Sony To Sell Vita At A Loss For 3 Years

[The_One]

I don't think Sony has a choice on this matter. They've learned from PSP/PS3 that horse power alone won't win. But if you have horse power AND price point, you can certainly tip the battle in your favour...

[Dave-The-Rave]

Which is it then?

http://playstationlifestyle.net/2011...le-on-day-one/

[The_One]

Which is it then?

http://playstationlifestyle.net/2011...le-on-day-one/

I'd take Kaz's words over the words of a single-region VP. In short: Kaz is probably right, and the PSV will be sold at a loss.

[Jo-san]

Makes a mockery of the previous comments by fellow forum-members in having 'no reason to doubt Sony'; when the Sony management don't appear to know what is going on. Complete absence of joined-up thinking.

[Ghost-Rhayne]

Makes a mockery of the previous comments by fellow forum-members in having 'no reason to doubt Sony'; when the Sony management don't appear to know what is going on. Complete absence of joined-up thinking.

Thanks for your insight there pach attack.

[Jo-san]

Thanks for your insight there pach attack.

[DreDayDetox]

LOL ^ calm down. No one is fighting anyone.

[*goo]

Thanks for your insight there pach attack.

I'd call that an astute observation. The left hand indeed appears to not know what the right is doing.



(Either way, I've pre-ordered...)

[Wasib]

I found a little extra bit of information on this:

Q: The PS Vita price was a nice surprise at E3. But at that price is the system going to be sold at a loss form day one?

Andrew House: I think as a business it will definitely be profitable from day one. In terms of hardware specifically, it's really not something we tend to comment on, but I would say it will be a significantly better situation than for example, the PlayStation 3. This is in a much, much healthier place from a profitability stand point.

That was an interview conducted by gamesindustry.biz. Full interview can be found here:

http://www.psu.com/forums/threads/27...11#post5583211

Basically that means hardware loss (if not a massive loss) but combined with software/accessory sales Sony expect Vita to be profitable from day one. I think it does not take a rocket-scientist to figure out the hardware will perhaps be sold at a loss - the specification is very high and yet the price $249 very reasonable.

So Scott Rhode, VP of SCEA, was referring to the combined position (hardware/software/accessories) of Vita alongside Andrew House. Kaz Hirai was talking from a hardware viewpoint only. That is the difference - they do have the same position - it's just that they were talking about different things which is completely acceptable given that they were being interviewed by different people who ask different questions.

Ultimately (as usually is the case) the source of confusion has come from a source in the opening post that is of poor quality - the better sources are below:

http://www.andriasang.com/e/blog/2011/06/08/vita_loss/

http://www.eurogamer.net/articles/20...ss-making-vita

[luluxiu]

I think that VITA will be close to break-even is the line, .. but in three years, which will eventually break even. To be honest, I know people who buy the first day of the dimension of his lot, I think it will break even 2 years to be honest.

[O.J. Mayo]

I think this is bs. I hardly believe it costs them 250$ to make 1 vita. Even if it does cost that much for them to make it they make up that loss on the 1st party games

[Seahawkk]

I think this is bs. I hardly believe it costs them 250$ to make 1 vita. Even if it does cost that much for them to make it they make up that loss on the 1st party games

it doez probably a lot more than you think

[Bitbydeath]

I think you're confusing business with public relations. Let me adjust your statement to reality.

If you're not making your customers think they are first then you are failing as a business. The most important thing is to make money.

Small businesses capable of being run by one person do so because they love it and happen to be able to make money. Large publicly traded corporations do so to make money.

I hope you do not really believe that.

[BoyBettaKnow]

Exactly, the reason why they are making this product is for the fans, for the love of gaming and for world betterment. This vita is "life" meaning that it is bringing new life into the world of gaming with a completely new, fresh and selfless act by Sony.

More companies should take their lead and make products with not an aim for profit ( which is overrated anyway) and perhaps they could get learn from Sony.

Love live Sony. Long live Vita. Peace.

+Rep
(when I can)


BBK Is Tapatalking

[Jo-san]

I hope you do not really believe that.

Are you suggesting that Sony is a charity and not an profit-generating international corporate?

If Stringer and other top-level members of Sony Group's management started saying that they are positioning Sony not to make money, the Sony Group would go bust. Nobody would lend them money, the share price would collapse, suppliers won't supply components, there would be a talent drain, and consumer confidence in the business would capitulate.

I don't use these often, but:

[Bitbydeath]

Are you suggesting that Sony is a charity and not an profit-generating international corporate?

If Stringer and other top-level members of Sony Group's management started saying that they are positioning Sony not to make money, the Sony Group would go bust. Nobody would lend them money, the share price would collapse, suppliers won't supply components, there would be a talent drain, and consumer confidence in the business would capitulate.

I don't use these often, but:

Nobody said anything about not making any money.

[Jo-san]

Nobody said anything about not making any money.

Then why did you question Tyriens' comment about companies making money (ie after-tax profits to be dispersed to shareholders in the business)? We live in a global capitalist-orientated economy, not some airy fairy Karl Marx utopia.

[Bitbydeath]

Then why did you question Tyriens' comment about companies making money (ie after-tax profits to be dispersed to shareholders in the business)? We live in a global capitalist-orientated economy, not some airy fairy Karl Marx utopia.

Profit is different to making money.

I've bolded the main part so you understand it better.

prof·it/ˈpräfit/

Verb: Obtain a financial advantage or benefit, esp. from an investment: "the only people to profit from the entire episode were the lawyers".

Noun: A financial gain, esp. the difference between the amount earned and the amount spent in buying, operating, or producing something.

[Jo-san]

Profit is different to making money.

I've bolded the main part so you understand it better.

What on earth are you rambling on about, the whole reason this was brought up originally, was because you stated on the previous page:

Profit is overrated... When you are running a business you should be doing it cause you love it not cause you want money.

If Sony isn't in business to make a profit - it will go bust, simple as.

What is ultimately so comical is that someone who probably still lives at home with their parents is lecturing to me about making money when I run my own lucrative financial services business with offices in London and Tokyo.

[Bitbydeath]

What on earth are you rambling on about, the whole reason this was brought up originally, was because you stated on the previous page:

Profit is overrated... When you are running a business you should be doing it cause you love it not cause you want money.

If Sony isn't in business to make a profit - it will go bust, simple as.

What is ultimately so comical is that someone who probably still lives at home with their parents is lecturing to me about making money when I run my own lucrative financial services business with offices in London and Tokyo.

Personal attacks are a good sign you are losing the argument, you should just stop now.

[Jo-san]

Personal attacks are a good sign you are losing the argument, you should just stop now.

No. What it exemplifies, is that by failing to come back with any points pertinent to the tangent of thought in the thread, you have no argument to win.

Furthermore, if you're going to play the 'personal attack' victim card, conceivably you ought to heed your own words by not providing someone with considerable familiarity in money matters a retort consisting only of the definition for the word 'profit' (post #43).

[Ghost-Rhayne]

No. What it exemplifies, is that by failing to come back with any points pertinent to the tangent of thought in the thread, you have no argument to win.

Furthermore, if you're going to play the 'personal attack' victim card, conceivably you ought to heed your own words by not providing someone with considerable familiarity in money matters a retort consisting only of the definition for the word 'profit' (post #43).

Making a profit is important for a business, but it can't come ahead of your customers as they are the life blood of any company. Sony know what they are doing with their console prices. House called it "blended margins" or something; making little/losing money on the console and making it up in software and accessories which have a much larger margin. Is it the best strategy? I don't know, but when Sony sells me an awesome piece of gaming tech like the PS3 or Vita, and I know they are not profiting or are even taking a hit, I respect their business plan and their general philosophy because not many companies are willing to do that. On top of this financial sacrifice on their behalf, they then go on to release the industries most impressive and biggest catalog of games while the competition, who is reportedly significantly better off is doing jack shit, and instead chases after the casuals to make more money. This isn't how Sony treats their customers, and it's why I appreciate the company so much.

[Jo-san]

Making a profit is important for a business, but it can't come ahead of your customers as they are the life blood of any company. Sony know what they are doing with their console prices. House called it "blended margins" or something; making little/losing money on the console and making it up in software and accessories which have a much larger margin. Is it the best strategy? I don't know, but when Sony sells me an awesome piece of gaming tech like the PS3 or Vita, and I know they are not profiting or are even taking a hit, I respect their business plan and their general philosophy because not many companies are willing to do that. On top of this financial sacrifice on their behalf, they then go on to release the industries most impressive and biggest catalog of games while the competition, who is reportedly significantly better off is doing jack shit, and instead chases after the casuals to make more money. This isn't how Sony treats their customers, and it's why I appreciate the company so much.

You need customers to make profits (as long as your costs aren't greater than your turnover) - without them, you can't make profits. In summary, the key in business is being able to balance each and maximise the profit opportunities from both; Sony have failed at both.

The idea of 'blended margins' isn't new either; that's been Sony's business plan since the PS1: sell the hardware at a loss, recoup it on the software when you've got a dominant position. The problem with this situation is that Sony only generated chunky returns on the PS1 + 2 when it had dominant control (off the top of my head Sony had 75% of last generation consoles were PS2's); when that dominant position failed to materialise with the PS3, it was part of the problem behind the significant losses.

The problem with the Playstation brand is that there aren't sufficient numbers of likeminded hardcore individuals to yourself. Microsoft realised this and it's why they cut back on their studios and high-cost titles, because in reality, they can cover 95% of their traditional console base with the likes of CoD, Fifa, other key multiplatform titles, Halo, Gears and Forza without taking a significant hit from consumers. Subsequently despite the lack of exclusives, Microsoft have increased their catchment audience (selling more units than at any time in the divisions history), boosted the profitability of the business and operating high margins.

The way I see it, is that if you want to see future iterations of the Playstation brand in a multi-console ecosystem, Sony will have to adopt this strategy. If it doesn't adapt then I can't envision management continuing to support the brand in the long-term, especially if there are additional heavy losses and low-returns on investment. Ultimately I suspect you’d want the Playstation brand to carry on, not fizzle out.