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Deep Pockets

October 29, 2010 14:12:56.000

The console business is one where you need very deep pockets:

Sony's gaming business is moving towards profitability this year -- something that's eluded the company each year since the PlayStation 3 was launched in 2006.

Just think about that - four years of pretty harsh losses before things turn around - and then the console maker has to deal with two realities:

  • The need to milk profits out of the now (no longer bleeding) system
  • Getting ready to launch a next generation system

That sure explains why the improvements to the PS3, XBox, and Wii have all been incremental. Even though Nintendo was profitable out of the gate, they now have Apple on their turf, cutting into what they probably thought of as milk money (the entire DS line).

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posted by James Robertson


Re: Deep Pockets

[W^L+] October 31, 2010 11:47:36.636

I've always believed they use the inkjet model: sell the printer (console) for cost and make your profit on the supplies (games). But consider this: one of the big three gaming systems is produced by a company that has supported a failing online business (MSN / Windows Live / Bing) for over a decade. That's got to crimp pricing and profits for the whole console games industry.

Still, if Sony had launched the PS3 at price parity with the XBox 360, they might have had enough volume to push game sales into the profit territory earlier. As the owner of both, the PS3 is the better system, when the game you want is available.

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