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Sony's PlayStation business continues to decline
Sony's PlayStation business continues to decline
August 2, 2012 | By Mike Rose

August 2, 2012 | By Mike Rose
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    28 comments
More: Console/PC, Business/Marketing



Sony's PlayStation business saw notable declines in the first quarter of the current fiscal year, contributing towards increased losses for the company as a whole.

The company noted that the current economic climate continued to prove difficult, with "the trend toward appreciation of the yen taking hold." As a result, Sony has downwardly revised its results for the full fiscal year, while also anticipating "a severe operating environment" for the second quarter.

Sony's Game sector in particular was greatly affected, with lower recorded revenues and a swing to operating losses year-over-year. Sony has now lowered its PlayStation unit sales forecast for the 2012 fiscal year and, as a result, says that operating income for its Game division "is expected to be significantly below" its original estimate.

For this quarter, the company grouped together its PlayStation hardware, rather than reporting units separately as per usual. Its PlayStation 3 and PlayStation 2 consoles combined sold 2.8 million units during the quarter, down compared to 3.2 million sold year-over-year.

Its handheld consoles didn't fare much better -- the PS Vita and PSP combined sold 1.4 million units, down compared to 1.8 million sold in the same quarter last year.

Software sales were also down across all hardware. Sony sold 20.1 million PS3 and PS2 games combined in the first quarter, down compared to 27.6 million year-over-year. The PS Vita and PSP combined sold 5.8 million software units, compared to 6.6 million year-over-year.

Sony's struggles in the handheld space have forced the company to revise its initial forecast of 16 million system sales for PS Vita and PSP this fiscal year, cutting that number down by a quarter to 12 million.

Notably, the company's Game division wasn't its biggest downfall. Its Mobile Products & Communications sector, which includes mobile phone and PC sales, saw notable operating losses of ¥28.1 billion ($358.6 million) compared to income of ¥1.6 billion ($20.4 million) year-over-year, mainly due to the impact of the Sony Mobile acquisition in February.

For the quarter ended June, 2012, Sony's Game division saw revenues of ¥118.0 billion ($1.5 billion), down 14.5 percent compared to ¥137.9 billion ($1.8 billion) year-over-year, and operating losses of ¥3.5 billion ($44.7 million), compared to operating income on ¥4.1 billion ($52.3 million) in the same quarter year-over-year.

Overall, the company recorded revenues of ¥1.52 trillion ($19.3 billion), up 1.4 percent compared to ¥1.49 trillion ($19.1 billion) year-over-year, and losses of ¥24.6 billion ($313.9 million) compared to losses of ¥15.5 billion ($197.8 million) year-over-year.


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Comments


Alan Rimkeit
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Bring the new PS3 Slim I saw in those pictures. Sell it for CHEAP. As cheap as Sony can with out losing cash. PS3 sells for $249.99. Sell the new one for $149.99. Drop that place and drop is NOW Sony. Also, drop price of the Vita to $149.99 as well.

Eric Geer
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I would buy a Vita if they brought it down to $150 to 170.

As for the PS3 price drop...that should have happened some time ago.

Alan Rimkeit
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Well, I really, really do not see any other way of Sony making up the declining sales other than price drops. If they do not do that then they are screwed for the most part as far as I can see.

BTW, I am a Sony fan and love my PS3. Funnest gaming system I have ever owned.

Eric Geer
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"Maybe, but as they likely lose money on a $250 Vita as well, how many games would you have to buy, to make up the bigger losses, they experience with a $150 Vita? Right now, there seem not to be enough games on the market to justify such a step."

Sometimes you need to take a hit in order to get things rolling...Nintendo realized this and capitalized on their loss. $250 was too much for 3DS... they brought it down. Sony should have realized when the 3DS couldn't sell for $250 that Vita was going to struggle at $250-300 plus needing to buy memory cards--so more like $300-350. They have made choices that obviously were not going to work--and at this point it is either take a hit or just keep sinking slowly.

Matt Ployhar
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Articles like these don't really paint the full picture.

In short. ALL Consoles are down to one degree or another. Console Software in particular is also taking a dive at Retail.

I think another interesting vector on this is to also include what the individual companies 'burn' rates, & burdened headcount costs are. When you look at it in that light... it turns into a game of Chicken. One company in particular is simply just hoping to outspend everyone else.

Merc Hoffner
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Of course the sales are incomparable, but did you know that Sony has about 30X the employee count of Nintendo but only about 2X the equity?

Merc Hoffner
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Sony as a whole. It's not apples to apples on purpose. My point is despite being massive by comparison, Sony ain't that much more valuable. It's a much less stable situation - too many debts and a lot more of those day to day operational burdens.

If we were to compare the games division, well at the last count I saw (2007 I think) SCE had 11,000 employees to Nintendo's 5000, but financially they're incomparable - not so much because of Nintendo's 'success' (to my knowledge both have lost money in the last year), but because, as far as I can calculate, Sony's lost about as much money on games as they've ever made. Equity? Hard to quantify for that division alone, as are the intangible values for both companies, but Sony's ain't looking pretty - and all that's happened in a single generation of exceptional burn.

Maybe Microsoft can afford to lose a $billion a year on games for the better part of a decade, but Sony has to get ahead of this phenomenon fast, or they really will have to pull a Sega. And with MS still apparently able and willing, Sony needs a game changer. Gaikai COULD be that answer, but it seemed more like an impulse buy than their central corporate strategy to me.

The Le
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The ultimate problem for all the consoles is cost of software. I find it peculiar that we're still looking at $60 MSRP for games. NFL 2K5 had it right seven years ago -- price the game low and watch your sales take off.

Alan Rimkeit
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Me too. I never ever buy games that are $60. I always wait for the games to come to the $30-40 dollar price point before a purchase happens.

Eric Geer
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Agreed---I still don't understand why more publishers/devs don't swallow some of their pride to realize that their games aren't worth $60 right out the door. Your sales aren't great because your games aren't great OR there are games better than yours...lower the price draw in more customers. Price the game as a single A or a AA game(not sure what the correct termage is)---there is a market for games that are good, but just don't have the budget of true AAA games(which deserve the $60 price tag)

Joe Zachery
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A price cut will not help Sony in anyway. They need games consumers want to purchase. That is what they are missing right now.

Alan Rimkeit
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There are tons of games on PS3. Vita is the one that needs help with games. They should make it free for devs to make games for Vita for a limited time. Or at least lower the entry cost of dev kits to all most nothing.

Brock Davis
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In this economy, these consoles are luxury items and you only are going to buy them if you either play them yourself or have kids that do. Now I bought a Vita at launch and love it, not all people are like me. Some are casual gamers and some are hardcore. People that buy the Vita are usually in their teen to mid 20's and like to play the hardcore games. They should have known that it was going to be slow for the Vita the first year because it always is for a new console. Now I think the PS3 price needs to be lower to compete with the X-Box 360, give them a 16HDD and make it $150. I would think that would attract a lot more costumers to the PS3(a great blu-ray player still and a game machine all bundled at $150).

kevin Koos
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I think on the PS3 side this generation has dragged on to long. Need new consoles to breathe some new life into it. On the handheld side the VIta has a lot of headwinds. High price for a dedicated handheld, could buy a ps3 or save up for an ipad, plus game development costs are high and not a big market to justify the cost of developing AAA games. They need PS4 I dont know what they can do for Vita. Nintendo can always roll out a mario/mario kary/zelda game, you know your at least getting that with any nintendo product...

k s
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Given the state of sony as a whole and continued decline of the playstation brand I don't think sony will be with us much longer. They aren't making money at all, in fact they are hemorrhaging money, and people aren't interested in their brand.

Really if sony wants to stay in the games industry (assuming they can survive much longer) they need to get out of the hardware business and stick to software, they just don't have the stockpile of cash required to launch any new systems.

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Denis Nickoleff
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It's unfortunate but not surprising considering they delay product features for game conventions. Nintendo delayed the e-shop for e3, sony delayed psone classics on the vita for whatever convention they're at next.

Not really a smart move when you're already offering so little.

Amy Austin
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The PS3 is actually a great console. I chose it over the 360 because of the Blu-Ray player, knowing that since I'm not a hardcore gamer I would get my money's worth out of the Playstation and not so much out of the 360 (this was before Netflix, Hulu, etc. were added to the consoles). Now that it has not only the Blu-Ray but also Hulu, Netflix, Amazon's streaming movies, and the NFL Sunday Ticket, I rarely turn the console off. It has become my all around entertainment unit. (I know Hulu and Netflix are also available on 360.) I do, however hate developing for it, you can tell Sony isn't a software company it's a complete pain in the ass to work with over the 360 in terms of dev. Though that gripe shouldn't effect retail sales... I think the PS3 got a bad name early on for various reasons and people don't know what they're missing out on when they choose the 360.

Kelly Johnson
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I have owned a PS3 and Xbox360 since they came on the market. I have used my Xbox360 daily while my PS3 gathers dust. Why? The xbox just does a better job at "added value" and it offers a more seamless experience. I have had nightmares dealing with the Playstation support. They were not able to change my password once the hacking debacle happened and now I have $$ in my Playstation account that I can't use because the PS store says my unit is registered under another system which is bollocks. All I did was move my residence, I still have the same machine. Because of the weak lineup of multiplayer games the gaming community is not robust as it is on the xbox. I have logged over 100 hours on multiplayer (Gears of War 2, various Halo games, and Mass Effect 3 to name a few). Mostly I watch Blu Ray movies on the PS3 but don't do that much since I canceled Netflix. It is sad because the PS3 is a really cool and technically sound device.

Omar Marshall
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Sony needs to do something and do it quickly. I really like their products. the ps3 is awesome not too sure about the vita tho.

I use my ps3 much more than my 360 why? My 360 red lighted out and that was the end of it (I live in Jamaica so i couldn't send it back) I have the fat 60g ps3 for so long now and it still works. Even the lens still works perfectly. So i think they make device that last.

I have the wii from launch and always plays it. I have it till today and still plays it more than than any of the HD twins.

I do want sony to recover tho cause i do enjoy their first party titles on the ps3 eg Encharted, killzone etc.

Henry Tuttle
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Are Amy Austin and Kelly Johnson real people or astroturfers?

Geoff Yates
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Sony launching an expensive new piece of hardware in the midst of a world wide recession really wasn't the smartest thing. PS Vita is a great system but we are in a world where money isn't a luxury its a tough call. Especially when people are forking over good dollars for the latest smart phone. The 3DS is comparatively cheap (it took a price drop to reboot its fortunes as well). Backwards compatibility issues. The stars aren't aligning.

Wii U may also languish if the price point isn't right. However its launching just in time for Christmas so parents (and avid gamers) can use that as the excuse to purchase. Its the months after will tell if the economy is bright enough for large capital outlays.

Sony's PS3 exclusive line up of games is impressive so if they ever decide hardware isn't a game they wish to play anymore I think they would still make good money. Haven't looked at the mobile phone business but that is another market they should drop out of. Samsung, LG, Apple, HTC, etc. these guys mass produce great products.

Stop blowing billions on research and development for gaming consoles. Use off the shelf products. Nintendo and MS have been doing that successfully. Common sense may prevail for PS4.

Derrick Lim
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Maybe if Sony stop pricing memory sticks for the PS Vita at ridiculously prices, it might make the platform more attractive. I think the pricing of the device is sensible, but selling storage at such a high premium while trying to promote downloadable games via the PlayStation Store seems to be as if the decision was made by two difference executives with no idea what the other was doing.

Camilo R
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Sony re-released a PS2 game for Vita and it had a boost. This is a simple and effective way to get something going, people obviously care for PS2 games. Yet Sony removes PS2 BC from PS3 and doesn't even port the PS2 library to Vita. Things that simple can have an effect and Sony seems oblivious to it.

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This user violated Gamasutra’s Comment Guidelines and has been banned.

justin revell
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Just stop making portable gaming system no one plays them. Start a app store so I can download games to my IOS or Android smartphone and price them responsible. But thats just my opinion!!!

Joel McIntyre
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I think they'd do better if games were "cheaper" - money and time - to make for their systems. "Minis" were a good step (but could be better), and don't they have a new push going? But something that can make a shoestring dev house turn out several quality games a year would be a big help to them, I think. I like the PS3 interactions better than Xbox360, though I have fun on both. But if hardware is as cheap as it gets, then they need more games and apps to get money from existing owners.

Daniel Miller
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BLARGH!


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