After Nearly Four Years, The PS3 Finally Turns A Profit

Thanks to new versions of the hardware and increased sales in the past twelve months, Sony's PlayStation 3 has finally become a profitable machine for the company.

"This year is the first time that we are able to cover the cost of the PlayStation 3", Sony Computer Entertainment Worldwide Studios boss Shuhei Yoshida told IGN. "We aren't making huge money from hardware, but we aren't bleeding like we used to."

From the first day of the PS3's release in 2006 until only recently, every console Sony sold was in fact losing it money. Why? Sony were selling the PS3 for less than it cost to make one. It may sound crazy, but it's how Sony (and Microsoft) have done things for years, opting to sell expensive hardware at a loss while hoping to recoup the investment through software sales.

Well played, Sony. It's been a long, tough road. If you want reference on how long and tough it's been, Nintendo have been making a profit on every Wii sold since it launched in 2006.

PS3 Profitable, Price Cut Unlikely [IGN]


Comments

    Every time I read stuff like this, I giggle.
    Nintendo's first price drop was earlier this year, the others have been gradually falling since release, but I thought they'd crested the profit margin last year or earlier, I didn't realise they only just stopped bleeding.
    Anyone know when the 360 start turning a profit?

      Well it depends, its not quite as black and white as this article makes it look.

      Publishers pay to have their games on the console, I don't know the exact figure but its probably around $5 - $10 a unit. So depending on how many games the owners are buying the consoles can still be profitable when sold at a loss.

      But yeah that of course means nothing when people are buying games second hand, so it all depends on how many brand new copies they can sell from stores.

        Yep, both Sony and Microsoft have sold their hardware at a loss and made up for it with profit from software, both as publishers and as first party developers. It's known as a loss-leader, and it has been around for AGES - the last console generation also ran on this principle, as do supermarket specials and the like. Anyone who 'giggles' at this doesn't understand the industry, or marketing in general.

        Interestingly, Nintendo's "profit off the hardware" strategy is rooted in their disastrous attempt to loss-lead with the Gamecube last gen. The irony is that since they're making all their money on hardware there isn't anywhere near as much incentive for them to develop a wide range of decent first-party titles, which is partly why the majority of Wii games are awful third-party shovelware. When Ninty bothers to make a big game it's a great one and it sells phenomenally, but they seem to only do that 1-2 times a year. Maybe if they'd loss-led with a gruntier console at the same price, we'd have seen a second Zelda after less than 4 years, or a credible lightsabre game by now...

      The Xbox 360 has been making of profit off hardware for a long time. The new redesign is another attempt to increase profit made of the console and to stretch out its life. However, if you take into account the 2 billion or so dollars MS spent on warranty repairs, who knows?

    Congrats Sony... now go out and buy an Xbox with your hard earned.

      Yeah, but don't play on it for too long because it won't last. Better stick with the product you already have.You won't find the need to buy 2 or 3 in the same year.

    10 year life starts now?

    MS still lose on the console, but considering the 23 million live subscriptions (including an estimated 12million that have been active for over 2.5 years), MS has been turning a pretty penny for a while...

    When you consider how crazy expensive the console is, it makes me a little less critical of Sony to know they make a loss selling the machines. I think the Wii proves that Sony and Microsoft have assumed people have too much money to blow on these things. Gaming consoles have crossed the price line and need to reel it back in like the Wii does.

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