Sony to break-even with PS3 in 2009

[+Audioboxer Subscriber²]

A Sony exec for the PAL territories dropped a big hint recently as to when the company expects to break-even with the PS3 business. The exec also dispelled rumors of a pending price drop despite the current financial crisis. According to the executive, Sony is on track to breaking even sometime in 2009.

I wrote a story back in October where I stated that Sony was indeed very close to breaking even, after studying the company’s financial reports. If you read the story here, you can see that some of our readers accused me of making “unsupported speculation.” Even though I clearly pointed out that the financial report indicated a reduction of 60% in operating loss.

When a company reduces operating loss by that much while software sales have been comparable (shift from PS2 software sales to PS3 software sales) you can bet that the company is very close breaking even by reducing manufacturing costs. According to MCV, SCEE President David Reeves stated that getting the Computer Entertainment business back into the black after two years of reporting losses is their top priority.

He also indicated that despite rumors of an imminent price drop, it will not be happening anytime soon. Reeves said that the company will focus on providing a more value added package rather than drop the retail price of the system.

“As soon as we got the manufacturing price down on PSOne we lowered the price. Same with PS2. But we’re not doing that on PS3 – that’s not the model, even if people are expecting it.”

The reason Sony won’t be reducing the price as soon as manufacturing costs have been lowered is to reach parity with a break-even cost of manufacturing. If Sony constantly reduced price as soon as manufacturing costs have been lowered, the company would never break-even.

However, once the break-even point is reached, the company can start aggressively competing with price. Reeves stated, “Next year we are probably going to be a little bit more aggressive when we reach the break-even point.”

Reeves also indicated that the PS3 is currently outselling the Xbox 360 by 300k units in Europe. Considering that the PS3 launched 16 months after the Xbox 360 in Europe, that is an impressive feat. It is too bad for Sony that the marketing team in the U.S. hasn’t been as competent.

Source: http://gamer.blorge.com/2008/12/04/sony-to...th-ps3-in-2009/

Good news for gamers, we knew they were being stubborn about price cutting due to the losses, so the sooner that ends the better.

This means hopefully better priced consoles and the room for slimline consoles. Meaning more casual people can actually easily afford the PS3.

But oh of course, I still await the usual barrage of "too late" comments, seeing as you know, next year will be year 3 of the PS3 - Year 3 is often known as too late for new games around Neowin, so it's gotta be too late for price cuts as well right? :p

Still in my books, watch around Feb, I think they might cut for KZ2 release...

[Michael1406]

Break even already? Doesn't it usully take longer?

Anyway, this is positive news, which hopefully means they'll be more obliged to make us happy.

[LTD]

When will MS break even with the Xbox?

Correct me if I'm wrong but last I heard it was a money-loser. Then again, I don't think that would have had any significant impact on MS anyway.

[DPyro]

They are probably breaking even earlier because of PSN and Qore.

[Mathachew Veteran]

Sony had a deal a few days ago on their site where you could use a Playstation card to buy a PS3 and get $150 credit, basically costing you $249 for a PS3. My friend took advantage of it.... little punk. Anywho, it will still be a while before I get a PS3, but we'll see if they actually do make it and if prices are lowered.

[+Audioboxer Subscriber²]

They are probably breaking even earlier because of PSN and Qore.

Nah, everyone seems to forget the PS2 and PSP which have been selling well, especially in the PSPs case, have been making profit for many years.

When it comes to NPDs, no one really pays attention to them, it's all about the PS3 - When really, in terms of Sony's financial situation the PS2 and PSP have been vital to the PS3.

[Ricardo Gil]

Too late Sony. You know, next year will be PS3's 3rd year, and as we all know around here that's too late for new games, so it's too late for price cuts as well.

[FlibbyFlobby]

I think a PS3 slim would be really nice (presumably there will be one). I'm looking forward to the day I can take my HD gaming and media hub about in my rucksack around friends etc. :)

[Sethos]

When will MS break even with the Xbox?

They are already breaking even as far as i know.

[+Audioboxer Subscriber²]

Too late Sony. You know, next year will be PS3's 3rd year, and as we all know around here that's too late for new games, so it's too late for price cuts as well.

Well said.

People should listen to this guy.

They are already breaking even as far as i know.

They will be.

No way in hell they'd chop 360 prices as low as they are if they weren't, regardless of how rich MS is. It would just be inefficient business practice representing a panic to cut that low if you were still bleeding money, and MS are in no panic last time I checked. Not to mention like the article above states, it would make it very hard to ever break even if you cut too early.

[LTD]

They are already breaking even as far as i know.

Thanks. I would assume a much, given the Xbox's popularity.

[spacer]

Price isn't the reason I haven't bought a PS3 yet. It's the lack of PS2 compatibility that's stopping me. Fix that, and I'll buy a PS3. But, at least it'll be cheaper soon; that's good news for most.

[Ricardo Gil]

Well said.

People should listen to this guy.

Damn, guess I was maybe too subtle playing with your own words...

[FlibbyFlobby]

Price isn't the reason I haven't bought a PS3 yet. It's the lack of PS2 compatibility that's stopping me. Fix that, and I'll buy a PS3. But, at least it'll be cheaper soon; that's good news for most.

I know this is only a rumour, but it would be good if it happens, especially if they start selling PS2 titles in the store.

[+Audioboxer Subscriber²]

I know this is only a rumour, but it would be good if it happens, especially if they start selling PS2 titles in the store.

What also helps fuel that is on the ratings site (ESRB?) Rayman 2: Revolution the PS2 game has recently been listed for PS3.

[kyro]

wow. pretty blatant slamming of marketing team in USA .

I really wish Sony try to focus indian market, keeping the indian site completely outdated and no Indian Playstation3 store with local PSN servers doesnt really do good for any owner like me who wants to recommend PS3 :( .

http://in.playstation.com/ps3/news/ that site is Joke, it still is filled with 2007 news and games updates , guess no one even bothers checking.

if anyone here on neowin who is inside sony ps3, please try to ping them about this on behalf of me.

[The Teej]

Sony's already getting aggressive, A Sony rep came into work today and told us about this new mega deal that's hitting stores:

http://www.game.co.uk/PS3/Hardware/Hardwar...Games-1-Bluray/

PS3 80GB

DualShock 3

Mirror's Edge

Fifa 09

Motorstorm Pacific Rift

Prince of Persia

LittleBigPlanet

Transformers on Blu-Ray

?348.49>

If that's not being aggressive, I don't know what is.

It's just a damn shame this is only around until christmas:(( I'm unbelievably gutted, because there's no way I'd get that kind of money before Christmas.

[+Audioboxer Subscriber²]

While ?350 ain't exactly pocket change, that's one kick ass deal for a new owner who can afford it.

[Kronir]

Sounds like Sony and the PS3 are doing better than we thought. This is good news. :D

[The Teej]

While ?350 ain't exactly pocket change, that's one kick ass deal for a new owner who can afford it.

Well ?300 isn't eithe:p:p But this will most definitely sway people who are on the fence about whether to get a playstation or a 360, and people who have that kind of money to spare (and yes, there are MANY people with that kind of money to spare, this credit crunch crisis is a load of bull IMO) will gladly opt for the extra ?50 and get 5 amazing games and a Blu-Ray movie to boot.

If it wasn't for the fact that I'm no longer sure if I'll be getting a PS3 for christmas, I'd be extremely tempted (read: probably would) get this PS3 bundle out of my overdra:p :p

[+Audioboxer Subscriber²]

Well ?300 isn't either:pp But this will most definitely sway people who are on the fence about whether to get a playstation or a 360, and people who have that kind of money to spare (and yes, there are MANY people with that kind of money to spare, this credit crunch crisis is a load of bull IMO) will gladly opt for the extra ?50 and get 5 amazing games and a Blu-Ray movie to boot.

If it wasn't for the fact that I'm no longer sure if I'll be getting a PS3 for christmas, I'd be extremely tempted (read: probably wouldget this PS3 bundle out of my overdraftb:p:p

Yes, make your bank buy your PSTriple!!1111