Sony Lost Over $AU 3.15 Billion To PS3 Cost, Pricing Imbalance

Pricing the PlayStation 3 below its production cost caused Sony to lose $AU 2.27 billion in 2007 and $AU 1.22 billion in 2008, the company revealed today.

Sony's fiscal 2008 annual report delineated potential risk factors to its investors, outlining that "the large-scale investment required during the development and introductory period of a new gaming platform may not be fully recovered". The loss figures were provided as an example of the "significant negative impact" introducing a new platform can cause at first.

"In the past, large-scale investment relating to capital expenditures and research and development for the manufacture of key components, including semiconductors supplied for [PlayStation 3]was also recorded within the Electronics segment", the company said.

In order to stay competitive, said Sony, it had to invest large amounts of money in research and development to introduce the PlayStation 3 into the market, and these sorts of expenditures don't always get recouped, especially if a platform "fail[s]to achieve such favourable market penetration... resulting in a significant negative impact on Sony's profitability".

Even if it can recoup its investment, Sony said, it's still possible to have lost large amounts of money on the platform's introductory period, and even a successful PS3 might take a while to replace what it cost to produce. These possible outcomes are currently a risk for the company, Sony said.


Comments

    LOL, Sony don't care about a measly few billion, they WON the next gen DVD war with the PS3.

    I wonder what the research & development, manufacturing facilites, advertising, movie studio smoozing, etc cost Sony for Blu-ray... 1, 2, 3, 4 billion or more? All of that lost if they lost the DVD war.

    Think about how many billion dollars they are going to make from Blu-ray royalties in the future. You'd have to be a mug to just look at the PS3 in isolation.

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