Sony to lose more than $1 billion on PS3

[mwgiii]

Analysts have warned that the release of the PS3 could backfire on gaming giant Sony Computer Entertainment, bringing the Sony subsidiary to its knees. Merrill Lynch Japan has stated it expects Sony to lose more than $1 billion on hardware manufacturing alone during its next-gen console's first 12 months on sale, a figure that may prove unrecoverable.

Merrill Lynch Japan Securities, quoted in the latest issue of Toyo Keizai, states that it expects core production costs of PlayStation 3 to be around $500, with the machine likely to ship at $399 – equating to a loss of around $1.18 billion in the first year the machine goes on sale. It should be noted that these losses are based purely on manufacturing costs and do not factor in the colossal marketing budget SCE has undoubtedly prepped for it's next home console launch.

Rest of article: http://news.spong.com/detail/news.asp?prid=9421

 

[Sean Mota]

This probably goes hand in hand with what analyst have been saying that to produce blue-ray is more expensive than HD DVD.

 

[korsjs]

if they sell as many ps3s as they did ps2s, they will be fine.

 

[Purogamer]

Eventually they'll be fine, but that first year is going to be rough unless they have notable software sales to offset the hardware costs.

Important thing to remember is that sony sticks it to our wallets pretty good. If you buy a ps3 and a game, you also have to buy a memory card/stick, which sony has always made money on. Plus the chances of selling additional controllers, especially ones that are more like the dual shock and not the batarang, will fly off the shelves...

 

[Stargazer]

I wonder how much Nintendo would lose on the Revolution?

 

[Purogamer]

Nothing, they don't lose money on hardware and never will. That's their rule. Even with the miniscule marketing budget, they'll still be in the black when it comes to launching a new system.

 

[Stargazer]

That is what I thought. They can afford to stay in business because it is less risk to them when they first release a product. They could sell less product and still make just as much without the big upfront investment.