14 DAY TRIAL // Sony has filled a report with the Securities and Exchange Commission which details the way the PlayStation 3 has shaped how the company views the console manufacturing business, while also revealing some very interesting figures regarding its cost and how Sony plans to turn it into a profitable one.
Apparently, the total cost of development, production and marketing for the PlayStation 3 since its launch date are a staggering 3.3 billion dollars. The costs are not covered by the profits made by selling the console, to date, and most of the losses are the result of high manufacturing costs. Only recently have these costs begun to come down, thanks to new processes being introduced and to certain re-designs of the hardware side.
Sony states in the SEC filling that "Even if the platform is ultimately successful, it may take longer than expected to recoup the investment, resulting in a negative impact on Sony's profitability".
But 2008 sees a decrease in both the cost-of-sales to sales ration of the console, which measures the money required to create and sell one console against the price at which the console is sold, and in the ratio of marketing expenses to sales, so the console will probably end 2008 with overall profitability.
The losses in 2007 for the PlayStation 3 amounted to 2.15 billion dollars. The upside is that the videogame division of Sony sold 26% more games than in the previous year, with sales going up to almost 12 billion dollars. Even if the console itself cannot turn up a profit, the games that Sony sells for the console are likely to be profitable by themselves, offsetting some of the console losses.
Sony has quite a strong line-up of exclusive videogames for the PS3 coming this fall, so we might see a whole different picture the next time Sony talks about the performance of its console.