It's all about the money...

[akadkins]

Hey - stole this from a web posting I saw. Liked the point it was making about how much people are willing to spend on games/Blu-Ray:

its interesting that even though the wii (1.9 million units) is definitely outselling the ps3 (1.1 million units), people in america have spent more money on the ps3 ($610 million) than the wii ($475 million). i haven't read a single blog or article that has mentioned that. it doesn't say much, but it says that so far, america is willing to spend more money on ps3, even if it doesn't translate to profits for sony. it Is definitely contributing to the success of blu-ray, which might be more important to sony in the long run anyways.

I like that argument...do I as a consumer care about profit for a company? Not unless I'm a stockholder.

[Heresy]

But the question is: how much is Nintendo making on each Wii and how much is Sony making (or losing) on each PS3?

[TBoneCapone]

Originally Posted by Heresy

But the question is: how much is Nintendo making on each Wii and how much is Sony making (or losing) on each PS3?

Maybe so but the overall point is that more money has been SPENT on Sony products. Keep in mind that Sony more than makes up for it on the extras.

[dialog_gvf]

Originally Posted by Heresy

But the question is: how much is Nintendo making on each Wii and how much is Sony making (or losing) on each PS3?

It's a interesting question. Nintendo is Nintendo. The DS and Wii are their business. Sony is Sony, and they are way beyond just a game division.

I believe the subsidy does has the effect of making Sony very careful to meet demand, at most. They don't want to have lots of units in stock anywhere since they can always supply a cheaper to make unit today (costs are always dropping).

Now, it is said Microsoft has lost $5 billion and counting on the Xbox and Xbox 360 ($4 billion of that on Xbox). They aren't projecting a profitable quarter for Xbox 360 until later in the year.

Sony won't lose $5 billion on the PS/3. And whatever they do lose should be considered against what they have made in the past, and what they hope to make in the future.

At this point, Sony is building a foundation of a new paradigm. Whether it works out or not we shall see.

Gary

[phloyd]

What is more important for the profitability is the software sales.

How many people are buying the games for each platform?

I know that it is possible to cheat both the 360 and Wii - not sure about the PS3... None the less, software sales are the keys to financial success...

[ps3andlovinit]

Originally Posted by phloyd

What is more important for the profitability is the software sales.

How many people are buying the games for each platform?

I know that it is possible to cheat both the 360 and Wii - not sure about the PS3... None the less, software sales are the keys to financial success...

Keep in mind that nobody *really* knows the hardware costs of each unit. Everything is speculation that comes from "analysts".

There are also all sorts of secondary $$ like R&D tax credits etc that are most likely to be applicable to Sony first, Nintendo second, MS last - given the new technology or lack of implemented in each console. Sure there are other ways for corps to move profits and losses around.

Given the failure rate of the 360 it's costs also have to be considered much higher than just doing an x component costs y type of analysis.

[tobythetitan]

Last I knew-Nintendo was the only one making profit on the console itself (by numbers reported). I would imagine software is somewhat similar. That's where they all make the big chunk. I don't know how to put links on here but on Amazon's top sellers in VideoGames-More of the Wii things on there are made by Nintendo-whereas PS3 and 360's stuff is made by third parties (with a few exceptions). Plus- I would imagine copying the new formats costs more too. I would say, and just an amateurs opinion from what I've seen, heard, and read Nintendo is making more.

[Chris Gerhard]

Originally Posted by akadkins

I like that argument...do I as a consumer care about profit for a company? Not unless I'm a stockholder.

I sure disagree with that. Without profit potential, the products won't see innovations and improvements. No profit potential and the format goes in the toilet quickly. Competition among companies for market share and profits drives the development of products like Blu-ray. Unfortunately with both formats exisiting, the potential for profits is bleak.

Chris

[Rup_Muk]

"Profits" - in this case - are a two-edged sword.

CONTENT is key - the hardware is the "hook".

We've hit the bait and now are in - to overuse the metaphor - hook, line, and sinker! Now, Sony gets at least a small portion of every title we buy. That's where the money is.

If they made the console too expensive, hardware sales would plummet and therefore software would suffer. If the consoles were too cheap, people would think why were they buying into a "cheap" product. Funny how human psychology works! Based on this, pricepoint setting is about the most difficult things to accomplish in industry!!!

Rup.