PS4 development costs eats into PlayStation profit

Sony said this figure was reached by a mixture of slowing hardware sales and an uptake in software. Unit sales of PS3, PSP, and PS2 hardware all fell

[golding89]

Well..What did you guys expect? Sony is sell PS4 for 399 with such good specs just to outsell Xbox one?

I understand they are trying to outdo
MS but we all know they are eating the cost badly....

Hope they don't have to sell more buildings.

[ShugaCane]

There are going to sell the PS4 for $399 because they realized that overpricing their consoles is not the right move. They certainly wish to outdo MS but I think their main concern is not the reiterate the mistakes they've done with the PS3.

[golding89]

lol yea 600 bucks ps3 was crazy. They did learn their lesson

[Need4Game]

"PS4 development costs eats into PlayStation profit"

Perhaps The PS4 console simple design isn't costing playstation profit.

Maybe PS4 games costing playstation Profit.

Probably Not a bad trade-off, more Games for PS4.

[shivvy24]

yep selling a ps3 for $1000 in australia was insane ! i got mine when they rolled in the 40Gb model for $689

[GameNameFame]

Sony will be bringing out great games, software and hardware.

Good for gamers then. It's better than MS's common strategy of cheaply buying timed exclusive. Or investing on kinect and casual crap.

[SuperLupe]

If Sony not had lost around 50 million customers to the Xbox 360 moving from the PS2 era to this gen they would not have come out with a 399$ PS4.

I'm pretty sure they still can't believe how this gen turned out. PS2 like success was the minimum they were expecting. At the end of the day it took them 6/7 years to catch up with the 360. They were vexed by MS and to a lesser extent Ninty and are now out there to get revenge. They're like "enough playing now, we gonna see who's the boss around here".

They arent taking any gambles this time around: no overcomplex and overhyped CELL chip, no ludicrous price, no overconfidence. Just a simple powerful console for just the right price ... you can't go wrong with that. Sounds like the Xbox 360 of next gen :)

[mouzone]

@golding89

yeah it was but when you consider that at the time the cheapest blue ray player was about 800 bucks it is kinda understandable

[blitz0623]

They aren't trying to outdo MS. Do you really think they changed the price to $399 after hearing MS at E3? They already said they had decided the price even before Microsoft announced the Xbox One price. Without Kinect the X1 would be about $399 as well. Sony was smart to not force the camera issue

[nukeitall]

Sony could have matched MS at $500 while throwing in a camera, and made a bigger profit.

You can claim Sony is doing it for the good of gamers, and to some a better business decision. However, to me, Sony way under priced the PS4 relative to what the market would have payed.

This will hit Sony's bottom line, and again less investment back into the division. A very profitable division and healthy competition is the way to go.

[gaffyh]

@nuke - That would have been the most stupid decision, because if they are priced the same, and they BOTH had cameras, it would come down to who had put the most resources into making camera-based games, in which case MS would have won because they have more casual titles. Cutting the camera and launching $100 cheaper is a genius move by Sony, and the fact is they decided the price way in advance.

I will never understand why people always say "it should have launched at $499", it COULD have, but you're getting the console $100 cheaper! Be happy about it.

Second thing is, how will it cut into their bottom line? How do you know that they aren't making a profit on each console sold? Granted that's a stretch, but I'd bet that at a maximum, they are making a loss of $100 (although I've got a feeling they aren't making much of a loss at all), which will easily be offset by 2 or 3 games, and early adopters always buy the most games in the long run. The PS4 development costs mentioned is the R&D that goes into making the actual system and manufacturing the system in advance of launch. Once the console launches, they will make that money back in no time.

[Loki86]

@blitz they said they removed the camera and lowered the price directly because of the backlash from the public of the X1 pricing.

[gaffyh]

@Loki - No they didn't. Jack Tretton said on the GT interview that they had decided the price weeks in advance, and I think Pachter had a chat with one of the execs who said they were watching MS conference and were hoping they were not priced at $399, because Sony couldn't go down to $349.

[LordNikon]

I don't remember them saying anything like that. The PS4 would've been cheaper no matter what... even if the camera was included, but... from the get-go Sony was always offering consumers a choice. Hence why the PS camera is an OPTIONAL DEVICE.

[wishingW3L]

PlayStation consoles has never been overpriced, PS2 and PS3 were sold at a loss you know... They were badly planned though. The PS2 was successful with the DvD and it sold tons of games but the PS3 had blu-ray and it didn't became successful until the slim and price cut.

Overpriced would be the $250 Wii, 3DS at $250 and the $350 Wii U.

[minimur12]

no sh*t.

[Chaostar]

"I understand they are trying to outdo
MS but we all know they are eating the cost badly"

Do we? There hasn't been any info leaked to suggest what kind of profit/loss either console will be making per unit. This is an assumption on your part.

edit @nicknacktack: No, but making negative assumptions based on nothing is. Since you joined less than a day ago and your only two comments are in this article, one of which is also spouting misinformation about Sony's business, it's safe to be suspicious of your agenda.

[nicknacktack]

Wow.. every little criticism of sony is Trolling?

Come on man..

[nicknacktack]

@Chaostar When you joined 27 Mar 2010..was everyone suspicious of your agenda on your first 2 comments?

Smh.. idiot.. get a life.

[Chaostar]

aaaaaand out come the personal attacks, bravo, you'll fit in well here.

I didn't troll or spread fud with my first comments so... no.

[s8anicslayer]

He joined three days ago and he lost 2 bubbles already? I can't imagine why...lol

[awesomeperson]

@nick

Generally, people don't have a problem with those joining recently. However, in the past few months there are many, many accounts joined very recently, all which seem to spurt off the same type of comment.

It's the start of a new console gen, which inevitably leads to new console arguments - hence, there is reason to be suspicious of new accounts joining, especially when they comment in a biased fashion.

That being said, golding89's comments do tend to reflect a strong bias towards Xbox, take a look at his comments from his profile and see for yourself.

I'm not saying that's a bad thing, I'm inclined towards Playstation, as that's the brand I currently use the most. It is when people go in articles and say the same thing over and over that gets to the level of trolling, and is really just an annoyance.

[British_Knight]

Nevertheless, one thing is certain, PS4 has to be a huge success for Sony. Microsoft, on the other hand, is made of cash (check Forbes). Hopefully, Microsoft continues to invest their vast resources into XB1. The Yankees bought a slew of championships by outspending their competitors. Microsoft probably could do the same if they wanted to, but XBOX is a marginal percentage of MS revenue.

[nicknacktack]

I think it's safe to say the only thing keeping sony in the market is the PS brand. Because all their other product are crazy overpriced..from laptops/tvs..etc

I guess they are trying not to make that mistake with ps4.

[Muffins1223]

Their music and movies are doing pretty good and the new xperia's also doing well.

[jukins]

Sony products are not overpriced they are totally inline with all the competitors. Even in the past when they were a premium brand price was inline with other premium manufacturers. Some products may be expensive but overpriced is a stretch.

[dredgewalker]

It's not overpricing, new hardware costs a lot to develop. The PS3 was priced high in the beginning because of the cost of the bluray drive and other new components. They even sold PS3's at a loss. The PS3's gamble with bluray payed off and the PS4 is reaping the benefits.

[rainslacker]

Their financial division also pulls in a tidy sum. Sony is pretty diverse. They even make chemicals...although I think they offloaded that part of the business because it wasn't profitable. Can't remember if that's right or not, and looking up facts would be lost on someone like you.

[GribbleGrunger]

Just business as usual for the launch of a new console. There's nothing here.

[gedden7]

Ummm Nintendo doesn't do that lmao and THEY MAKE THE MOST MONEY! LMAO

[MoveTheGlow]

Yeah. R&D is a necessary expense.

@gedden7, I get it, but Nintendo *does* spend a lot on R&D. They develop their next console as soon as the current one releases - sometimes before that. The WiiU was an idea from way back, but it cost way too much money until it was too late. This time around, R&D didn't hit them hard, since they had this "war chest" of money they made off of casual gamers with the original Wii. Now, the WiiU sales are finally biting them.

R&D was definitely misguided with the WiiU (to say nothing of their dumb marketing decisions, including the name), hence why they consolidated their handheld and home console R&D departments. I'm guessing they put the handheld director in charge.

[Muffins1223]

Even at $399 sony has said that they still make profit on the console

[Thatguy-310]

Well after reading the article it clearly just stated how their profits could have been higher than 30 million but the didn't because of the research and development that went into the ps4. If I'm not mistaken sony will be profiting from each PS4 sold.

[Minato-Namikaze]

I think you are misunderstanding whats happening. PS4 R&D ate into the PS profits It has nothing to do with how much they are selling it for. All companies take a hit when R&D starts up for a console. Sony made a profit last quarter.

[gedden7]

23 Disagrees for telling the truth????

What this gamer said IS 100% TRUE... SONY did have to SELL property JUST TO MAKE A PROFIT. THAT IS TRUE...

SONY HAS ALWAYS BEEN ABOUT TECH AND OUTDOING MS IN THAT DEPARTMENT.

I know the truth hurts but damn people OPEN YOUR EYES, Stop being a fanboy and BE OBJECTIVE..

[British_Knight]

Sony did sell property due to their financial problems.

[HiddenMission]

Actually making a profit off of the sell was not the motivation Kaz wanted to get rid of excess spending and resources that were not needed and if they made money off of the deal even better.

Sony has been about hardware way before MS even considered entering the hardware game so competing with them was not their intention...competing in general was.

Since Sony is a top end hardware company their goal is to produce top end quality product and it's that simple.

You are the one coming off fanboyish and I hate using that term but your not being objective you're painting a anti Sony agenda picture and nothing more.

[rainslacker]

"SONY HAS ALWAYS BEEN ABOUT TECH AND OUTDOING MS IN THAT DEPARTMENT"

Always huh? Sony's been around for over 65 years. Longer than MS has been around. I have to give Sony some credit for seeing so far into the future that they knew they'd have to go up against MS one day. MS was barely on Sony's(or many others I might add) radar until the 360 came out. The first Xbox never got close to the popularity of the PS2. It was that arrogance that cost Sony a lot this gen, but they did their thing, and still came out ahead of MS.

Now I could agree with that they are going head to head against MS for this past gen, and going into the next gen, but I don't think it's about outdoing MS, I think it's about them doing what they always have with the PS brand. That's to deliver a quality gaming machine. Competition has pushed both companies to be better, and no one should have a problem with that.

[medman]

golding89...just another intellectually challenged and perpetually confused individual who thinks when a corporation rapes him that means they love him. Good luck with that. PS4.

[LordNikon]

Sorry, double post.

[GraveLord]

You are delusional. Research and Development takes money. This literally has nothing to do with how much PS4 will cost at retail. NOTHING.

This is about DEVELOPMENT costs.

Bubble down for you.

[3-4-5]

News Flash !

Having to pay workers cuts into profits.

[ShugaCane]

They're spending a lot to provide the best next gen console possible. Now I hope gamers are going to take that into consideration and buy the PS4 in masses, so that Sony can support it as long as possible.

[golding89]

@ShugaCane hope so

[wishingW3L]

PS4's not even out yet, so of-course... Like if you open a new store you invested in the stuff you're gonna sell and the rent of the place etc., you first need to start selling to recoup it. -__-

[FrigidDARKNESS]

Well an industry report says that Sony were taking the hit on the 8gb GDDR5. Sony back tracks from a statement made that they will not sell the ps4 at a loss.
http://www.eurogamer.net/ar...

[GameCents]

Gaming is a very risky business, especially as a hardware manufacturer.

Take MS for instance, since Q1 of FY 12 until Q4 of FY 13 Xbox division has made $1.228 billion in profit. That may sound like a whole lot, and it is, but the money spent to get to that profit is obscene!

[fsfsxii]

Tell us more Mr. BusinessCents.

[devwan]

Let's look at the bigger picture:

http://www.neowin.net/image...

[green]

That is even more impressive than i expected. They spent money to get a foot hold in the industry and from 2007, they have not lost a dime on the Xbox division at all. It seems even R&D costs for the X1 did not drive the Xbox division to a loss.

[devwan]

@green The figures show a deficit of $3bn over the past 10 years, xbox one development costs and investments (eg $1bn buying timed exclusives and producing their own 1st party games, $3bn shared costs developing APU with AMD etc.) will all add up. This is why ms shareholders are not fans of the xbox division of the company.

[Wikkid666]

$35 million profit... not much of reason to be in business.

[shibster88]

Good I hope they blow all there profit,just means they aren't pissing around,just shows they mean it and want it to be the best......... which it is anyway, cant wait for my new ps4 just wish one little thing they had like 4 colours available, black, red,white and blue, I would so dig a white one with the blue lights, and a sweet white controller with the blue light, would look pretty awesome :D, anyway for you sony♥

[JohnCartenper]

No, actually Sony is edgin all their bets on the PS4 being immensely successful.

Only way to keep Sony gaming division afloat and save Sony Corp.'s terrible financial shape.

Will the bet pay off?

We'll see.

[dcj0524]

Hope to see another ps2. If not Sony Computer Entertainment is going to have a hard time fir the R&D of PS5.

[JohnCartenper]

Sony has a pretty big chance of going bankrupt in 2-3 years.
Their stock is rated at "junk" by agencies.
If you look at their financials, you'd understand why.

[Wikkid666]

So true... people here are too blinded by the fanboy attitudes. Sony as a whole has been sliding down for years. The entrainment division (tv, movies, music) is the only part of the company that makes money.

It's probably more likely that they will be taken over though.

[GraveLord]

You should probably practice what you preach or else you'll come off as a hypocrite.

The smartphone business is growing rapidly and profitable for Sony. The Game business would be as well if it wasn't for R&D costs.

[Wikkid666]

Do you know what the phrase "Practice what you preach means"? Obviously not

Sony has no place in the smartphone business... they are lost in a see of viable options.

[plmkoh]

What are you, from 2012? Sony has been upgraded to 'neutral' for months now. They made a profit from one-off asset events two quarters ago and they made a profit with core business the last quarter.

This is exactly why the stock has gone from $12 to $22 since January. Remind yourself never to get into investments.

[GraveLord]

That was last year. Multiple analysts how have Sony as a BUY.

[shibster88]

The ps4 is an updated ps2 just look at the shape sony knows there state but they would risk a load of money and the chance of being bank rupt for the ps4, some.of you think sony is stupid but they aint they produce some of the best tvs and I have one of there top ones kills any other tv ive seen, also sony are in the film industry and make good laptops phones etc etc so on so fourth, they would risk there company, they know what they are doing im a xbox boy but they changed my mind in a heart beat, thats there game and it will pay off.

[gnothe1]

Sony makes one of the best tv's?....that's why their rated lower than samsung, lg, sharp...an then they rushed to get their 4k tv's out before everybody else because they know they cant compete.

[mochachino]

When Sony has 40 million gamers paying 60 a year for PSN plus they may finally make up for PS3 losses.

The only thing I want to hear from Sony right now is the release date if PS4. I need the console now

[classic19]

sony will be fine for every ps4 sold its around 20 bucks profit, plus ms has to pay sony around 5 bucks for every X1 sold to, they r a ok

[isarai]

I think people are taking this the wrong way, "Development" cost, not "Manufacturing" cost.

[Ripsta7th]

Lol just by looking at the comment agrees/disagrees is pretty obvious this is Playstation territory