Nintendo Profits Up 72%, Sony's Down 94%

Gamasutra is reporting on reporting, with financial information from some of the large gaming companies becoming available this week. Nintendo, who had already previously raised projections, saw their profits up 72% over last year. This dramatic increase was credited largely to the DS, with 10.9 million units sold in the first six months of this year alone. Sony, on the other hand, dropped profits by 94% over this time last year. The company attributes this largely to the battery recall and PS3 start-up costs. From the article: "The company's games division reported a ¥43.5 billion ($366.6m) loss, from a ¥8.2 million ($69,000) profit in 2005, thanks to research and development, manufacturing and marketing costs related to the launch of the PlayStation 3. Sales and operating revenue were down by 20.5 percent to ¥170.3 billion ($1.43bn). A decrease in hardware sales worldwide was attributed to a drop in price for the PlayStation 2 and PSP. Software sales also decreased overall, although individual PSP sales were up on the previous year. Combined profit from the PS2 and PSP business was described as 'relatively unchanged'."

Comments

Corporate Governance and Japan

[MBraynard]

This is not really a bad thing for Sony and Americans are looking at it much differently than the way a Japanese investor does.

Over there, they take a longer term view and do not live and die by the quarter like they do here in the US. This is partially cultural. It's not necessarily a good thing but it is a factually true thing. They are more forgiving for this kind of financial result than investors in the US are.

However, another, and not necessarily helpful reason for this patient view is that the equity owners who normally would jump ship are often also the debt holders of the corporation. This is almost unheard of here in the US and the result in Japan is that corporations are more likely to ignore long term problems with a corporation because the best solution (dumping shares) would hurt their debt value so they tend to stay the course and hope for the best.

No link between the Nintendo and Sony numbers

[TCQuad]

Sony profits went from 28.4 billion yen last year this quarter to 1.7 billion yen. The battery recall cost 51 billion yen. (via Yahoo!) So, had the battery recall not happened, Sony's profits could have increased (up to 85%, depending on the accounting magic with the recall) even given the development costs for the PS3.

Why should I care?

[thatguywhoiam]

Seriously. From a 'gamer' (ugh) perspective, I could give a flying fuck about how well these entities are doing financially. Call me when one of them is about to fold.

(I'm actually surprised Sony hasn't received the Apple treatment - "Beleaguered Sony")

I care that they both have consoles launching and I am interested in trying both. I am interested in the launch lineup. I'm interested in specs. Controllers. Formats. But quarterly reports, do we really care that much?

Anyways, I hope Sony learns from their mistakes and improves. I will vote with my dollars accordingly until they stop behaving badly. I don't want them to "die", as some posters have mentioned; besides being exceedingly unlikely, Sony has made great things in the past. It would be nice to see a return to form, specifically for SCE and Sony Electronics. The media arms I have no use for.

Re:It's only going to get worse

[AKAImBatman]

Lik-Sang sold grey imports and was subject European rules governing such things.

Yes, they are subject to those laws. Of course, they never had a chance to defend themselves. I repeat:

SONY FILED A LAWSUIT IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY

Did you get that? Probably not. Let me say it a few more times:

SONY FILED A LAWSUIT IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY
SONY FILED A LAWSUIT IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY
SONY FILED A LAWSUIT IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY
SONY FILED A LAWSUIT IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY
SONY FILED A LAWSUIT IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY
SONY FILED A LAWSUIT IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY

Did you get it that time?

Sony was entirely within their rights and the law to bring suit.

Were they? Were they REALLY within their rights to FILE A LAWSUIT IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY?!? Sony exploited the looseness of the EU consolidation to pull a nasty, underhanded, disgusting legal tactic that was intended to make it too expensive to fight.

The specifics of the action and the judgement can be read here.

1. Sony won by default. Lik-Sang didn't show up, they disolved their company due to LAWSUITS IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY.

2. I will repeat, I DO NOT CARE whether Sony's lawsuit would have been upheld or not. Had Sony handled this properly, Lik-Sang may have had to stop the imports of Sony Consoles, plus pay Sony damages. Instead, SONY FILED A LAWSUIT IN NEARLY EVERY EUROPEAN UNION MEMBER COUNTRY IN ORDER TO PUT LIK-SANG OUT OF BUSINESS. Then they had the gall to turn around and claim that they had nothing to do with it.

I've got two words to describe my feelings about their long string of abuses: BOYCOTT SONY!!!

Can I hear an AMEN out there?

Re:It's only going to get worse

[MeanderingMind]

The point is that Sony didn't have to. Sony could easily have said to Lik-Sang, "We're within ourtlegal rights to request that you not import PS3. We ask that you cease and desist. Legal action will not benefit either of us, but it may become necessary if this can not be resolved between the two of us."

That's a nice, but firm, way of doing things. You're not shaking a legal fist at them, you're giving them the opportunity to talk with you, discuss it, and reach a resolution without expensive court fees.

This is what Sony did. Sony said, "Lik-Sang, here are a dozen or more simultaneous lawsuits in different languages for the same thing. Good luck hiring a team of competent lawyers in every nation in the EU and flying back and forth like crazy between all the hearings, trials, and judgements. We know you can't afford it."

I don't know if you've ever seen the Monty Python skit where they use machine guns and rocket launchers to hunt a mosquito, but that is a good analogy for what Sony did here. They didn't have to put Lik-Sang out of business to stop them from importing PS3s to the EU. They could even have come out of this looking like a decent company that regrettably, but not selfishly, protected their interests.

What they did was unnecessary to stop Lik-Sang from importing. What they did was necessary to put Lik-Sang out of business.