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News

  Sony: Game Biz To Be Profitable By 2011
by Leigh Alexander
6 comments
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November 19, 2009
 
Sony: Game Biz To Be Profitable By 2011
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Sony's games business still faces losses, but Sony Corp CEO Howard Stringer says the company's restructuring is progressing well -- and that the segment of its business that houses the PlayStation 3 should achieve profitability by March 2011.

"Our work is already bearing fruit," said Stringer, discussing the company's turnaround strategy in Tokyo, according to the Associated Press.

In the last fiscal year, Sony as a whole reported a ¥98.9 billion ($1.1 billion) loss -- its first in 14 years, and the second loss ever in its existence. Improving sales and aggressive restructuring contributed to the company's narrower-than-expected loss of ¥26.3 billion yen ($289 million) in its July-September quarter.

But the company is projecting a ¥95 billion ($1 billion) loss for the current fiscal year ending in March 2010 -- "We still have more work to do," Stringer said today.

But he says Sony is ahead of schedule on its restructuring, saving ¥500 billion ($5.6 billion) in procurement costs and cutting 12 percent of its total workforce, or 19,500 jobs, over the last year -- more than the company initially announced when it revealed the extent of its anticipated losses close to the end of its last fiscal year.

Part of the presentation included more information on the 'Sony Online Service' (working name), which is intended to use PlayStation Network as its base and encompass games, video, music, and ebooks across all Sony devices, from TVs to game consoles and far beyond. Company executive VP Kaz Hirai also demonstrated the company's Amazon Kindle-like e-reader and its PS3 motion control wand as examples of its new initiatives.
 
   
 
Comments

Christian Keichel
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Everybody predicting profits or losses, that are one and a half year away has to use a crystal ball. No way this prediction is based on anything else then pure beliefs.

Kale Menges
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I'll believe it when I see it. I'd say "Best of luck, Sony," but "luck" has nothing to do with "miracles"....

Joe Cooper
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2011, as in a full five years after release? The PS3 will be profitable when new console season comes?

Andre Thomas
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Given the fact the PS3 would be even much cheaper to manufacture in a few years I would say Stringer is right. In fact given the thought that Sony is in a much better position than Microsoft and Nintendo to drive down cost again I would say Stringer's prediction is right on.

Mark Harris
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It's a possibility, but by then the Wii will be $150 or less and the Elite 360 will be $250 or less. Even if they shave off manufacturing costs they still have to bring the console sale price down in line with their competition, which puts them back in the same situation they're in now.

Eventually Sony will be price competitive without losing money per console, but I'm not entirely confident that it will happen by 2011.

Christian Keichel
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The money in the video game business isn't made with the hardware, but with the software, while the consoles are only sold with profit at the end of a lifecycle, software can be profitable from the beginning. And this seems to me Sony's problem, while they were a major publisher on the PS1 and PS2, they release much fewer games on the PS3, maybe to not shy away 3rd party publishers, but nonetheless, they can't make big money with software only with the licensing fees they get.


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