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gofreak · Jun 17, 2011

IGN's posted their E3 interview with head of SCE WWS, Shuhei Yoshida.

He gives a clearer outlook on a number of points than some of his colleagues, for example on Vita hardware profitability. It's a much more realistic/nuanced answer that probably reflects the reality of that issue right now.

http://ie.psp.ign.com/articles/117/1177042p1.html

Yoshida: At the very start of this project a bunch of us core members went to Japan and spent a day discussing what it is that we wanted to achieve with the new PlayStation portable device. One of the goals was to hit the right price point, which was actually $250. So at the very beginning we agreed that we're going to hit $250. But during that time we were still recovering from the difficultly we had with the high cost of goods with PlayStation 3 where the company lost a lot of money. We asked consumers to spend a lot of money to purchase what, at that time, was bleeding-edge technology. That was great from a technical standpoint but the technology has to mature enough so that a reasonable price can be put on the performance.

For Vita, the price on performance was something we definitely wanted to hit, although we all agreed because we are PlayStation, people expect better graphics and prettier pictures, so we have all those things we wanted to achieve in terms of capabilities, but we capped our ambitions with a cost of goods target that we can profitably sell the hardware for $250.

To answer your question, we set out a goal: Yes, we're going to hit the $250 price, and no, we don't want to sell the hardware with a deficit. That's a goal we set out to do and I'm very happy we are achieving that.

IGN: So you're going to be profitable with each Vita sold?

Yoshida: We haven't completed the hardware development. It's like 98-percent done in terms of hardware, and on the system software side and network code, we have a few more months to work on that. We don't have the final-final answer to that question, but the way we are projecting it seems like we're going to do pretty well.

On Vita dev budgets:

I am there in many meetings with third-party developers and publishers, and because one of our studios is no different than them in terms of being game developers, a lot of questions we asked on the input we had made in determining the features of PSVita, they quickly understood. They agreed this is the right level of technology they would be able to put their games on.

It's not making a next-generation game on home consoles where you have to spend $100 million. Actually, the development cost for one of our studio titles on Vita is way closer to what we've been spending on developing PSP games than what we've been spending on PlayStation 3.

He talks about a number of other things at the links, including the stuff mentioned in the title. Pretty good interview.

Takao · Jun 17, 2011

Who wants to bet that one studio title with budgets like a PSP game are LocoRoco, or Patapon?

Edit: Holy crap, they're not selling at a loss or an even remotely large one?

gofreak · Jun 17, 2011

Takao said:
Who wants to bet that one studio title with budgets like a PSP game are LocoRoco, or Patapon?

I pondered the wording of that comment...I'm not sure he's referring to one project specifically, I think he means their projects in general. 'A' (typical) vita project as opposed to 'one' vita project.

Adr1an · Jun 17, 2011

So there not selling at a loss

Nemo · Jun 17, 2011

Uhh, I thought it was well established they'd sell with a big loss a la PS3? Who planted that idea in my head?

Selling it without a loss is pretty dyna

zomgbbqftw · Jun 17, 2011

No losses! That is impressive.

RavenFox · Jun 17, 2011

No losses?! Oh GAF you had me worried.
Umbasa bless the chips.

AAK · Jun 17, 2011

What? Didn't we have a thread earlier saying that Vita will break even in 3 years? I find it hard to believe anything with an OLED screen is that cheap to manufacture.

Plinko · Jun 17, 2011

That's absolutely amazing if they sell this at no loss.

Sony is doing everything right with the Vita so far. Probably my most-anticipated system release ever.

RPGamer92 · Jun 17, 2011

Holy Crap at them not selling for that big of a loss. What magic did they do to accomplish that?

AAK · Jun 17, 2011

Found it:

http://www.neogaf.com/forum/showthread.php?t=433075

Sonys PlayStation Vita is making headlines worldwide due to the systems visual prowess and impressive lineup of launch titles. Cramming so much horsepower into this little package was certainly a costly investment for Sony, but the company shocked the world when they revealed that the Vita will retail for $249.99 (Wifi only)/$299.99(3G/Wifi AT&T Service Contract Required) for North America. This cheap price will come at a cost for Sony, however.

In an interview with Reuters Japan, Sonys Kaz Hirai stated that Sony aims to make a profit on the PlayStation Vita in three years. Sony often sells their hardware at a lost, so this isnt anything new for the company as they sold the PlayStation at a lost despite the $600 price tag. Out of the three home-console manufacturers, Nintendo is usually the only company to make a profit on hardware right away due to their conservative nature of building their hardware.

CoffeeJanitor · Jun 17, 2011

No losses. Impressive.

This changes up a lot of the PS4 pricing speculation. No loss leading for Sony this gen seems sort of confirmed by the Vita and a ton of statements.

Nirolak · Jun 17, 2011

The way they keep waffling on this implies to me they're looking at breaking even or losing like $10-$20 and can't quite tell yet which it will be.

Their overall statement seems to be that they expect the business as a whole to be profitable from the start though.

Jin34 · Jun 17, 2011

AAK said:
What? Didn't we have a thread earlier saying that Vita will break even in 3 years? I find it hard to believe anything with an OLED screen is that cheap to manufacture.

I think that was based on a google translation.

Corto · Jun 17, 2011

No loss with Vita would mean an all-out PS4... Good.

Krev · Jun 17, 2011

Corto said:
No loss with Vita would mean an all-out PS4... Good.

That's quite a leap of logic.

gofreak · Jun 17, 2011

AAK said:
What? Didn't we have a thread earlier saying that Vita will break even in 3 years? I find it hard to believe anything with an OLED screen is that cheap to manufacture.

I'd like to see the context of that Kaz comment.

I think it probably actually went something like this. "Will Vita take as long as PS3, 3 years, to become profitable on hardware?" "Kaz: (laughs) No, it will take less than that"

Which isn't the same as 'it'll take 3 years to become profitable'. IIRC he, and others at SCE, also said that at the very least, as a business (software+hardware), it would be profitable from the start.

Yoshida seems to be saying that they are aiming for hardware profitability, and though he can't give a certain answer right now, that's the projection.

onipex · Jun 17, 2011

He didn't exactly say no so I'm taking that pr talk as a yes but the loss may not be too large. The truth will come out anyway.

antonz · Jun 17, 2011

They made it pretty clear the last major investments talk that the days of exotic hardware etc were going away and making way for off the shelf components etc.

They can still push boundaries but it will not break the bank so to speak. The fact Cell phone tech is advancing as fast as it is was a lifesaver for Sony and Vita.

Boney · Jun 17, 2011

:bow

Sony, free us from the handheld ghetto!

Kaako · Jun 17, 2011

How are they not selling it at a loss? Or even a very tiny loss? I'm still trying to wrap my head around it...
Profitability for this thing from the start would be pretty sick.

CoffeeJanitor · Jun 17, 2011

antonz said:
They made it pretty clear the last major investments talk that the days of exotic hardware etc were going away and making way for off the shelf components etc.

They can still push boundaries but it will not break the bank so to speak. The fact Cell phone tech is advancing as fast as it is was a lifesaver for Sony and Vita.

I know this is OT, but is PC tech advancing at a similar pace so that they would be able to push the PS4?

Portable tech allowing Sony to push their system technologically makes a lot of sense.

daffy · Jun 17, 2011

Aww, I was hoping for a longer answer with the piracy question. He's right though. I hope he's also right about more flexible pricing for digital releases.

I cannot wait for more RPGs on this thing. Just imagine Final Fantasy... or Kingdom Hearts... omg

antonz · Jun 17, 2011

CoffeeJanitor said:
I know this is OT, but is PC tech advancing at a similar pace so that they would be able to push the PS4?

Portable tech allowing Sony to push their system technologically makes a lot of sense.

Cell Phones are taking leaps alot faster than PCs right now though its more a case of cell phone tech catchin up to PCs.

Father_Brain · Jun 17, 2011

The original Reuters article, which was Andriasang's source for the "profitable within three years" story:

http://jp.reuters.com/article/topNews/idJPJAPAN-21584220110608

Gravijah · Jun 17, 2011

Plinko said:
That's absolutely amazing if they sell this at no loss.

Sony is doing everything right with the Vita so far. Probably my most-anticipated system release ever.

Yeah, hardware wise, this thing is shaping up to be one of the all time greats. Very excited.

gofreak · Jun 17, 2011

Father_Brain said:
The original Reuters article, which was Andriasang's source for the "profitable within three years" story:

http://jp.reuters.com/article/topNews/idJPJAPAN-21584220110608

There were english language versions of this also via reuters. Same situation where there was no direct quote, and no context. Still think it's likely there was some comparative conversation wrt PS3 and Vita, the former of which IIRC took around 3 years to hit hardware profitability. I have my doubts he was setting out a specific timetable for vita there, but saying it would be less than the time PS3 took (if that was ~3 years, which I think it was).

Just speculation, but would explain the gap in the comments.

test_account · Jun 17, 2011

The comment from Kaz about "profitable in 3 years", maybe that is more of an indication of when they expect to have covered all the R&D costs etc. If they make like $5 on each Vita sold, then it might still take some years before all R&D costs etc. is payed off.

Phonomezer · Jun 17, 2011

For Vita, the price on performance was something we definitely wanted to hit, although we all agreed because we are PlayStation, people expect better graphics and prettier pictures, so we have all those things we wanted to achieve in terms of capabilities, but we capped our ambitions with a cost of goods target that we can profitably sell the hardware for $250.

Doesn't say whether or not this will be at launch or in 3 years.

To answer your question, we set out a goal: Yes, we're going to hit the $250 price, and no, we don't want to sell the hardware with a deficit. That's a goal we set out to do and I'm very happy we are achieving that.

Don't =/= Won't

All in all... I'm confused.

Eccocid · Jun 17, 2011

AAK said:
Found it:

http://www.neogaf.com/forum/showthread.php?t=433075

They might not be at loss when manufacturing the hardware but they will lose money when it comes to marketing the system, production, sending it to retailers etc.

darkwing · Jun 17, 2011

Kaako said:
How are they not selling it at a loss? Or even a very tiny loss? I'm still trying to wrap my head around it...
Profitability for this thing from the start would be pretty sick.

some other mobile device was just overpriced

survivor · Jun 17, 2011

If Vita is actually profitable then that's some fine engineering work by Sony. Or magic.

gofreak · Jun 17, 2011

test_account said:
The comment from Kaz about "profitable in 3 years", maybe that is more of an indication of when they expect to have covered all the R&D costs etc. If they make like $5 on each Vita sold, then it might still take some years before all R&D costs etc. is payed off.

Yeah, it is problematic if each person answering this question has different goalposts in mind... they all seem pretty consistent on the profitability of 'the business', though.

Based on teardowns of other devices with similar components, I don't think breakeven or even profitability on the raw manufacturing cost of the device is unbelievable, though. Add in other things like retail cut, marketing etc. and it gets more problematic of course.

babyghost853 · Jun 17, 2011

Phonomezer said:
Doesn't say whether or not this will be at launch or in 3 years.

To answer your question, we set out a goal: Yes, we're going to hit the $250 price, and no, we don't want to sell the hardware with a deficit. That's a goal we set out to do and I'm very happy we are achieving that.

Click to expand...

Don't =/= Won't

All in all... I'm confused.

And some how you missed this part.

Nirolak · Jun 17, 2011

Here we go.

Eurogamer said:
Eurogamer: Kaz Hirai was quoted as saying it'll be sold as a loss with a view to making a profit in three years. Is that just the way it has to be these days in order to build an installed base?

Andrew House: We have operated by and large very successfully around a model that works on what we call a blended margin. We have very low margins or possibly negative margins on the hardware, offset by a much more attractive margin structure on software and peripherals.

We'll manage the business very much in that same way for Vita.

Source: http://www.eurogamer.net/articles/2011-06-09-sonys-andrew-house-interview

GamesIndustry.biz said:
Q: The PS Vita price was a nice surprise at E3. But at that price is the system going to be sold at a loss form day one?

Andrew House: I think as a business it will definitely be profitable from day one. In terms of hardware specifically, it's really not something we tend to comment on, but I would say it will be a significantly better situation than for example, the PlayStation 3. This is in a much, much healthier place from a profitability stand point.

Source: http://www.gamesindustry.biz/articles/2011-06-13-sonys-andrew-house-editorial

I think the real take away is that they expect to lose little to no money on the hardware, allowing them to be profitable from the start.

If we're using this to predict Sony's future, this would tell us that the PS4 will sell at or slightly below cost given that the same executives who made the Vita are making the PS4.

Ellis Kim · Jun 17, 2011

Nirolak said:
The way they keep waffling on this implies to me they're looking at breaking even or losing like $10-$20 and can't quite tell yet which it will be.

Their overall statement seems to be that they expect the business as a whole to be profitable from the start though.

I think its the bolded more than not. I imagine that their goal is to make it profitable from the start, which is why he's reluctant to give a final answer before they finalize hardware specs. They want profitability from the start, but I just hope that they won't cut too many corners along the way.

edit: Ah, quotes!

Yeah, definitely sounds like they might lose money on either hardware, or more on stuff like packaging/manufacturing/distribution.

Vinci · Jun 17, 2011

I'm thrilled Sony doesn't appear to be taking a loss on each hardware unit sold. But I'm surprised that so many others appear happy about it. I thought that was, like, a bad thing for a lot of folks on GAF?

Corto · Jun 17, 2011

Krev said:
That's quite a leap of logic.

If Sony chose to have another device bleeding money from the get go, the next home console would suffer from that. PS4 can even be shaped to be sold at no loss from the beginning as the Vita seems to be, but not having another device in the same division bleeding money could only mean good things to PS4 hardware and software development.

Phonomezer · Jun 17, 2011

babyghost853 said:
And some how you missed this part.

Yes but once again there is no timeframe in which these goals will be achieved.

I think it's fantastic that the US price is $250. I'm not looking forward to picking up the tab with the PAL release... ;(

Gravijah · Jun 17, 2011

Vinci said:
I'm thrilled Sony doesn't appear to be taking a loss on each hardware unit sold. But I'm surprised that so many others appear happy about it. I thought that was, like, a bad thing for a lot of folks on GAF?

You can make a profit, but not too much profit.

Personally, I don't care at all if someone is making a profit or not. I don't suddenly look at my 3DS differently because of the Vita.

Jin34 · Jun 17, 2011

Corto said:
If Sony chose to have another device bleeding money from the get go, the next home console would suffer from that. PS4 can even be shaped to be sold at no loss from the beginning as the Vita seems to be, but not having another device in the same division bleeding money could only mean good things to PS4 hardware and software development.

Oh, your original comment made it seem you thought this would mean PS4 would be sold at a loss to get the most bleeding edge hardware possible, sort of like 360/PS3. But this more GameCube like model is what will probably be the future for both companies.

Dedication Through Light · Jun 17, 2011

The PS Vita sounds wonderful. Nice to know that development costs is close to PSP game levels. Hopefully the masses buy the device, I know, Ill get it on day one, such gorgeous graphics.

test_account · Jun 17, 2011

gofreak said:
Yeah, it is problematic if each person answering this question has different goalposts in mind... they all seem pretty consistent on the profitability of 'the business', though.

Based on teardowns of other devices with similar components, I don't think breakeven or even profitability on the raw manufacturing cost of the device is unbelievable, though. Add in other things like retail cut, marketing etc. and it gets more problematic of course.

Indeed.

Mrbob · Jun 17, 2011

Vinci said:
I'm thrilled Sony doesn't appear to be taking a loss on each hardware unit sold. But I'm surprised that so many others appear happy about it. I thought that was, like, a bad thing for a lot of folks on GAF?

I don't think Sony is making a huge profit on Vita hardware either, though. My guess is they are close to breaking even.

I'll be too glued to that sexy OLED screen when I have mine to care whether they are making or losing a couple bucks on each device sold.

Having Blu Ray in PS3 is awesome, but Sony lost nearly all their 10 year profit from PS1 and PS2 by doing so. Now Sony is on track to be making money again on PS3 and I'd rather have Sony around making games for their systems than having them bleed out due to high hardware manufacturer cost.

Selling hardware near cost is a good compromise.

Vinci · Jun 17, 2011

Mrbob said:
I don't think Sony is making a huge profit on Vita hardware either, though. My guess is they are close to breaking even.

I'll be too glued to that sexy OLED screen when I have mine to care whether they are making or losing a couple bucks on each device sold. Having Blu Ray in PS3 is awesome, but Sony lost nearly all their 10 year profit from PS1 and PS2 by doing so. Now Sony is on track to be making money again on PS3 and I'd rather have Sony around making games for their systems than having them bleed out due to high hardware manufacturer cost.

Selling hardware near cost is a good compromise.

Man, I'm with you - I'm happy as hell. I want Sony to be profitable. And for suggesting that in the past, I was told that I wasn't a real gamer, that I must be an investor, and that Sony and MS are willing to take a loss for us to get the shiniest tech possible in each box come hell or highwater.

So yes, I'm a bit surprised by the sea change.

Plinko · Jun 17, 2011

The memory is most likely where they're going to make their money back on this system. It's the only thing I dread about this launch. I'm curious as to when they're going to announce the prices for memory.

Lagaff · Jun 17, 2011

This is good for sony(they still dont loose too much or make lil profit) and good for us consumers because they are at good price for all the tech packed in
I see it at win win situation.

Dedication Through Light · Jun 17, 2011

Plinko said:
The memory is most likely where they're going to make their money back on this system. It's the only thing I dread about this launch. I'm curious as to when they're going to announce the prices for memory.

Whats a reasonable price?

PaulLFC · Jun 17, 2011

Plinko said:
The memory is most likely where they're going to make their money back on this system. It's the only thing I dread about this launch. I'm curious as to when they're going to announce the prices for memory.

Surely other companies will bring out memory at reduced prices, such as Sandisk? They did with Memory Stick Pro Duos and Wii SD cards.

Plinko · Jun 17, 2011

Dedication Through Light said:
Whats a reasonable price?

No clue. I'm fully expecting to pay an extra $50 at launch, though.

I'm sure other companies will have their own brands eventually.

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