Lower than expected sales contribute to huge losses.
Sony has confirmed plans to reduce the headcount at its Games division and implement "restructuring measures".
The move comes after it revised its forecast for the financial year 2008, which ends on March 31, 2009, painting a bleak picture for the PlayStation brand.
AdvertisementIn the Game segment, operating income (loss) is expected to be lower by approximately ¥30 billion (USD 337 million / EUR 258 million). Of this, approximately ¥15 billion is due to the impact of the appreciation of the yen and approximately ¥15 billion is due to "lower-than-expected sales".
Sony's revised game console forecast estimates sales of 10 million PS3 units worldwide by the end of its 2008 financial year (no change from its previous forecast), 15 million PSPs (down from a forecast of 16) and 8 million PS2s (down from a forecast of 9).
Sony forecasts 250 million software sales for the financial year.
Yesterday NPD data revealed that Sony's LittleBigPlanet had sold 611,000 units in the US, helped largely by a strong December which saw sales of 255,000 units. PS3 FPS Resistance 2 is also hovering around the same total, with 598,000 units shifted (Nov 385k, Dec 213k). Metal Gear Solid 4, released back in June, sold 775,000 units on its debut month and has now gone on to sell 1.076 million units.
As part of its restructuring and cost reduction initiatives, which aim to reduce losses by a whopping ¥250 billion for the financial year 2009, Sony announced that its pictures, music and game businesses will see a "headcount reduction and other restructuring measures". It is not clear at this time what this means, exactly, for the PlayStation brand.
Additionally, as part of "non-restructuring cost-reduction measures", Sony plans to implement "significant reduction in marketing, logistics and other general expenses".
Earlier in the month SCEE boss David Reeves revealed that first and foremost Sony as a company must begin making money and only then can the company move forward with the PlayStation.
"The most important thing for us as a company in the very short term is for us to start making money," said Reeves. "This is a pledge that was made last March and is something that we are still very much on target to achieve."
What do you think Sony's losses mean for PlayStation? Let us know in the comments section below.
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Other eastern based electonics firms are suffering similarly, e.g. LG in Korea reported it's first loss recently.
One could argue that this is the worst time possible to try and sell the most expensive console but I'm pretty sure Sony will pull through, other industries are going to be hit much, much harder, e.g. car industry, housing market etc., so a £299 price point is really a drop in the ocean compared to other cutbacks people are making.
Pretty sure that Sony can take full advantage of the fact that more and more people are staying home these days rather than going out to find entertainment.
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I said it before, and I'll keep on saying it. What SONY need to do is release a BluRay free version of the console. Regardless of what the price is today, people remember that original £400 price point. It is a huge mental barrier to cross for some, as only the hardcore gamers will ever consider spending more than £200 on a console.
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When making the purchase the primary point that counts is the cost of the product they buy. Making the 360 or Wii a more tangeable option. The Wii sells at a profit and the software sales carry the 360. PS3 has neither and the console deficit is estimated at £120 per console still. Yes this is a far way off the £220 of launch but still. We have already seen cuts to the console. No Backward compatibility etc.
When you stock pile consoles that are not selling and advertisement is not bringing in game sales to cover the console deficit then the company starts to falter. Sony haven't cut PS3 prices as they feel their consoles worth is still high. It's literally as they cannot afford a price drop at this point in it's lifecycle. Sorry but i feel the Sony price point is too high and unfortunately theres not a lot Sony can do to remedy it.
I'm sticking my head out here and saying unless the economic downturn starts to recover then Sony Entertainment is a company heading to the glooms of recession.
I also believe if we wern't in this current crisis the PS3 would have caught up more with the other consoles over the holiday period.
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Ok Sony are loosing money, but thats because people are so use to the 360 and quite happy with not changing. Thats fine, i dont blame them, but these times are hard not just for the comapnys like Sony, but for customers. The credit crucnh has effected us all! If there was no credit crunch, lets face it, people could afford 289 quid for the console.
The PS3 has more to offer than the other consoles, people just dont choose to have it, because they feel they dont need it. Well thats ok, but i want my console to sing and dance, but it also saves me money by not forking out for a blur ray player, seperate games console, dvd player, wifi dongle, subscription to multiplayer gaming, and everything is wireless apart from the 2 cables. Did i not mention how quiet it is lol
I don't care how many people feel its too expensive, i bought one on release for 400 quid, im not complaining about what i have got. Maybe you need to stop being tight and actually try the damn thing proplerly (not playing your mates) and experience it.
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They need 10 x the Killzone 2 or LBP titles to really boost their sales.
I don't think we've seen the end of the PS3 or the Playstation brand by any means, the PSP would more likely be the first casualty. What they'd need to do (and what it sounds like) is to cut costs of production further both in hardware and software. This can be done by headcount, merging teams and streamlining the process.
Many companies, including mine, have done the same to get ahead of the difficult times and produce some profit at the end of the day.
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PB you have been given great games on the PS3 yet still no one buys them the sales for LBP are quite frankly shocking! There was some guy on here that ripped into the sales in Game when they played it on the same level as Wii Fit Mario Kart and Gears of War 2 for sales. Its Christmas sales are weak. Sony owners aren't buying games. What we need to know is WHY? One other thing is that the PSP is in it's n'th year and is actually now profitable at point of sale so this would not be a reason to consider for decommission obviously the PS3 is a loss monger and without sales of the PS2 of all things would have Sony nigh on bankrupt!Last edited on Thu 22 January 2009 by Karlius
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December was a good month as far as sales for the year, but down on last year, which just means that less people were buying the console in December, but more people overall were buying the console in 2008 compared to 2007.
In addition, LBP did sell 1.3 million units worldwide and although it looks small compared to a flagship 360 title like GOW2, it's not bad considering the user install base is only half. It's the same story with POP on the 2 systems, the 360 version outsold the PS3 by 30,000 units, which sounds about right for the install base.
Software will only be bought by people who have the console, then there are those who buy the console purely for the Blu-ray (I know at least 2) and maybe by 2 game titles in their first year, if that. Again, there is an arguement there that Sony should be shifting more PS3 units just because of those buying Blu-ray, but in my eyes they really haven't done enough to sell the technology to the average household as yet.
However, even with this in mind, the sales aren't strong enough for Sony to see profits from console losses and it's no point arguing that the 360 has an extra year's start because the profits matter now, not in a year's time. I'm not blinkered by the fact that it's Sony. Any company can get into trouble in these conditions, but I do think they'll create a strategy for the short term which includes keeping the PS3 afloat.
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If they still sell a fair amount then Sony will still make them.
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Someone made a point on last page about it not being Nintendo or Microsoft its well known msoft are also making jobs cuts with figures between 6000 and 13000 jobs to go. The final has just not been made yet. Msoft have also lost quite a large number off their share price overall for 08. My case in point is no one is recession proof by any means.
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If they still sell a fair amount then Sony will still make them.
» Go to pblive's original post
If they still sell a fair amount then Sony will still make them.
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