Burling's Avatar
Joe Burling at 05/16/2007 16:24
"It was not an ideal launch."

All along, Sony's been telling us how amazing their launch was. What else have they been spinning to us?
Ambulance-Y's Avatar
Ambulance-Y at 05/16/2007 17:00

nuff said
broham's Avatar
broham at 05/16/2007 18:03
It's the price. Sony underestimated the competition. Loss of exclusive titles.

If you lower it (the price) people will come.
Im OK's Avatar
Im OK at 05/16/2007 19:48
Our focus is to strengthen our software lineup this year

That's good news.

(/Captain Obvious)
lAboMbA's Avatar
lAboMbA at 05/16/2007 21:06
okay, so i buy the widescreen HDTV...buy the new fangled 360-HD-DVD player attachment...and i still have to watch the fucking movie w/black bars on the top and bottom? WTF!? Thanks a whole shitload widescreen edition movies.
Campbell's Avatar
Campbell at 05/16/2007 22:13
Captain Obvious!: Summa makes a blog using the term "Captain Obvious!"
Orionsaint's Avatar
Orionsaint at 10/01/2007 15:37
I was all ready to buy a PS3 till they announced the price.

I see PS3's stacked high at Best Buy & Circuit City. No ones buying PS3.

It's mainly because of the expensive price, but also lack of good games, arrogance from sony that insults gamers and word of mouth labeling it the loser system to own.
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