Sony Computer Entertainment back in black

Sales of 4.9 million PS3s, 5.76 million PSPs give once-ailing game division record quarterly earnings of over $5 billion; analysts remain skeptical.

Three months after posting an $841 million operating loss for its second fiscal quarter, Sony Computer Entertainment Inc. is back in the black. Today as part of its overall earnings report, Sony reported that its game division posted a profit during its third fiscal quarter, which ended on December 31, 2007. SCEI posted a ¥12.9 billion (around $121 million at today's exchange rate) profit on ¥581 billion ($5.45 billion) in revenue for the three-month period, up from a ¥54.2 billion ($508.9 million) loss on ¥442.8 billion ($4.16 billion) the year before.

SCEI's resurgence was in large part due to the PlayStation 3. Though the console's development and production costs had been draining Sony's coffers since 2006, the company now reports "a significant decrease in the operating losses of the PS3 business as a result of successful PS3 hardware cost reductions."

As a result, Sony made money on many of the 4.9 million PlayStation 3s it sold worldwide during the quarter, an increase of 3.24 million units from the same period the year prior, when the console launched in November. PS3 software was also up, rising 20.7 million units to 26.0 million units.

Unfortunately, the robust figures didn't keep the company from lowering its oft-vaunted 11 million-unit annual PS3 goal to 9.5 million. However, even that new figure wasn't enough for some analysts. "Sony had forecast 11 million units, while we forecasted 8.5 million units," said Pacific Crest Securities' Evan Wilson in a note this morning. "While Sony is confident in its new forecast...we remain skeptical of its target."

Today's report also touted the PlayStation Portable, which saw sales rise 1.05 million units year over year to hit 5.76 million for the quarter. As a result, Sony raised its sales estimate by 30 percent to 13 million for the year. The grass on the software side was not greener, however: The 18.3 million PSP games sold during the quarter were 3 million fewer than were sold than a year ago.

Unsurprisingly, Sony spun its Q3 numbers as the first of many profitable earnings reports. Wilson, though, still thinks the PS3 is not living up to its potential. "Sony appears to be trading the long-term success of the PS3 for a near-term profit," he said. "It is possible that it could meet its reduced target of 9.5 million PS3 unit shipments as retailers ramp inventory in fiscal Q4 (March) for the anticipated releases of Grand Theft Auto IV (April 29) and Metal Gear Solid 4 (June). However, we continue to believe that the primary barrier for PS3 is price, and until the console reaches a mass-market price point, its sales will struggle." Currently, the 40GB PS3 is $399 in the US, with the reportedly discontinued 80GB model selling for $499.

393 Comments

  • Alik

    Posted Feb 1, 2008 12:06 pm PT

    Ok things to take away from this
    1) DONT listen to analysts: they were wrong about nintendo doing bad way back, and they predicted sony would be #1. These predictions proved to be wrong, if they were wrong then, they could be wrong now about predicting weak numbers for sony.
    2) this is NOT a great success for Sony. Theyre just now getting into the black, and as it stands it hasnt changed the fact that Nintendo is still pwning them. I notice this article didnt compare sony's numbers to nintendo's my guess is if they had it would be obvious they arent on par with nintendo yet.

    I am a nintendofanboy i grew up with them i cheered as nintendo took the lead. I believe they have the true vision of the future of gaming. I dislike Sony too. But I look at the reality of the situation, when sony was on top i bought a sony system and i enjoyed the games. If sony retakes the lead i may eventually buy a ps3 but as of now im still not impressed with the ps3, i am impressed with wii which is why i bought one.

    lets see what happens from here on out before we start making predictions

  • MADDjoe

    Posted Feb 1, 2008 11:57 am PT

    It's pretty sad that people think of the ps3 as a blu-ray player before they think of it as a gaming system. I think it says alot about why people buy the ps3. I do think that if sony is going to try and make a come back with this thing this is the year to do it. If they can't get out of the hole by this year I think ps3 will stay in 3rd place till next systems come out.

  • l337fool

    Posted Feb 1, 2008 11:50 am PT

    Wow sony isn't the red and all of a sudden they are gaining on the 360 in the eyes of the sony fanboy..... Try releasing a must own game for your system.... That might help.

  • Gameboy2k

    Posted Feb 1, 2008 11:42 am PT

    I want a PS3. I have a 360 now, but I want both worlds. I lost out on the last generation where I only had an xbox. I missed out on God of War 1 and 2. No longer will I lose as the consumer. When you can afford it, get all 3 systems. The game libraries combined are too awesome. We have to stop being pigheaded and not miss out on any of the exclusives.

  • Autolycus

    Posted Feb 1, 2008 11:16 am PT

    its been out for over a year now, and they got their "exclusives". it also had a millino different price drops and they advertised the PS3 more for blu-ray movies then games. if it hasnt happen yet, it isnt going to happen. the only people that arent capable of seeing that are the ps3 owners trying to justify their lighter wallets

  • phoenix009

    Posted Feb 1, 2008 11:08 am PT

    @ annegab
    It uses a hardrive not memory cards.

  • annegab

    Posted Feb 1, 2008 11:04 am PT

    Wish they would lower their prices soon. I can't afford a $400 console, controllers, memory cards and of course all the games that are going to come out

  • thebeast619

    Posted Feb 1, 2008 10:20 am PT

    @gadeos

    all of those games you mention is also on the ps 3 that why the ps3 will dominate the 360 this year. and you must not know the ps3 2008 lineup because there is more games then you just said

  • FaiThFul066

    Posted Feb 1, 2008 10:17 am PT

    Very nice to know. Sony is in the Black, so I wonder if we will more accessories and maby a little price reduction in the near future?

  • kerc_chaos

    Posted Feb 1, 2008 9:38 am PT

    I wonder how long though?

  • Oozaru_Kakkarot

    Posted Feb 1, 2008 9:37 am PT

    And soon...it will consume us all...ahhhhhhhhhh the darkness!!!

  • banka1

    Posted Feb 1, 2008 9:34 am PT

    i think the ps3's cell processor and its blu-ray will destroy the 360 this year!!

  • Yuck_Too

    Posted Feb 1, 2008 9:23 am PT

    --Timstuff --
    So we should take Sony's announcement as fact for the PS3 but GS numbers for the 360. If GS is right for the 360 why doubt their numbers for the PS3?

    But all that aside lets use your numbers...and take into account the 6 Million or so lead the 360 has...that means it will take another 6-years to catch up. Longer if we go with more conservative and accurate estimates...in order for the PS3 to catch up they would need to sell an additional 500,000 units ontop of their current monthly sales and for the other consoles to remain constant.

    Why is basic math such a foreign concept to so many people here.

  • Timstuff

    Posted Feb 1, 2008 9:13 am PT

    PS3 outsold Xbox 360 last year.

    http://www.gameblews.com/?p=6116

    Now watch, as Xbox 360's year head start completely disappears in 2008.

  • Yuck_Too

    Posted Feb 1, 2008 8:45 am PT

    --darkride66 --
    And Sony lost the same $4 Billion on the PS3 alone in 12 months across 2 fiscal years. For huge multi-facetted companies it's all part of doing business.

  • damariners

    Posted Feb 1, 2008 8:45 am PT

    uuuu i can smell the 2008 year for ps3..

  • meharu

    Posted Feb 1, 2008 8:23 am PT

    no wonder Sony is getting back the crown of the console king,it is true that the PS3 had a slow start but look at it now.

  • XanderZane

    Posted Feb 1, 2008 8:09 am PT

    It's a great time to be a gamer and own all 3 systems. I'm surprised Sony made any profit. I think it was mostly due to the PS2 and PSP sales. Sony will probably drop the price of their systems again at the end of the year. They need to stick with 1 or 2 SKU's though and stop discontinuing systems. There was nothing wrong with the 60GB PS3. They should have kepted that and then introduced this 120GB PS3 with B/C, Wifi, HDMI Cable, headset and DS3 for $499. Those are the only 2 systems they would ever need. Then during the 2008 holiday, drop the price on both systems by $100 and clean up.

  • darkride66

    Posted Feb 1, 2008 7:52 am PT

    shinchy asked "How do you go from loosing $841 Million to suddenly making $121 Million in profit?" That's a good question, one you could easily ask MS, who's game division is now in the hole something close to 4 billion between the old Xbox and the Xbox 360. The answer is easy, though. When they report sales info, it's reported quarterly.

  • aDhAmMe13

    Posted Feb 1, 2008 7:47 am PT

    ps3 staring 2 really catch up. it WILL recieve its console crown that the ps series always wore!

  • murfboyz

    Posted Feb 1, 2008 7:21 am PT

    This will be the year you see ps3 take off as interest and knowledge of blu ray reaches consumes.Lets face it you can buy ps3 for same price as bluray player who in there right mind will pass this deal up even if your not an avid gamer I have all systems and will be buy another hd tv (60inch sxrd) and I will buy addl ps3(note!) I wouldnt if it didnt have bluray player. Note I wont buy add wii.360 as neither will play hd movies yes I know of hd dvd player for 360 i have it but it appears hd dvd is going to be leaving us so i would'nt invest in another one and for the record both 360/ps3 are superb, xbox live is the best but no doubt ps3 has better build quality as i have return 360 twice already ala red light .I believe this is the year wii will slide as consumer will realize that despite better price point that you get more bang for buck withy xbox sony especially sony with bluray ,and why drake unchartered didnt get better reviews on thsi site shocks me great game would reccommend to anyone.

  • deadkingdg

    Posted Feb 1, 2008 6:29 am PT

    Yuck_Too
    Another way is they continue to clean up with the PS2 and they may not have expected that console to still be performing at the levels it is...so that could account for higher then expected numbers.

    I think they did. They continue to sell the PS1 3-4 years after the PS2 was out, and at first, the PS1 was outselling the PS2 because it was below 100$. PS1 was the first console ever to reach 100 millions and the PS2 topped it, so I think Sony knew the PS2 would continue well based on how the PS1 did.

  • Yuck_Too

    Posted Feb 1, 2008 5:39 am PT

    --shinchy --
    Depends how they did their forecasts.

    For one example if the are in fact still losing a bit of money / unit (which is possible since there has only been 1 report from a analyst saying otherwise) then the fact they sold less then expected means they actually lost less money over that timeframe.

    Another way is they continue to clean up with the PS2 and they may not have expected that console to still be performing at the levels it is...so that could account for higher then expected numbers.

    This is the fun of big corporate business accounting.

  • negodosul

    Posted Feb 1, 2008 5:37 am PT

    i think its all about price......down means up!

  • markharris31

    Posted Feb 1, 2008 4:56 am PT

    Hooray fan boy wars!!! It doesn't make any sense to bicker over which console is better. Both the 360 and PS3 have solid game lineups in 2008, which is great for gamers. I'm very happy with my 360, there are at least 6 games out this year I'm very interested in, but with another price drop I'd pick up a PS3 just for the Blu Ray (if the wife lets me, of course :p ).

  • NandoSupes

    Posted Feb 1, 2008 4:34 am PT

    And this number will increase with the release of FF13 and FFVS13,MGS 4.watch, the PS3 is here to stay,Sony has way too much capital,they will push thru brute force.

    I won't be surprised to see the PS3 the winner this year in terms of the quality of the games and don't forget,....Home is just around the corner, 2008 is a big year for us PS3 owners.

  • Boy_Man07

    Posted Feb 1, 2008 4:25 am PT

    i own a 60GB PS3 and, when i bought it, it was costing U$599. i think U$599 is kind of expensive for the PS3, but i bought it because i like it (and i had the money, of course). but now, the 80GB PS3 is U$499 and there is the 40GB PS3 for U$399. come on, people! it is not expensive at all! it comes with Blu-ray, so it is a little more expensive, yes. just like the 360 Elite is more expensive than the 20GB 360, and just like PS3 is more expensive than 360. the real problem is: some people don't wanna give a chance to the PS3, maybe because they don't like it, maybe because they got disapointed with the beginning price(and now, no matter what, they believe the PS3 is not worth their money), maybe because they don't like Blu-ray, i don't know. the thing is that some people still think the PS3 sucks for some reason, but that's not true. none of them (PS3, Wii, X360) suck if you give them a chance and see that all of them have its qualities.

  • DiscGuru101

    Posted Feb 1, 2008 3:12 am PT

    "However, we continue to believe that the primary barrier for PS3 is price, and until the console reaches a mass-market price point, its sales will struggle." -True.

  • shinchy

    Posted Feb 1, 2008 3:02 am PT

    How do you go from loosing $841 Million to suddenly making $121 Million in profit. In the space of 3 Months it's not even physically possible; it's not like they sold a part of the company, or released a massive new product. It just can't be correct.

  • rockutd

    Posted Feb 1, 2008 2:20 am PT

    What price?I mean if u compare the 360 and the PS3 , there are not any big differences of price.In my country, the 360 is as expensive the PS3,except that they bundle it with 2 stupid old games.N dun forget u gotta pay thru ur nose of the 360 adaptor.And that makes the 360 officially more ex.

  • X360MadMan posted Feb 1, 2008 2:18 am PT (does not meet display criteria. sign in to show)

    X360MadMan

    Posted Feb 1, 2008 2:18 am PT (hide)

    LOL@ Sony and ps3 LOL.

  • waraga

    Posted Feb 1, 2008 1:12 am PT

    blue ray is they real key for the ps3

  • BlackKnightOfH8

    Posted Feb 1, 2008 12:27 am PT

    If not for the fact I feel I would treat it the way I treat my 360 i'd get one. Because honestly I don't need another $400 DVD player in my house. Ratchet & Clank will only make me play one for so long before i'm back to playing Team Fortress 2 and World of Warcraft.

  • Jose_Rizal

    Posted Feb 1, 2008 12:10 am PT

    Kenji_Masamune
    9.5 million w/o any blockbuster games? Not too shabby. ======================
    PS3 may not be the best gaming console at this time (game wise) but its hard not to see them being the best Blu Ray movie player at the moment with an added bonus of being able to play games on them. They were primarily riding on Blu Ray format. X360 on games although hardware failure, lucky not to have happened to me or any of my friends, was putting it in a bad light. 2008 might be the time that PS3 will be seen again as a gaming console which happens to play BR movies, not the other way around. Good for you Sony! X360 and PS3 are here to stay.

  • MR-Q

    Posted Jan 31, 2008 11:50 pm PT

    kkk....ok

  • jasongm

    Posted Jan 31, 2008 11:19 pm PT

    I'll still be waiting till the price heads down to 299$, that is my limit.

  • minox2109

    Posted Jan 31, 2008 11:18 pm PT

    ok people keep saying tht sony is goin down the same path as sega but the reason they did so bad was because they had dominating competition and a poor game line up.... the ps1 n ps2 they dominated their markets largely supported by their game line up.... the ps3 still has a chance because there is no real dominating console.. releasing the 360 early didnt get the domination they wanted i mean look at the wii sales..... the ps3 has lots of games n tht includes exclusives n multi... the multis still count even microsoft agrees to this watch their presentation from last years e3..

  • mariokart64fan posted Jan 31, 2008 11:17 pm PT (does not meet display criteria. sign in to show)

    mariokart64fan

    Posted Jan 31, 2008 11:17 pm PT (hide)

    9.5 ya right they havent even reach 5 million and they claim 9.5 million regardless , nintendo and ms already have more then that ,,, so if they want to target 9mill ps3s.. oh k but that wont help them catch ms or nintendo which numbers is going up every day on a daily bases at least the wiis are !

  • eezzy_rider

    Posted Jan 31, 2008 10:41 pm PT

    I love how most of the people who reply here treat Sony as the bully of the block and personalize him as "one person".
    Thinking up marketing strageties and excecuting, trying to predict consumers needs and wants is not something that is done overnight.

    They just clearly understimated that consumers want price options then just raw power.

  • DevilMario54

    Posted Jan 31, 2008 10:25 pm PT

    Maybe sony will put the rumble in the remotes now, loser!

  • Kenji_Masamune

    Posted Jan 31, 2008 9:48 pm PT

    9.5 million w/o any blockbuster games? Not too shabby. With the release of lots of great games this year (I myself am really looking forward to FF13 (crosses fingers that we'll see one of the 2 outside of japan this year), MSG 4, GT5 (both of them) SC4 and White Knight) I think that they can hit the 11 million for this upcoming year, but we'll see. It's going to be a stellar year for gamers no doubt.

  • Tombackman_5

    Posted Jan 31, 2008 9:46 pm PT

    The ps3 will have a surge this year but it doesn't necessarily mean it will win this console war. I am a die hard Sony fan, but I bought a 360 first because it had the better games. But Sony has some good title on the back burner and hopefully they will start a trend.

  • pencilpusher69 posted Jan 31, 2008 9:42 pm PT (does not meet display criteria. sign in to show)

    pencilpusher69

    Posted Jan 31, 2008 9:42 pm PT (hide)

    Sony's game division for 2007 has lost $1,968,644,000.

    http://www.vgchartz.com/forum/thread.php?id=16119&start=0#end

    Rather failing to see the how they're "in the black" for the year.

  • Conanfan1 posted Jan 31, 2008 9:31 pm PT (does not meet display criteria. sign in to show)

    Conanfan1

    Posted Jan 31, 2008 9:31 pm PT (hide)

    I don't like MGS or FF and I already have a 360, so I don't really need a PS3.

  • EPaul

    Posted Jan 31, 2008 9:04 pm PT

    Wow that was quick

  • Koushin

    Posted Jan 31, 2008 9:03 pm PT

    I got my PS3 (Ceramic White 40GB) when I was living in Japan. With the exchange rate and all I got a great deal on it. (less than 400USD) I believe its the best investment I've made on a gaming system. Granted, I'm a game fan and don't prefer one system over the other (to me a good game is a good game regardless of what console its on). The fact is though it has a Blue Ray disc player which looks to be the overall winner in the media battle (Blue Ray vs HD DVD) and as well let's not forget that with all the current and future PS3 owners out there, that major software developers will once again shift their attention back to working with Sony on their console hardware. This should be a great year for the PS3 in 2008. Can't wait to see what PS3 will have at the TGS this year!

  • silverman2000

    Posted Jan 31, 2008 9:03 pm PT

    To all xbox fans and the news and tv game shows g4tech tv out there that make fun befor of ps3 that is gonna go down for good,lol all i se is goin up and up day by day,long live sony playstation.I have nothing against 360 is a cool system but for thos ppl that talk alots!!!

  • surppo

    Posted Jan 31, 2008 9:00 pm PT

    i think the games count when people say there are no games on the system and then turn around and try to play up games like gta4 and dmc4. i dont care what system has what games i personally like the ps3 because of my hd needs and the all inclusive package.

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