Sony not expecting PS3-like losses for PS4

CFO Masaru Kato says company's investment for next-generation console is "much, much smaller" than last model.

For the PlayStation 4, Sony is not expecting to incur losses on the same level it did with the PlayStation 3, according to Sony Computer Entertainment CEO Andrew House.

"We will not generate anything like the losses we did for the PlayStation 3," House told Bloomberg.

According to the report, Sony lost more than $3.5 billion in 2007 and 2008 after the PS3 launched for $600 in 2006. CEO Kazuo Hirai has said the system did not become profitable until late 2011.

Sony aims to avoid PS3-like losses for the PS4 in part due to a smaller investment in the PS4 relative to the PS3, CFO Masaru Kato said on a recent earnings call.

Kato said Sony spent "hundreds of millions" in designing the PS3's chip set and "billions" on semiconductor fabrication because these technologies were not readily available.

"There were no manufacturing capacity or technology to manufacture these chipsets. So the amount of investment that went into PS3 was quite big," Kato said.

By comparison, Kato said the PS4 is a much "lighter" platform in terms of investment due to its PC-like architecture.

"At the core, we are taking off-the-shelf technology available and we are putting our proprietary technology around that core chipset," Kato said. "The amount of investment is much, much smaller. I cannot give you the absolute amount."

The PS4 launches worldwide this holiday for $399/€399/£349, a full $100 below Microsoft's Xbox One.

Sony is no longer guaranteeing that PS4 orders in the United Kingdom will be available on launch day.

Written By

Eddie Makuch is a news editor at GameSpot, and would like to see the Whalers return to Hartford.

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Discussion

337 comments
Wanderlei777
Wanderlei777

Sony have been trying to say the loss on the ps4 will be around $60, of course this is complete spin to hide the reality.

The unit cost isnt telling much of the actual profit they are going to do with the machine. All those buildings must have their lights turned on and the horde of officeworkers needs to be payed a salary somehow. They must advertise, the cost of logistics, warehouse and distribution, etc Also taxes.

On top of;
-Losing well over $8 billion on the ps3, more than their ps1/2 profits combined.
-Losing $2 billion plus on the Vita
-Getting destroyed by Samsung and LG in consumer electronics,
-Apple destroyed them with the iPod and iPhone

Sony's market cap value 1/10 of what it was 10 years. They have crippling debt running over 90% and are liquidating assets left and right just to keep the lights on.

Andrew House wasnt lying when he said Sony cant afford another failure. If things dont go well it could very well be a Dreamcast and have its life cut short and be Sony's exit from the gaming hardware business.

Heil68
Heil68

Thank you Sony. By gamers, for gamers.

edinko
edinko

Its built with a standard off the shelf CPU/GPU that cost about as much as 2-3 big pizzas. So of course they wont make a loss

Holy-Rapture
Holy-Rapture

A lot of people are saying the PS3 was a let down or disaster, I love the system. Never had any problems with it, has amazing games and well worth the price. What more could you ask for.

jayjay444
jayjay444

Yeah they plan on milking us with their online  subscription the same way MS is, we're not stupid and if thy think i'm paying for a service like that on PS3 they can fuck off but if i'm still getting the free games then u have a deal it's the only thing good about PS+ the actual service it's self is utter shit. 

Triton
Triton

Always nice when you hope to make money on your new product.

steelmouth
steelmouth

Its amazing how a company can steel survive after taking a 3.5billion yes billion with a "B" loss

Mraou
Mraou

PS3, PSP Go, PSP and Vita have been disasters for Sony (some more than others). They're doing things much better with PS4, but it's hard to forgive them for their past mistakes, not to mention their notorious arrogance and horrible marketing campaigns, etc.

19James89
19James89

There seems to be a strong correlation between consoles that sell well and arrogance creeping into the manufacturer of that said console. 

The PS3, the Wii U and the Xbox One seem to confirm this. Rest on your laurels at your peril, because if you do such a thing, the consumer base will punish you for it.

__Metallica
__Metallica

And with this generation Sony will make money of every X1 sold :-)

AzatiS
AzatiS

I was Playstation fan for years with PSX and PS2. I thought PS3 would be the perfect system before its release..


Ps3 did everything wrong ... EVERYTHING... The main reason i didnt buy a PS3 and i sticked to PC gaming. 


Thats the main reason why PS4 does everything right though. EVERYTHING!! So maybe PS3 was a fluke but that helped PS4 being the monster it is now with the price it is... Sony learned from mistakes of PS3.

PS3 = a letdown more or less as a system which didnt deliver what Sony hyped it for.

PS4 = simple yet exciting system that praised from gamers to developers in a very compelling price. What more to ask.

robbiejones
robbiejones

fact. you can use Microsoft's Skype service free on playstation vita but not on xbox one lol

1blackone
1blackone

So NOT making your chip-architecture out of the Cosmic Cube and NOT writing your Programming code in Reversed 3rd-Century Aramaic results in LESS EXPENSES, stronger Dev support, and quicker product turnout?

WHO KNEW?! OHMAHGAAU!

spidermanmon
spidermanmon

there going to lose money on the ps4  too i am not going to buying it any time soon.I like my ps3 to much

hadlee73
hadlee73

You know a company has stuffed things up when it is the second-best selling system of a gen world-wide (behind Wii) and still makes losses.

blackace
blackace

Well Duh!! They aren't creating their only CPU chip and Blu-Ray is dirt cheap now. So that's a no brainer. After losing more then $12 billion on the PS3, I would hope Sony has gotten wise to the pricing of new hardware this time around. They also ditched the MOVE, so that's something else they don't have to spend money on anymore. They will still lose some money for the first year, but they should be golden after that.

DrKill09
DrKill09

No crap.  Blu Ray drives are dirt cheap now, and they aren't using custom hardware. 

hp2110
hp2110

If the Yen keeps falling like it currently is, and the dollar continues to rise (which it is expected to) it will be very very difficult for Sony to turn a profit off of the PS4. I have a feeling they will have to raise the price. I don't think they will risk losing money on this console considering Sony's stock value rides on the performance of this console.

Zach Samuel Magaro
Zach Samuel Magaro

yeah well there exclusives are terrible thats why all the good ones went 3rd party hopefully they make another last of us then i will get one

Monsterkillah
Monsterkillah

Well I hope PS4 and X1 succeed

Can't say the same for Wii U though

jayjay444
jayjay444

@steelmouth The PS4 is there last roll of the dice if this fails the company could be in the shit i'm getting the PS4 but i'm honestly thinking of canceling it. 

freedom01
freedom01 moderator

@Mraou I have to disagree on the PSP and Vita, they might have been disaster in the US, but in Japan its selling very well, maybe not as much as Nintendo's handheld but they are still popular. Even now there are still games being made for the PSP and the Vita is slowly rising also.

daemonproject
daemonproject

As MS own the codec VC-1 used on Blurays! So it goes both ways :)

nanorazor
nanorazor

@AzatiS In other words the major problems with PS3 was Blu ray and the Cell Processor

Benny_Blakk
Benny_Blakk

@AzatiS I think the major let down is on SONY's side in regards to profit. Yes, the first 2 years were "rough" as an owner (I had no complaints, but I'm just one guy), but once their first party games started rolling, you can see how good a console it really is. 

I think the PS4 will have better balance as far as price and power at a reasonable price. Best thing is the better games will come earlier this time around.

Just my take.

Nyrex
Nyrex

@robbiejones You're right, but because multiplayer is a huge part of console gaming I'm guessing a good 95% of Xbox One users will have a gold account anyway... 

OldKye
OldKye

@spidermanmon Due too lower investment, the backlash of the X1, and being sold out for launch.

I doubt they will lose money at all the problem with the PS3 was high initial cost which is a fixed number so in a long run model you become profitable(pay it off basically) once you sell enough units.

My guess is they will pay off almost all the initial investment with the sales at launch.

shanthjibu
shanthjibu

@hadlee73 worldwide, ps3 sales is way ahead of the 360. 

WolfGrey
WolfGrey

@hp2110  

Uh considering that the PS3 sold well worldwide..... the PS4 won't have any issues with it.

A money value in one country won't damage them.

MjnE
MjnE

@Monsterkillah why? it fractures the gaming community and leads to devs making exclusive games/content for one of them..

lostn
lostn

@daemonproject Blurays stopped using VC-1 years ago. I even forgot all about that name until you just brought it up. It was the original HD-DVD studios that used it (one encode for both HD-DVD and BD). The BD exclusive ones did not. They used AVC primarily, with some older releases being MPEG-2.

Microsoft does make good money selling Windows on Sony laptops however.

lostn
lostn

@Nyrex @robbiejones The statistics are that half of Xbox 360 users have never connected to the internet.. so you're 95% is wrong. 

Aaronp2k
Aaronp2k

@sev2010 @coolmayur00191 they did better than microsoft last time aswell, it took a while mind you but they finally managed to overtake microsoft in sales thanks to the majority of europe backing their console. it tends to be only americans who buy xbox.

Irishman317
Irishman317

@OldKye You do understand that pre-orders selling out mean absolutely nothing for a system. I mean, the Wii U friggen sold out of pre orders in its first two weeks.

lostn
lostn

@Nyrex It was current as of December 2010. A report as of April 2013 says that 46 million use Xbox Live (out of 76 million sold). It does not mention whether the 46 million are Gold members, or if it includes Silver. But let's assume it's Gold, that's still only 60%, a far cry from the 95% you claimed.

Nyrex
Nyrex

I'm pretty sure that those statistics were based on old information from 2009.

freedom01
freedom01 moderator

@constantterror @Aaronp2k about kids playing fps and shouting on the mic, we can all agree that they exist in all of the consoles. 

constantterror
constantterror

@Aaronp2k Yea cause all the 12 yr olds wanna play galo and all the other crappy fps and cry on the mic like wussys I prefer a mans console which is Playstation 1,2,3,and soon to be PS4 anything American made console can fail fars I care don't get me wrong I love America but lets face it they suck at making a good gaming console.

OldKye
OldKye

@Irishman317

Wii -U wasn't able to make many ergo they didn't sell many also almost all sales are the pre - ordered ones(not counting returns and pre - orders not picked up).

Not only are there likely to be hundreds of thousands of consoles in the first few shipments for Xbox One and PS4 but it looks like demand will remain fairly steady as neither game wise derives too far from the norm.

Further more the Wii - U had a large development budget which is what is hurting the bottom line once again a fixed number(due to poor unit sales)

Your comparing apples and carrots my friend.