Sony Trimming More Costs From PlayStation Division

2009 wasn't the best year for Sony, at least financially. So the Japanese company is looking to trim a little more of its overheads, specifically with the way PlayStation games are distributed.

Previously, Sony Computer Entertainment's distribution arm and that of the rest of the company were entirely separate operations. In 2010, though, they'll be rolled into the one unit.

You may ask why this hasn't always been the case, but remember, this is Sony. Units operating in blissful, counter-productive isolation is one of the main reasons the company is in such dire straits in the first place. Sony to Combine International Distribution Operations [Business Week]


Comments

    I guess this shows how brutal the video game industry can be. I think most of us can agree that Sony made some good decisions this year, from lowering their price to finally be competitive to being the first and probably only of the big three companies to adopt a slim design, to putting out some of the best exclusives for a long time. It’s strange because every other month I remember reading news stories about the PS3 selling well. Not well enough I guess.

    I think this is a good decision for Sony to merge these two divisions into one. Surely Sony Computer entertainment should be %100 in control their distribution.

      The problem is that the PS3's selling great isn't good just by itself, people need to buy games otherwise they're just selling the consoles at a loss. I'm not sure what the specific magic number is, so for all I know buying one PS3 game balances it out, but it's the games they really need to shift to make a profit, not the consoles.

        Last i heard Sony are making a $37 loss on every console

        http://www.kotaku.com.au/2009/12/report-sony-still-losing-money-on-every-ps3-sold/

        That’s the thing Sony had such great games this year, I can’t believe they still made a loss, but i guess everyone has had to make some cutback this year.

          Exactly. If Sony can't make a profit on the core console, it will take a great deal of exclusives to recoup the profit. It's even hard for them to offer a price drop knowing that each console sold leads them further into debt. It's a catch-22, since Microsoft and Nintendo have a lot of money at their disposal, and they would be affected a lot less from a deficit caused by console loss.

          Sony need to raise prices on their consoles to compete, but they can't compete unless the prices are lowered. It sucks for them.

      SCE were in 100% control of their distribution, that's what's changing. Games will now be distributed by the same network as TVs, stereos, CDs etc.

      And I think that's a good thing - when it comes down to it, the logistical exercise of delivering stock should be centralised across the whole organisation, there's really zero benefit to game stock being shipped out of separate warehouses, which is what we're talking about here.

      and what ps3 exclusives are you talking about?
      I can only name Uncharted 2...

      what else?

        Just off the top of my head: Infamous (better than Prototype in my opinion, I got both), Killzone 2, Uncharted 2, FFXIII, the upcoming MAG and God of War 3 (and I'll add Metal Gear Solid 4 and Little Big Planet in even though they came out late last year)...

        Many of these games did something that couldn't be offered on a 360 - like the expanded network architecture for MAG's 256 players, or the extreme length of MGS4 and FFXIII requiring Bluray disc capacity, or Killzone's extraordinary doses of gritty yet pretty. As a playstation owner, it's not the exclusives that disappoint, it's the cross-platform games.

          Ratchet and Clank: A Crack in Time for the PS3; and don't forget the PSP!

          Dissidia, Assassins Creed Bloodlines, LittleBigPlanet PSP...

          And downloads over the PSN, ie Fat Princess. And PlayTV.

          Also... I'm not very business savvy, but does this really show proof of Sony not making money? It seems that this could very simply be Sony figuring out a more cost-efficient way of operating.

    Dem mofos be chillin I b illin its da 360 dats da winna, gets top billin

      ... can anyone figure out what the hell this guy is trying to say? You either think your gangster - which isnt cricket - or you're brain is haemorrhaging.

        haha this isn't an insult, i know it was probably a typo, but i found it funny that you used "your" instead "you're" and then right after used "you're" instead of "your". :D

      For those of you not familiar with the gangster vernacular please allow me to translate:

      “I sincerely believe that this particular corporation are in a state of disrepute, I am also of the belief the Xbox 360 have been the clear winners in all aspects of video game development. Thus I believe the Xbox 360 shown be applauded for their efforts and position in the market”

        I totally understand now!
        Thanks for the translation.

        That sh** be dope!

        I mean... That's very nice of you to translate.

    Hmm, doesn't Sony still lose a few bucks for every PlayStation 3 sold these days? Until they start making a profit again, it's probably not going to end well.

      Actually, a lot of products are sold at a loss, knowing that the high-margin accessories (games, in this case) must also be bought. It's called loss-leader marketing, and the original XBox certainly did it (not sure about the 360).

      Sony aren't hoping to make a profit off the hardware - their strategy recently seems to be pushing for more and better exclusives, while simultaneously trying to spruik the blended features of the PS3, so they can get a profit margin off the games and Blu-ray movies. I reckon it's got a shot at working in a long enough console generation, the Wii is near the edge of its processing power already and the 360 isn't as far away from maximal output as some folks might think yet no-one is planning to release another generation as far as I know.

        UPDATE: according to Google, the 360 is/was also sold as a loss leader, leaving the Wii alone as the only console profiting from raw hardware sales. Maybe this is why Nintendo don't seem to be that fussed about supporting 3rd party devs better - they don't need the revenue.

          And a greater install base leads to greater game sales. Which made the PS2 such an outstanding success. Sony came late to the current-gen game. But they seem to have got their act together with the slim - it's been selling twice as strong as Wii, and 5 times as strong as 360 this christmas.

            That's true, but Sony need to have consistent sales with the Slim to create a lead on the 360. I'm sure we all agree nobody'll catch the Wii at the moment, and I agree with your point about the PS2, they did the best last gen with it because it had such a wide variety of games etc.

              What helped the PS2 take the market by storm was that it was also the cheapest DVD player you could buy for a long while - the PS3 is the same for Blu-Ray, but it seems nobody wants to refresh their movie collections like we did with the VCR-to-DVD upgrade (and there are DVD upscalers on the market), so it's not helping as much. It all depends on how long this gen lasts for - Sony have always said they're banking on a long one.

              And I tend to think that the Wii should be considered as its own product - they're pursuing a completely different market, and are geared to offer very different experience to the other two "hardcore" consoles. It's like how you wouldn't compare a karaoke machine to a home surround sound system, even though they do pretty much the same job. One is designed for to be fun for occasional and party use, while the other is a more complicated appliance for serious audiophiles.

                Yep, if this gen lasts for another 4-6 years I reckon Sony'll overtake Microsoft eventually as Blu-ray slowly phases out normal DVD's. It'll be a gradual change though, so Sony really does need a long gen for their Blu-ray playing capabilities and cheaper manufacturing costs (which, frankly should have begun to appear by now) to be able to become like the PS2, and become the optimal choice for home entertainment.

                That's the main strength in the PS3 and was in the PS2; the Playstations offer an internet broswer, a high quality blu-ray player, games (which by the time the next gen appears the library should be fantastic), and other media
                options.

                Also on the Wii, you're correct, you can't compare it to the others. It's a casual, family machine and my experiences with my Wii are normally centered around when friends and family come over. There simply isn't enough hardcore and games to appeal to gamers who would prefer a 360 or PS3.

    i blame the PSP Go for this

    Even if Playstation was racking it in, Sony is a huge corporations and any losses in its movie industry or electronics will affect the gaming divisions.

    Well, my local Sony Central store is a ghost town and the PS3 kiosk is virtually untouched.
    Meanwhile, the JB-Hifi 20m away is always packed with people.

    I think this might hint at the core of Sony's problem?

    For the love of god Sony... Dont go with digital distrabution and drop physical media altogether.

      Yeah, there's nothing like going into a store and walking out with a pre-order of a hotly anticipated game. I for one would like to see physical media stick around for a while, I just don't want to use up all my internet downloading games when I can just go to the store.

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