Forbes reports that Play Station 3 has cost Sony an incredible $3 billion, mainly because of the company’s pricing strategy for the product.
As PS3 hit the market, Sony wanted to recover some of the market share that Microsoft’s Xbox 360 had gained, mainly due to its launch a year before PS3’s. Sony thought that by selling its consoles at a price that would be a little less that their actual cost, it might gain more market share and it would be able to use it to make profit for the company from exclusive gaming titles and sales of its patented Blu-Ray DVD.
What is more, after enough units would have been sold, production cost would have dropped, and Sony would have ceased to sell PS3s at a loss.
Even though the last predicament has come true, the unexpected success of Nintedo’s Wii console has interfered with Sony’s strategy. The company has seen its expectation of game title market domination be blown to smithereens as Wii came out with more and more exclusive titles, and its console sales soared.
Even though the PS3 console seems to have gotten a few very good exclusive titles recently, and has shown signs of recovery during the past months, it is still a long way to go until Sony will be making a decent profit out of it.
The Forbes report concluded: “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.”
http://www.efluxmedia.com/news_PS3_Made_Sony_Lose_3_Billion_19509.html
As PS3 hit the market, Sony wanted to recover some of the market share that Microsoft’s Xbox 360 had gained, mainly due to its launch a year before PS3’s. Sony thought that by selling its consoles at a price that would be a little less that their actual cost, it might gain more market share and it would be able to use it to make profit for the company from exclusive gaming titles and sales of its patented Blu-Ray DVD.
What is more, after enough units would have been sold, production cost would have dropped, and Sony would have ceased to sell PS3s at a loss.
Even though the last predicament has come true, the unexpected success of Nintedo’s Wii console has interfered with Sony’s strategy. The company has seen its expectation of game title market domination be blown to smithereens as Wii came out with more and more exclusive titles, and its console sales soared.
Even though the PS3 console seems to have gotten a few very good exclusive titles recently, and has shown signs of recovery during the past months, it is still a long way to go until Sony will be making a decent profit out of it.
The Forbes report concluded: “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.”
http://www.efluxmedia.com/news_PS3_Made_Sony_Lose_3_Billion_19509.html
