PS3 price cuts already being considered

Sony exec tells AP that reevaluating the price of the console is one of the back-to-profit strategies the games division is considering; no indication given of time frame.

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This week, Sony announced that profits had fallen some 5.3 percent over last year in the company as a whole, with the games division suffering third-quarter losses of 54.2 billion yen (approx $455 million). Some had predicted that the company would suffer even greater losses. In a survey conducted by Bloomberg of five industry analysts, the median estimate was that the company would report a 50 percent loss.

Historically, the time period after a console's launch sees the parent company reporting a loss, a gamble that is intended to pay off when profits are recouped from software sales. Sony's senior vice president, Takao Yuhara, told the Associated Press that his company's loss could in fact be more than the 200 billion yen (approx $1.6 billion) that Sony has currently forecast for the financial year ending March.

Many of the costs associated with the PlayStation 3's launch were higher than anticipated, including advertising promotions and production delays that forced the company to use air rather than sea shipping.

Yuhara revealed that Sony's strategy was to have the games division breaking even by the end of the next fiscal year, March 2008. He told AP, ''Such factors, including price cuts to some extent, are factored in'' to the company's break-even plans. No date was given for when Sony would be considering making the cut or how much it would be slashing from the current price of $599 for the 60GB model (which will be 599 euros in Europe, £425 in the UK).

The company has already made the unusual move of cutting the PS3's price in Japan, where the console was launched on November 11, taking the 20GB version to 49,980 yen ($429), 10,000 yen ($85) less than previously slated. However, this move appeared to backfire, as it was slammed by some analysts, and the company's shares took a tumble after the announcement.

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