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Next-Gen Shift Costing Sony and Microsoft

Posted by ryuzaki0 on from the games-are-really-expensive dept.

The shift to the next generation of consoles is costing their parent corporations dearly. GameDailyBiz has an article up claiming that the gaming division at Sony may lose almost $900 million this year, thanks to rollout costs for the PS3. The 360, already in the marketplace, is looking pretty solid. However, in among increased Microsoft revenue announcements (up 13% for the quarter over last year) and a healthy number of shipped systems by the end of June (almost 5.5 million) is a hard statistic. From the Gamastura article: "As for specifics on the Xbox 360 and Xbox's financials, the company's Home and Entertainment division, which includes the Microsoft Xbox video game console system, PC games, the Home Products Division, and TV platform products for the interactive television industry, lost $388 million for the quarter on $1.06 billion in revenue, a sharp increase from the $175 million loss the previous year." A reminder that these systems may be successful, but they're costing to get out there.

3 of 80 comments (clear)

  1. "products for the interactive television industry" by bunions · · Score: 3, Informative

    Well, shit, there's your problem.

    --
    there is no need to sign your posts. this isn't usenet. your username is right there above your post. stop it.
  2. At some point, Microsoft may have to dump the Xbox by Animats · · Score: 4, Informative
    Microsoft's "Home and Entertainment" business unit is a money drain. It's never made money. At some point, Microsoft may have to sell that business off and focus on their core business, business computing.

    The stockholders are getting impatient. Microsoft stock has been flat for five years now. It's definitely not a growth company any more. Trying to grow into the entertainment sector has been a financial disaster. Microsoft is a high-margin company trying to grow in a low-margin area, and that almost never works.

  3. The End Of The Playstation Generation by The_Real_Quaid · · Score: 3, Informative

    M$ can handle the enormous costs. Sony is barely scraping by right now with the hardware costs of the failed PSP. The PS3 costs and failure will be their undoing. Never underestrimate M$ viciousness, when they smell blood they go for the kill.

    Here is an article I wrote last year about the coming decline of Sony marketshare in the game biz, and the resulting overall financial disaster for Sony Corp as a whole.

    Oh and in case anyone wants real, comprehensive financial data, here is a chart that shows profits/loss for Nintendo, Sony (game division) and M$ (game division) by quarter for the last 3 years.