Further Games Division Losses Predicted by Sony Exec

[fitbabits]

gamesindustry.biz (http://www.gamesindustry.biz) is reporting that Sony's senior vice president, Takao Yuhara, has predicted that major losses in their games division are likely in the current quarter - the size of which cannot simply be "laughed away".

You can read the full article here (http://www.gamesindustry.biz/content_page.php?aid=18620).

According to Reuters, Sony's senior vice president, Takao Yuhara, said that a possible increase in valuation loss on microchips used in the PS3 could have a massive impact on the group.

"We might see valuation losses of a size that we cannot laugh away in the quarter," Yuhara stated.

Analysts remains sceptical of an ongoing success, as it's more than just the games division at stake. Although Yuhara is confident that the company can recoup losses within a five year period, the company's huge movies division is also banking on the success of Blu-ray, and the PS3's Cell processor is set to be incorporated in a wide range of the company's consumer electronics devices.
I suspect this is news of the 'O RLY' variety. Of course the games division is going to suffer losses in the build up to the PS3's launch. Someone once said that you have to speculate to accumulate, which is what I see happening here.

[NoName]

Whew, I was getting scared when I saw a positive PS3 news post. I'm glad we have this one to balance things out. ;)

Sony's standing on a very narrow ledge right now. Hope a wind doesn't pick up...

[fitbabits]

Whew, I was getting scared when I saw a positive PS3 news post. I'm glad we have this one to balance things out. ;)

Sony's standing on a very narrow ledge right now. Hope a wind doesn't pick up...
But this was from a Sony exec. Not an analyst, not a Microsoft-affiliated website! Plus, look at my comment!!! Some people... :eek:

[JazGalaxy]

The thing that's hilarious about the PS3 is that if it tanks, I really don't know of anyone who will know what happened or why. I mean it would be completely unnecessary. its like sony is run by crazy people.

[JazGalaxy]

double post

[NoName]

But this was from a Sony exec. Not an analyst, not a Microsoft-affiliated website! Plus, look at my comment!!! Some people... :eek:
Hehe, sorry, I think feeling sick has put me in a cynical mood :).

[jacktion]

Is this normal behavior for a console launch? Did MS lose money and is Nintendo losing money? R&D is a long-term investment type thing but I feel like Sony is really gambling on the Cell and Blueray both being big winners and that remains to be determined. Plus, if you look at the long-term trend that Sony has established over the years you would have to be worried. Sony has tried to roll out a lot of formats that have tanked hard. Do you think that Sony can survive if the Cell does well but Blueray tanks? Or vice versa? Or does Sony need both to win?

[Kamalot]

Is it too soon to break out this image yet?

http://www.iplayalot.com/Sony/Sony_Iceberg_small.jpg
Click for full image (http://photos1.blogger.com/blogger/68/411/1600/sony_iceberg.jpg)

[Deathbane27]

Kamalot: Hehe, that's rich. :D

Is this normal behavior for a console launch? Did MS lose money and is Nintendo losing money?

Normal? About 50/50 on losing money on the console since the PS1 launch. Software sales usually turns it back into a profit, however.

Yes, MS did lose money and (edit: is still losing lots of money (http://www.evilavatar.com/forums/showthread.php?t=15608)).

Nintendo is not losing money. The Wii is composed entirely of 5-year old technology put to use in a new way. All the R&D is on perfecting its use. They actually *gasp* make money on the hardware.


The success or failure of Bluray and Cell aren't going to determine the success or failure of the PS3. Vice versa. Even if Blu-ray proves worthless and the Cell turns out to be a bad idea, the determining factor is what the people who buy it in the first 3 months have to say about it.

[JazGalaxy]

Is this normal behavior for a console launch? Did MS lose money and is Nintendo losing money? R&D is a long-term investment type thing but I feel like Sony is really gambling on the Cell and Blueray both being big winners and that remains to be determined. Plus, if you look at the long-term trend that Sony has established over the years you would have to be worried. Sony has tried to roll out a lot of formats that have tanked hard. Do you think that Sony can survive if the Cell does well but Blueray tanks? Or vice versa? Or does Sony need both to win?

I think the picture pretty much explains it all.

I think, and this is kind of cooberated by all the gamers who remark that sony seems like one hand doesn't know what the other is doing, that the Playstation is Sony's most profitable division, and I think a lot of the failing divisions tried to hitch onto the the Playstation Rocket to artificially increase their worth. That is to say, I think as each division wanted their crap added to PS3, it just got more unweildly and ridiculous.

I personally think we're in the process of watching the company self destruct.

[babs72101]

Everyone needs to stop being so negative about the PS3! It probably won't sell as much as the Wii or even Xbox 360 but as this article says in two or three years we're all going to have one!

Check it out:

http://www.gwn.com/articles/article.php/id/760/

[Last of the Red Hot Mamas]

Is this normal behavior for a console launch?

Sony's games division lost over $400 million in the runup to the PS2 launch (fiscal year 2000). So it's not abnormal for Sony, at least. Microsoft's home division lost nearly $1.3 billion in FY 2006, compared to a loss of $500 million in FY 2005. The home division also includes some other money-losing enterprises like WebTV and MSN, but it's reasonable to conclude the transition between the Xbox 1 and the 360 is responsible for most of that increase. Nintendo's much more conservative and also has their lucrative portable business (which accounts for most of their profits these days, if I'm not mistaken) so they'll probably do better profits-wise than either MS or Sony, at least in the short term.

[net7runner]

YA RLY?

[Johan]

The success or failure of Bluray and Cell aren't going to determine the success or failure of the PS3. Vice versa. Even if Blu-ray proves worthless and the Cell turns out to be a bad idea, the determining factor is what the people who buy it in the first 3 months have to say about it.

Do you really believe this statement? Sony has sunk billions into the Cell (which they hope to use across many consumer products in varying configurations) and their gaming division is the only part of the company that is actually making decent money. They need Blu-ray, Cell and the PS3 to succeed in conjunction; they're betting on all three to do so, in a big way, to improve financial results across the various divisions of their company.

I don't pretend to know if they'll succeed, fail, or just do 'okay' but I do think they're in a much more precarious position than MS (gads of cash, other profitable divisions) or Nintendo (perhaps making money from the get-go on their 'Wii').

[Deathbane27]

Do you really believe this statement?

It was a mistake to lump both of those together in that statement, yes. Seperating:

I don't see how the Cell succeeding/failing outside of the PS3 would have any significant effect on the PS3's sales. "Gee, this Cell-based server I bought from IBM is great. Maybe I'll buy a PS3." Or, "Damn, this Cell-based server I bought from IBM sucks liquid monkey ass through a straw. I'd better carry over the judgement to the PS3 without actually looking at the games." There's no logical connection there whatsoever. In the other direction, I don't see the PS3's power (or lack thereof) having much of an effect on other Cell products. It would be like comparing the Xbox 360 to Apple G4 computers since they both used IBM PowerPC-based processors.

Either the Cell works well in other products and gives a return on Sony's investment into it, or it doesn't. Whether it does or not won't have any effect on the PS3's sales, which was all I was addressing.



On the Blu-ray issue, however, there's a correlation. Every PS3 sold is another Blu-ray player in someone's home. Even if Blu-ray sucks, the PS3 could push it to victory over HD-DVD if people already have a PS3 so don't see any need for HD-DVD since they already have a high-def movie player.

And, actually, I guess you're right. If people in the market for a high-def DVD player decide on Blu-ray over HD-DVD, they'll probably go for a PS3 as long as it's the cheapest player available. So yes, Blu-ray's success could propel the PS3 as long as it's the cheapest player, or close enough in price that consumers that wouldn't otherwise be interested decide to give this "gaming" thing a try. :p



(Two long-winded paragraphs having nothing whatsoever to do with what was being replied to.)

Yes, I supposed Sony could go out of business before what would normally be the end of the PS3's life cycle, but otherwise I don't see how the rest of that has anything to do with what I said.

[Johan]

Either the Cell works well in other products and gives a return on Sony's investment into it, or it doesn't. Whether it does or not won't have any effect on the PS3's sales, which was all I was addressing.

On the Blu-ray issue, however, there's a correlation. Every PS3 sold is another Blu-ray player in someone's home. Even if Blu-ray sucks, the PS3 could push it to victory over HD-DVD if people already have a PS3 so don't see any need for HD-DVD since they already have a high-def movie player.

Thanks for the clarification; well stated.

BTW...where did you get that "long-winded" quote from? It says it's from me, but I don't think so...if you think I was long-winded, then please feel free to say so, but without the "originally posted by Johan123" in front of it! Thanks!

[Chameleo]

On the Blu-ray issue, however, there's a correlation. Every PS3 sold is another Blu-ray player in someone's home. Even if Blu-ray sucks, the PS3 could push it to victory over HD-DVD if people already have a PS3 so don't see any need for HD-DVD since they already have a high-def movie player.

And, actually, I guess you're right. If people in the market for a high-def DVD player decide on Blu-ray over HD-DVD, they'll probably go for a PS3 as long as it's the cheapest player available. So yes, Blu-ray's success could propel the PS3 as long as it's the cheapest player, or close enough in price that consumers that wouldn't otherwise be interested decide to give this "gaming" thing a try. :p.

good point there: HD-DVD adoption hasn't been all that quick.

someone's gotta come out and make an HD-DVD xbox360 like panasonic did with the gamecube and DVDs