RSSGaming, electronics sales compensate for Sony's lagging music, movies
By Scott M. Fulton, III | Published January 31, 2008, 12:14 PM
The keyword this morning for Sony is "up," especially with regard to its performance over the holiday quarter. The PlayStation brand would finally steal the show, if it weren't for Bravia hogging the spotlight.
The reason you build a corporation with highly diversified operations is because, regardless of the state of the global economy, no single market segment can ever be guaranteed to grow. Sony, in light of that fact, is a very smartly combined operation, and its careful balance of market segments helped it once again weather a year that at least seemed at the time to have been going badly.
In its quarterly performance report for Q3 2007 (its fiscal year is one quarter behind the calendar year) released this morning, Sony cleverly reported its PlayStation 3 sales numbers for the quarter were up 295% in 2007 over the prior year's fiscal third quarter. It doesn't take much gamesmanship to recall that the PS3 was introduced in North America and Japan -- and not yet even in Europe -- in November 2006, right in the middle of Sony's fiscal Q3.
The company reported worldwide PS3 sales for the holiday quarter of 2007 to have reached 4.9 million units. That's much closer to where Sony wants to be.
But during that same quarter, the PlayStation 2 sold 5.4 million units, and the PlayStation Portable surged to 5.76 million units in the wake of its redesign. With this report, Sony acknowledged that it has switched to reporting sales as units sold by virtue of someone having purchased them, as opposed to units shipped in anticipation of future sale.
The surge in all three products and their associated software gave Sony a quarterly sales record of just under $5.1 billion, a 31% increase over the prior holiday quarter -- which even Sony acknowledged at the time was a dismal quarter from which a company's fortunes could only go higher.
Anyone who thought Sony was a movie producer that happened to make games on the side, needs to become reacquainted with the company's balance sheet. During that same quarter, its Pictures division took in just under $2 billion in revenue.
But in an even more extraordinary indicator of the times we live in, the Pictures division ended up being just a hair more profitable, with $116 million in operating income for the quarter versus $113 million for the game division.
Let there be no mistake, though, Sony is an electronics company that just happens to make electronic games on the side, and some movies and music on the side of that. Due to the stellar performance of the Bravia high-def brand and the Vaio PC brands -- both of which have been redirected more toward mainstream buyers on budgets -- Sony's electronics division reaped over $18 billion in revenue in just the third quarter, earning $1.46 billion in operating income alone.
Sony actually owns just 50% of Sony BMG Music Entertainment, one of the "big four" record producers. So on the surface, the fact that Sony BMG's revenue from music sales were almost literally flat on the year, would seem to be bad, especially when you divide that flatness in half and share the other half with Bertelsmann.
But because the cost of doing business there is so low, Sony BMG earned $208 million in revenue during that quarter. And because that business is separate and not reported in Sony's sum total every quarter, it can use its $104 million cut to offset the rising cost of doing business in gaming, where the margins are much narrower.
but...but...nobody buys PS3's...they lose a ton of money on everyone sold...and...and...Sony sucks!...dead company!...the PS3 is dead!!....but but...but...
come on Hollywood....where is the spin?
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|Who is still buying PS2s? Statistics are interesting ... especially when I don't understand them. I realize that there are some great games for the PS2. If I hadn't purchased one yet, I would be looking for a used one at GameStop or eBay as many gamers are likely selling off their old systems and buying new ones (esp if the PS3 Backwards Compatible models are in their hands)...
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|It has a lineup of $20 games that the new systems cannot touch (and seemingly never will, "value" games on 360 are $29.99 USD).
Also add in the fact that Wii is essentially a Gamecube with new method of control input and it makes it easy for developers to create two versions of games: an engine that runs on PS3, 360, and PC, and an engine that runs on Wii, PS2, and PSP. The install base for the second group is much larger than the first. That doesn't mean you have to worry about premiere franchises going to the low-end route since 360 still drives software sales, but barrel scraping "casual games" aren't going anywhere either.
One thing Sony has to be careful about it not letting PS2 carry on for TOO long. They're actually indirectly helping Nintendo because a lot of third parties wouldn't create software for that system alone with the sales they are seeing. At some point they have to pull the plug and just price PS3 more competitively or Microsoft will capture the gamers who want to see technological advancement and buy a lot of software because of their passion for the hobby. You might be able to argue that it has happened already.
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|I don't think Sony are in too much of a hurry to drop the PS2, it's incredably profitable, and competes will against the Wii at the entry level. Plus PS2 owners today will in all likelyhood be PS3 owners in a few years, when the price and library fits their pockets.
The last point however, make me think that dropping the PS2 compatability from the PS3 is short sighted of them, as it gives PS2 owners a natural path of progression to PS3.
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|"They're actually indirectly helping Nintendo because a lot of third parties wouldn't create software for that system alone with the sales they are seeing"
Huh? You mean the system which has been leading the worldwide software sales for the past five months by a _wide_ margin? That system happens to be the Wii.
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|Well, even though I've been using them on and off for the past 6-7 years, I finally purchased one of my own a few months ago. Also, with all of the reports of optical drive problems and overheating issues with each of the 15 hardware revisions, I purchased mine new, not used. I've never been a fan of purchasing used electronics, and I figured that would yield a longer lifespan in case mine was plagued, too.
Oh, and its backward compatibility still works with my library of PlayStation games... a nice feature to have since my 2 original PlayStations are dead. That was a feature that should have never been removed from the PlayStation 3, especially since it has proven itself to be such a reliable console.
PlayStation and PlayStation 2 consoles have been notorious for their problems in the past, and they are not going to last forever. Sony finally has a reliable console which allows people to enjoy their library of older games, yet in their infinite wisdom they remove that ability in their recent PlayStation 3 consoles. That naturally drives the price up on the older models, since Sony has been discontinuing them one by one. If they continue this trend, there will likely be no more consoles with backward compatibility available through retail channels, forcing people like myself to pay much more on top of an already high price for one of the "better" models.
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|So PS3 SOLD 4.9 Million units, and Xbox360 SHIPPED 4.3 Million units..
Looks like Microsoft's 360 sales continue to stall...
With PSP and PS2 sales, Playstation brand sold one hell of a lot of consoles this xmas season.
It's also worth mentioning, that reports also says the PS3 is now break-even, in that's it's retailing for around as it's manufacture price, so Hollywood__ can stop crying about 18month old iSupply component breakdown numbers.
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|Why are you such an idiot?
Where does it say anywhere that MS only shipped 4.3 mil units?
The only reason for the surge is they stripped it down completely, of course people are going to buy it when it goes down cheaper as there are people who want just a blu-ray player as it still is lacking in the games department, you can list all the games you want, none of them are making people have to have it.
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|"that reports also says the PS3 is now break-even..."
Those reports also indicate that it's only the 40gb model.
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|http://www.guardian.co.uk/feedarticle?id=7246650
Numbers speak otherwise. PS3 is outselling 360 globally...
2007 Quarter 1 PS3 sales = 1.91 million units.
2007 Quarter 2 PS3 sales = .71 million units.
2007 Quarter 3 PS3 sales = 1.31 million units.
2007 Quarter 4 PS3 sales = 4.90 million units.
http://www.scei.co.jp/co.../bizdataps3_sale_e.html
2007 PS3 annual sales total = 8.83 million units sold worldwide compared to 7.3 million units of Xbox 360 sold worldwide in 2007.
"At the company's early-January 2007 Consumer Electronics Show keynote address, Microsoft announced an installed user base of 10.4 million, which would put 2007's tally at 7.3 million systems sold. Microsoft announced sales of 1.5 million for the system's 2005 launch quarter, which suggests that 2006 sales would have totaled 8.9 million, significantly more than 2007's 7.3 million total."
http://www.gamespot.com/news/6184291.html
Lets not also forget that Microsoft quote SHIPPED numbers, Sony SOLD to consumers. Making the difference even greater.
For those that can't be bothered to add them up, they have put 10.5 million PS3's in consumers hands in just over a year.
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|and...
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|and thereby comfirming that your so called report once again came straight out of your a**.
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|Yet I still dont know a single person who owns a PS3. I know many people who own Xbox 360s and Wiis.
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|What part of GLOBAL are you having trouble with exactly?
Just because your local trailer park only plays Xbox, does not translate into a global trend.
Do they have education in the USA? Some of the comments here, I sometimes wonder....
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|Sorry, not my reports. Again, trouble understanding basic concepts.
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|LOL. they have 2 xbox 360's for the entire trailer park. 1 is shared while the other is out for repairs.
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|"So PS3 SOLD 4.9 Million units,"
Yah and no Politician ever told a lie. /sarcasm
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|Meaning that only one of the PS3's SKUs is close to making a profit for the company (the one with the reduced functionality).
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|Steve, Steve, Steve...
Before you attack a country's educational system, you may want to go back and edit the majority of your posts, for grammar and spelling errors.
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|And we also know that the component difference account for less than $25. ($15 GS, $5 for card reader/usb sockets, $5 PS2 software licence).
so if the 40GB is breakeven, the other models are close..
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|It's a official company end of year report, you can't get away with telling porkies in that.
What's funnier, is the total denial that 360 Fanbots are in.
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|How much will that change with the inclusion of the Dualshock 3 controller (and the rumored larger HDD)?
EDIT: And before you fire off a snarky response, realize that this is a genuine question.
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|I doubt the Dualshock3 will add that much, considering that the controller seperately retails for $35 ($5 more than a SixAxis, I would imagine).
As for the larger HDD, looking at NewEgg, the 120GB's are about $50 more.
However, it's all about maintaining a retail price. it's better to increase the spec, rather than let the price erode. The new model will likely be a similar price to the current 80GB model.
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|I'm new to the board here. Who the heck is this Benjamin Linus? Some cartoon character?
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|Well I am not steve, like some paranoids here think I am..
Be carefull, if you disagree with their inbred views, you will also be "steve", or DaveBG.
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|Thank you for a civil answer.
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|A few months back there was a thread (another HD DVD/BR thread), where, after a few responses refuting a Ben. Linus post, Steve Austin chimed in with "That's not what I said..." in defense of the BL point of view.
Quite a few people on this board caught the verbal slip.
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|By inbred, are you saying they're W.A.S.P.s from the U.K.?
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|"Lets not also forget that Microsoft quote SHIPPED numbers, Sony SOLD to consumers. Making the difference even greater."
The article you linked to quotes SOLD not SHIPPED.
Care to provide the real article that shows its indeed shipped and not sold?
Uggh it appears you didnt even look at the sony link you posted either. Where did you get your 2007 quarter figures from? The table sony provide is somewhat different from what you provided
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|Yep he shot himself in the foot with that.
I let it pass but others dont :)
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|"Do they have education in the USA? Some of the comments here, I sometimes wonder...."
That's a mighty fine insult coming from someone who failed in reading his own links...
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|whatever makes you happy. If your system of choice is PS3, then good for you. In english speaking countries such as America, the so-called-from-benjamin-pinus uneducated country, Xbox360>>PS3. If you're not in America, please don't try to defend the unpopular console. And if you're really from another country, we don't care about your country and your opinions.
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|??? I have no idea what you are on about.
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|spoken like a true American M$ drone. The problem with your logic is more hardware and software are sold outside of the USA than in it.
Outside of the USA, the M$ 360 is doing horribly. It has been getting outsold by the Wii and PS3 for quite some time.
http://www.vgchartz.com/
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|Regarding sales of the PS3, that depends on who your source is.
http://nexgenwars.com/
I find it very curious that while the numbers of the other consoles are very close, there is a discrepancy of more than 1½ million for the PS3 between these two sites.
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