Sony Slashes 2008 Earnings Forcast By 38%, PS3 Profitability Uncertain

[FearTheReaper]

Troubled times ahead for Sony, Joystiq (http://www.joystiq.com/2008/10/23/sony-slashes-2008-earnings-forecast-by-38-ps3-profitability-u/)has the story.
Take Sony for example, who today slashed its 2008 earnings forecast by 38% citing "higher than expected foreign exchange losses" – a strong yen makes exports more expensive and, as luck would have it, the rest of the world is a pretty important component of Sony's business. A Tokyo-based analyst told Forbes that this was "just the beginning" for Sony and that "given the track record of this company, it will under-deliver all the way."
"Sony will make further losses in televisions, videogaming and mobile phones ... despite early 2008 promises of profits in TVs and its PlayStation3 videogame console," writes Forbes.

Hmm, could this spread to other console makers ?

[Flatpicker]

Troubled times ahead for everybody.
Video gaming is an expensive luxury when the economy goes in the crapper.

[BalekFekete]

Yeah...I work for a Danish pharmaceutical company and we're seeing huge amounts of potential profit eaten up when we have to convert them to the Danish Kroner for financial reporting.

[oldjadedgamer]

Putting Blu-ray in every machine keeps looking like a good idea at every turn.

[Roc Ingersol]

There's never really been even a correlation between the state of the economy (good or bad) and the game industry overall. It doesn't float up with good times, nor does it really dive with the bad. It just kinda does its own thing.

I wouldn't rule out the guy with the expensive console taking a hit, but in this situation he's also the guy with the most popular, cheapest console. So if anyone's trading down due the climate, Sony's as likely to pick up console sales as lose them.

[Binkley]

I thought video games are "recession proof" like movies? They are decent in terms of money/time ratio and have resale/retrade value.

[King Drewsky]

Hmm, could this spread to other console makers ?

I don't know, the other console makers are actually selling units.

Ba-dump-bump.

---

Obviously, Nintendo is going to be affected as they are also a Japanese developer. I wouldn't be surprised to hear them drop the earnings forecast for the upcoming year. However, I don't think they will be looking at posting a loss. The DS and Wii print money, right? Wii Sports 2 is on the way to save the day.

[AlwaysOn222]

Lol what a stupid question. No this could not spread to other console makers since Nintendo is printing money with every god damn release they have and MS is selling 360:s like crazy since recent price cuts. So much for 2008 being PS3 year lol.

[Emabulator]

The televison market has changed a lot for Sony. Used to be you could not touch a Trinitron for picture quality. I had three Sony televisions in a row. This year I puchased an LG because it was half the price and had a good picture.

[grognard66]

No question Sony finds itself in a tough spot. They're not in a position to price drop, the economy makes it harder to expand their audience at the present price point and the exchange rate only exacerbates the situation. The PS3 should turn out profitable in the end, but I feel very strongly that this will go down in Sony's history as their most disappointing console generation (In terms of sales, market share and perception).

[Rafer]

I thought video games are "recession proof" like movies? They are decent in terms of money/time ratio and have resale/retrade value.

The video game industry is recession proof to a degree (it expensive entertainment like vacations and expensive restaurants that people cut back on first), but is it depression proof?

It'd be interesting to see how the PS3 will do in Canada, the Canadian dollar has been plunging the last couple of weeks so PS3s could very well go up in price from $400 Canadian to $500 Canadian... Wii and 360 could go up as well.

The Wii might end up retailing more in Canada than it did at launch two years ago :(

[ElektroDragon]

Wait a minute... I thought that when the times were bad, people were supposed to buy MORE video games to escape reality?!? Those stock brokers wouldn't have jumped out windows in 1929 if they could have just come home to Fallout 3 and then see they weren't THAT bad off.

[oldjadedgamer]

Wait a minute... I thought that when the times were bad, people were supposed to buy MORE video games to escape reality?!? Those stock brokers wouldn't have jumped out windows in 1929 if they could have just come home to Fallout 3 and then see they weren't THAT bad off.

Videogame systems are recession proof. Videogame systems with unneeded tacked on luxury movie players that require high end televisions... not so much. In tough times and people trying to save their pennies... is Blu-ray really that much of a value to the average consumer?

[Vandenh]

I am sure MS and Nintendo will also have hits on earnings with a slower economy. The difference is that MS and Nintendo are not really in trouble.

[Evil Avnovice]

http://i203.photobucket.com/albums/aa55/goodavatar/DarkDoom.gif

http://www.samruby.com/Villains/DoctorDoom/DrDoomChap.gif http://www.mcnabbstudios.com/whats_new/topps_cards/galactus.jpg

[Demo_Boy]

If Sony drops the price of the PS3 I will buy one.

[silv]

Why would they drop the price? Their attach rate is poor, and they would simply lose more money on every console sold.

[Johan]

Got all the bases covered I see, Evil Avnovice! :)

Sony's decision to include Blu-ray doomed the PS3 to unprofitability from the get-go. It was delayed, too expensive, lost developer support due to its architectural complexity and lack of sales, and the list goes on. It's a solid machine, and a good value for videophiles, but most people are not you...the hardcore gamer...on a gaming forum. They want cheap, accessible fun for the family, and they are happy with their DVDs.

[Grumsh]

Not all systems are showing doom and gloom (http://www.gamespot.com/news/6199537.html?om_act=convert&om_clk=hot-stories&tag=hot-stories;story;4)

On the hardware front, Nintendo took home the gold and silver yet again, with the Wii placing first with 687,000 units sold and the DS second with 536,800 units sold. However, Microsoft's dramatic price reduction of the Xbox 360--the cheapest model is now just $199--paid off in the form of a 78 percent jump in sales volume. The console sold 347,200 units during September, up from just 195,000 in August. That was enough to put it past the PlayStation 3 (234,000 units) and its smaller sibling, the PSP (238,100 units). Xbox 360 sales may further increase once all three models of the 360 are bundled with games later this month.



Interesting times to say the least.

[Evil Avnovice]

Got all the bases covered I see, Evil Avnovice! :)

You know me: Clearly, I have nothing better to do than post doom3d pics in Sony threads. I wish someone would show me how to make a constructive post. :p