Sony: We don't need our own online svc, or profit either

I can only think you meant to say “The PS3” and “Blu-Ray”.

Errrr. No it didn’t. At best it was equal, but I’m pretty sure it was more expensive.

It was cheaper in Japan upon its initial release actually, yes.

And yes, I meant PS3 obviously.

Did the PS2 sell for cheaper in Japan than in north america? Because when we got a japanese ps2 at work, you were able to buy dvd players for about $300 CDN, but the console itself launched at $450.

No, but it was released quite a lot earlier in japan than the US.

Charles- Crappy DVD players did not cost $300 in 2000. Not even close. I believe but am not 100% sure that we had already seen the first sub-$100 DVD player by the PS2’s launch. 1999-2002 kind of runs together.

Of course, this is a bit different. Sony put an already established standard video format in the PS2 several years after it had already hit the mainstream. The PS3 is the vanguard of Blu-Ray, we are about a year before PS3 launch and there isn’t any Blu-Ray stuff on the market. No movies, no players, no drives. So yeah, the PS3 will play DVDs. But you can get a(probably better, if the PS2 is any indication) DVD player for less than the price of a video game, so that’s not a marketing bullet anymore. It’ll play Blu-Ray discs, but you can’t even buy those yet. Unless Blu-Ray absolutely explodes in 2006, I can’t see the PS3’s Blu-Ray drive being as powerful a selling point as the PS2’s DVD player.

The ps2 basically introduced DVDs to japan. Before it came out the japs were still on laserdisc. You couldn’t even rent dvds in japan at the time. It was such a huge deal that when the ps2 came out sony was selling DVDs on its japan website as ps2 accessories. It was a huge craze over there.

It didn’t have that kind of effect in the US, but here it’s still pretty common to have had the PS2 as your first DVD player.

Why isn’t there a Revolution option on there? If the question was who will sell more units, then it’s probably a two-horse race. But if it’s about profit, Nintendo will win because that’s what they do. Even in the first quarter of the DS’s release, when Sony was losing huge money promoting the PSP, Nintendo turned a profit.

Regarding the online thing, I think XBox Live is similar psychologically to the old Nintendo Seal of Quality. When you get a new XBox game, if it has an online component you know it’s going to work and you know how it’s going to work. With a PS3 game you won’t know what to expect from one game to the next.

The one thing Sony has going for them is that while most people want the ability to play online, a large percentage of them won’t actually do it. So it won’t matter that the experience is inferior to Live; they get the checkmark on the feature list, and that’s all that matters.

I meant profit. Revenue is getting money. Profit is making money.

…OK, OK, whatever, I meant profit, OK? ;-)

Ah remembers when we used TELETYPES, you whippersnapper!

(Seriously, I did use one of these as an 8-year-old nerd, doing my very first BASIC program, at the Talcott Mountain Science Center in Avon, CT. Weird thing is I’m only 36, that was less than 20 years ago…)


There is no “Xbox division.” The Xbox was part of the Home & Entertainment division, which includes things like WebTV, and lost money for a host of reasons.

With the reorganization, Xbox is part of the “Entertainment & Devices Division.” It’s not a lot different than Home & Entertainment was, really…it’s IPtv, Xbox, stuff like that. Though the mobile and embedded devices group is part of that division now.

I would say that’s true of the current Xbox, but I think with the 360 it’s more than that. Now that you’ll be connected to Live all the time, regardless of what game you’re playing or even if you’re watching a DVD, it’s sort of seperated from the “if a game is online” bit. You can be watching a DVD movie or playing a totally offline single-player game and still get invites, still have voice chats with people, send and recieve messages, etc. Plus the whole marketplace and Live Arcade thing, also seperated out from any game you may buy.

I dunno how much all that is going to mean to people, but Live is growing out from the “consistant experience for online games” thing and into the “consistant online experience for the console” realm. Okay maybe that’s not a good way to describe it.

So are you claiming that the Xbox hasn’t lost them money? Being pedantic about the actual name of the division (which the media does refer to as their ‘Xbox division’ by the way) doesn’t change that. Since the Xbox is (was) the primary name in Home and Entertainment, I see no problem in attributing the loss to it.

If you don’t have a line-item P&L statement for that whole division - which you don’t - then you have no real way to know. WebTV was expensive. MSN was a huge money-loser (AFAIK) and was in there with XBox for a while.

You may have no problem in attributing anything you like… doesn’t make you right :-D

Since it looks like XBox >$ PS2, but PS3 >$ Xbox360, I would say that even if Microsoft didn’t make any money last generation (and Sony made buckets), it’s entirely possible that they’ll make big money next generation (and Sony will lose). I bet that Sony will be strongest in Japan this time, but that globally MS will clean up.


Oh, absolutely. I was more condemning the PS3 than anything. Microsoft did online right with the XBox and is expanding and evolving it in the next generation. Sony did it wrong, but rather than acknowleding that fact and copying Live with the PS3, they’re continuing to do it wrong.

The only question is how much it actually matters. Despite all the good press Live and the XBox gets, it’s still a distant second in terms of install base and barely ahead of the 'Cube worldwide.

Just because I don’t have exact numbers from MS accounting doesn’t mean I’m wrong either. The Xbox is losing money. It always has. Don’t want to believe that? Your choice.

There are business analysts who go over Microsoft’s quarterly and annual statements in detail and in public.

In this analysis, MSN and Mobile/Embedded Devices are shown separately from Home & Entertainment. As you can see, MSN is profitable and has been so for a while; M/E is nearing profitability; and H&E (which in this breakdown contains little but Xbox) has actually increased its quarterly losses, already in excess of $100 million.

So yes, the Xbox is Microsoft’s big loss maker. Unless you choose to believe that Microsoft is losing $100 million per quarter on Age of Empires.

Sony sold the PS2 at about a $100 loss per unit for the first year or so. They had just invested in their own fab to make the graphics synthesis chip (which got HORRIBLE yeilds), the rambus RAM was really expensive, etc.

That’s also about the loss Microsoft took for their first year, maybe more. Of course, they had problems reducing and eliminating that loss over time, which is the real issue. You sell at a big loss for the first few million units, but then you gotta be break even or at least close.

It’ll be really interesting to hear what the Revolution is going to sell for. If it comes in at $199, it really could clean up, potentially. Microsoft and Sony may have actually pushed past the breaking point for consumers with this generation. If not past it, then they have to be really close.

This has, historically, not been the case. The most recent two consoles to launch undercutting the competition are the Dreamcast and the Gamecube, both of which launched at $199. We all know what happend to the DC, and the gamecube enjoys a pretty firm third place worldwide.

There’s something to be said for the “perception of value.” Pricing something higher makes it seem like it’s WORTH more, sometimes. You come in too cheap, and people think it can’t possibly be that great.

I want cheaper consoles, too, but being cheaper isn’t always the way to victory.

Oh no, that’s not what I’m saying at all. The Xbox certainly has lost money. But if you took the Xbox out of the Home & Entertainment, the H&E division would still lose millions of bucks all by itself. I just think it should be clear that there is no Xbox Division at MS, because the other stuff in that division is not chump change. We’re talking hundreds of employees, millions in R&D and production, tens of millions of products sold, all not-Xbox stuff that is part of the same division. In particular, Microsoft has invested crazy money into their TV stuff with no payoff yet (their IPtv software might finally change that).

Sony, for what it’s worth, has actually taken more of a hit on the PS2 than they let on. The PS2 business itself has been very profitable, but there were a lot of costs associated with R&D and production before the first one ever went on sale that cost them hundreds of millions of dollars. They built their own chip fab plant just for it, and then had to turn around sell it off to new management because they discovered they couldn’t make such a large chip on an advanced process and get good yeilds. But that’s not reported in the Playstation business, it’s in Sony’s chip production stuff. It’s all about where you record the numbers. :P Still, I think the PS2 has been a money-maker for Sony overall.

Lets run this poll again after Rockstar announces that they’re making GTA 4. It will fix all the problems of the last games and with blue ray you will be able to run over the WHOLE FREAKING WORLD and steal cars the disks will hold so much data. Also wait until dragon warrior X comes out for PS3 it will be so good that the whole Japanese economy will shut down for 3 months.

Come on don’t tell me that a delayed (again) oblivion is enough to vote for Xbox beating Sony. Xbox has the technology but Sony locks up the good games. Oh yeah and every hip hop star will play playstation so it’s much cooler than Xbox or PC.

From dubiousquality:

I’ve written about this before, but this week’s earnings announcements really drive it home.

–sales $14.74 billion.
–net income $247 million.

Without a one-time gain of $637 million related to a pension fund, they would have lost almost $400 million dollars.

The gaming division’s operating profit was $71.1 million.

–sales $9.74 billion.
–net income $3.14 billion.

Those results include a one-time charge of $361 million.

The gaming divisions lost $141 million.

That’s why Sony is under so much more pressure right now than Microsoft: the PS3 is critical to Sony’s bottom line. It’s about the only division making money. It’s irrelevant to Microsoft’s. It’s about the only division not making money.

There’s a huge difference in the core profitability of the two companies. Sony is involved with a bunch of ephemeral shit like making movies and music–fickle enterprises at best–and their degree of profitability is unreliable. Microsoft makes an operating system that is the standard for the vast majority of the world’s computer users.

Sony makes money. Microsoft prints money.

It will be quite a win for MS if they are able to truly compete with Sony for the #1 console position worldwide. That would be a sunstantial leap from a system people mocked before its launch. I still remember the days when analysts and gamers predicted doom and gloom for any American company taking on Fortress:Japan in the video game market.