Should I buy a console?

MisterAnarchy · 16-07-2003 11:47am

Fact:
Sony reported a net loss of 111bn yen (£582m) for the final quarter of its financial year. The company blamed the shortfall on consumers who had stopped buying electronics items, such as its Viao PCs and TVs, in the run up to war.

Shinji · 16-07-2003 12:05pm

Correct. You'll note however that your figures don't mention Sony Computer Entertainment, which is the division which houses the PlayStation and related projects. That division made a significant profit.

The fact that other parts of the company are making losses is not relevant to this discussion.

MisterAnarchy · 16-07-2003 12:46pm

Actually you are incorrect.
Over the complete year yes that division did make a healthy profit but in the last quarter it lost 122m Pounds.

Retr0gamer · 16-07-2003 2:11pm

I think that would have somethng to do with the video games summer slowdown were nobody buys many games and hardly any good ones are released.

Shinji · 16-07-2003 2:23pm

Right, since you keep moving the goalposts, let's actually consider the real figures shall we?

For the full year ended March 31 2003, Sony Corporation registered a profit of €870 million. This was admittedly lower than its target of €1.36 billion, but was a major profit figure nonetheless, and a significant improvement on its figures for FY2001.

The games division - Sony Computer Entertainment - registered a profit of €102 million for the year, with sales of 22.5 million PS2s during the year. For the following year, the company expects to sell 20 million PS2s - and should turn a larger operating profit due to falling costs of PS2 hardware production.

Sony continues to make a massive operating profit on the PlayStation 2. This isn't a debating point, it's a fact.

However, Sony Computer Entertainment also has large outlays at present because it's investing in technology for PS3 - including the building of a new fabrication plant for Cell in Nagasaki - and of course, in PSP hardware. These outlays do of course affect the balance sheet of the division (and I can only assume that this is where your 122 million figure comes from, since you haven't linked a source on that and I don't have the last quarterlies for Sony handy at the moment) but they're capital expenditures, not operating expenses.

As a division and a project, the PlayStation 2 has made an overall profit and continues to make an operating profit. The Xbox, er, doesn't

MisterAnarchy · 16-07-2003 2:53pm

I never said the XBox was making money.
It is making massive losses.
I said only 1 of the 3 companies made a profit in the last quarter.
I never said who.
I presumed everyone would have realised it was Nintendo as they continually make profits largely due to the Pokemon phenomenon.
All I was trying to say is that despite Sony being the market leader ,Nintendo are the soundest business model.
Consistently making profit.
Group net profit for the year ended March 31 dipped to 67.27 billion yen (350 million pounds) while sales dropped nine percent to 504 billion yen despite upbeat sales of its new "Pokemon" games.

Retr0gamer · 16-07-2003 3:06pm

I think Nintendo did make a profit it was just that it was lower than the year before. The Gamecube is profitable to Nintendo because unlike with the xbox nintendo makes a profit on each GC sold. I read this somewhere before. Hopefully shinji can confirm.

Shinji · 16-07-2003 3:11pm

I do agree that Nintendo has the soundest business model of the three. However, Sony's model is also an excellent one - they operate the traditional "razor and razorblades" model, which means that each of their consoles makes a significant profit over its lifespan even if they lose money initially. PS2 is now well into the profit stage of its lifespan.

Microsoft is the only one with a genuinely unsound business model, really. Xbox will never make a profit - it's already too deep in loss for it to ever make that back. Cube has been in profit from day one (Retrogamer is correct, Ninty make a profit on hardware with the Cube - so do Sony with the PS2, now, although they made losses initially), GBA has been a massive profit making device from day one, PS2 was into the black overall within two years. Xbox will be in the red for its lifespan overall, which is pretty disastrous financially.

MisterAnarchy · 16-07-2003 3:47pm

Considering a PS2 is 270 euro here as opposed to 160 euro in the US ,I'd say Sony are milking Europeans dry .

Lemming · 16-07-2003 3:54pm

Originally posted by MisterAnarchy
Considering a PS2 is 270 euro here as opposed to 160 euro in the US ,I'd say Sony are milking Europeans dry .

iirc, M$ were (still are??) doing similar pricing practices?

Get a room fanb0is :rolleyes:

Retr0gamer · 16-07-2003 4:05pm

Sega proved that the xbox strategy didn't work with the unfortunate DC disaster. DC wasn't exactly unpopular just that Sega needed money and made a mistake on selling the DC at a loss.

jesus_thats_gre · 16-07-2003 5:06pm

Nintendo did make a profit, but this was purely on the back of the GB Advance. The GC is not profitable.

MS is making a loss of 300 million a year on the XBOX

The PS2 accounted for some 50% of Sony's revenue and SCEA made a massive profit. Sony as a whole have not been so lucky.

jesus_thats_gre · 16-07-2003 5:10pm

Retrogamer, you do realise every console is sold at a loss. The purpose of this is to get as many units sold, so these same people will start to buy software. Software is where the big bucks are. This model has been used for a long long time now.

As for Third_Ech being a Troll, bollox to that. I dont know what basis you have for him having a number of user name (I am guessing it is because he has the same IP address as me), people in here tend to get all jumpy when a few people share the same IP. Consider this, there is a network or 5 or 6 PCs sharing the same broadband connection, with 1 static IP address.

Asuka · 16-07-2003 6:02pm

Originally posted by jesus_thats_gre
I dont know what basis you have for him having a number of user name (I am guessing it is because he has the same IP address as me)

No, actually, it was the uninformed and plain stupid remarks that did it for me. My opinion of him would be a lot higher if he were in fact a troll.

As for the GC being profitable - Im quite certain that it is. I cant find direct figures right at the moment, most sites seem more concerned with reporting (in the exact same words, most of the time) how it dragged the profit down in relation to the GBA considered by itself, but none mention the actual figures.

A

Third_Echelon · 16-07-2003 6:05pm

now thats your opinion that they were uninformed and stupid.... which they obviously were not if you read the posts after from other people starting to actually see what i was saying....

if you get a chance take a read.....

Shinji · 16-07-2003 6:21pm

Nintendo did make a profit, but this was purely on the back of the GB Advance. The GC is not profitable.

I'd love to see you find a reliable source for that comment. The GameCube is performing disappointingly in terms of overall revenues because it's missed its sales targets (as has the Xbox), but the console is still turning an operating profit. It's actually got one of the highest tie ratios of any console out there, which is pretty impressive - tie ratio at Euro launch was nearly 4:1, and it's gone over 5:1 now which is VERY high indeed.

No questioning the fact that GBA is Nintendo's biggest moneyspinner though - it certainly is.

MS is making a loss of 300 million a year on the XBOX

Fair bit more than that. There was a quarter last year where they lost 800 million bucks in the Home and Entertainment Division (effectively Xbox division), and another couple where they lost north of 300 million bucks. I think they were over a billion out of pocket on Xbox in the first year of operation.

Right now I think they lose about 120 to 150 million bucks a quarter on it - the more Xboxen they sell, the higher the loss, ironically enough.

astrofool · 16-07-2003 6:43pm

Shinji's an enigma wrapped in a Nintendo fan-boy

astrofool · 16-07-2003 6:52pm

one thing to note is that Ms is a bit like Abramovich at Chelsea, oodles of cash, so can keep throwing money at it to see if any sticks (they have 42 billion in cash reserves atm).

Sony have the best model really, or have over the last 8 years or so (obviously), it can be dangerous to throw everything in with the console market moving away from their traditional sector, they couldn't afford to do a Saturn on it.

I was a nintendo fan boy up until a few years ago, when the N64 ran up short, the gamecube apart from looking cute, really hasn't impressed (have a gamecube with metroid/smash bros/mario, and smash bros. gets played most). Though I'm hoping f-zero and mario kart will somewhat redeem it.

Shinji · 16-07-2003 6:56pm

Shinji's an enigma wrapped in a Nintendo fan-boy

Heh

I'm a Nintendo fan when it comes to the games, for sure. I like the kind of games they make, no doubt about that.

When it comes to the biz end of things, well, I'm pretty objective on it I think. That IS my job after all

jesus_thats_gre · 16-07-2003 6:56pm

Yes you are correct, the more consoles they shift, their losses will increase until Software sales begin to increase to a point where they can counteract the losses made on each console. Again, I dont know the exact figures, working out of a dodgy memory.

To be honest, I dont think MS ever thought the Xbox was going to be very profitable or that it was ever going to beat the PS2... The Xbox is just the first step in Microsoft's long term plan.. No doubt that their plan is the same as that of Sony's, transform the now games console into a home entertainment centre through the convergence of numerous consumer devices.

Microsoft's Media PC, I feel, is another test bed for this long term strategy. Sony's intentions can be seen in the forthcoming release of the PSX.

This is why I stated that Nintendo are going to find it harder and harder to compete in a previous post.

Forgive me if this post is aload of horse**** too, I am sitting it a room that is about 30 degrees at the mo, not the best!

Shinji · 16-07-2003 8:57pm

their losses will increase until Software sales begin to increase to a point where they can counteract the losses made on each console

Problem is, that point is so far off the charts that it's unlikely Xbox will ever reach it. They need some ungodly tie ratio (in the region of 14:1) in order to break even on the console sales. Not gonna happen, given their tie ratio right now is about 3:1 and that's counting the number of people who got games free with the console!

To be honest, I dont think MS ever thought the Xbox was going to be very profitable or that it was ever going to beat the PS2... The Xbox is just the first step in Microsoft's long term plan..

Absolutely. It's a toe in the door. That said, I don't think they quite anticipated just how much money they were going to lose on it - they'd hoped to break even after the first few years, by all accounts.

Xbox is a vital project for Microsoft. If they let it slip, then they will effectively be handing the living room and the entire home entertainment market on a plate to Sony. That's why Xbox exists - to establish a foothold in a market that Sony owns, because Microsoft realised FAR too late that PlayStation was a trojan horse for a takeover of the space under every TV on the planet.

Nintendo, on the other hand, make toys. That's a different market, and one they'll continue to be very profitable in while the big boys slug it out over the ownership of the media industry.

jesus_thats_gre · 16-07-2003 9:49pm

I agree with all you points. I dont think Nintendo can go on making toys for much longer. I would be of the opinion the whole concept of console gaming is changing, and I feel that Nintendo need to change with this somehow or withdraw in a similar fashion to Sega. It worked for Sega, they are on there way back to a decent financial situation and here is hoping they can challenge EA for the crown as chief third party publisher.

Maybe Nintendo would be best doing this, and make masses upon masses of money selling the numerous quality titles they have on multiple platforms. The Licenses they own are too valuable to confine them to a console that is at the bottom of the pile sales wise.

Should I buy a console?

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