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Sony expects to post a fiscal-year loss of more than $2 billion

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Calamari41

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Why do I get the feeling that those that want Sony to sell Spiderman, are more worried more about their "Spiderman franchise dreams/fantasies" then what's best for Sony. LOL
You don't think that a company getting 20+ years of future profits from an asset up front in exchange for that asset has the possibility of being "what's best" for that company?
 
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Even with it underperforming, it made $708 million in the box office and is easily in the top 10 box office successes Sony has. Marvel would have to pay a ludicrous price to pull that franchise out of Sony's money-desperate hands, seeing as even in failure it's still a money maker for a company in much need of them.

but then again, Sony needs to fix that franchise and i'm not sure they can. ASM2 was so bad I had to turn it off after about 30 minutes. I can't see them moving forward with the franchise unless the retool it in a big way, and even then they might have a spiderman fatigue issue to deal with.
In a way i think it works out for both parties. Marvel would clearly have to pay significant overs to take that franchise out of sonys desperate hands. On the flip side though if marvel did manage to pick it up you can bet that the films would start making a shitload more money. So even if marvel paid well above market value for the franchise i still think it would be worth it because the franchise would be bigger if they did (imo).
 

SRG01

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Yep agree 100%. The fact they get no merch rights as well is huge.

A sell off to Marvel is honestly the best route. Their next film in the franchise is Sinister Six which won't out gross ASM2 and ASM3 has been delayed. They can't reboot right away imo as that would cause further consumer confusion and franchise fatigue.

Sony is not in a good place currently with the Spider Man franchise
The basic problem with selling/not-selling is whether or not they should keep doing it so they have some sort of future cash-flow, or simply sell it so they can get a cash injection right now. It's a whole lot different than selling off their real estate, since their real estate didn't generate money per say.

In terms of cash flow, they're sitting at around negative $460 million, which isn't too bad in the grand scheme of things. The impairment charge does hurt, but does make me wonder why they would declare this goodwill in the first place, even if they are moving towards being a smaller player. Unless they're writing off entire facilities and unsold product...
 

The Shogun

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Why do I get the feeling that those that want Sony to sell Spiderman, are more worried more about their "Spiderman franchise dreams/fantasies" then what's best for Sony. LOL
Not for me. I love the MCU and absolutely hate what Sony has done to Spider Man but if it was making them heaps of cash then they should keep it.

However the franchise is stagnating badly and the proof is in the box office. Do you forsee Sinister Six or AMS3 out grossing ASM2?
 

dionysus

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Someone please correct me if I'm wrong, but are they really all that profitable? Modern Spidey films seem to be good for about $700-$750 million worldwide. And falling. Now that's not bad by any means, but it's not what it used to be.

Anyway, after taking out the cut to distributors and theaters, I believe the studios tend to get about half of the worldwide take (again, please correct me if I'm wrong). This puts Sony's gross income from a Spider-Man film at $350-$375 million. Take out marketing (tens of millions) and production budget ($200 million for ASM2), and you're left with $100 million or so in profit. And also bear in mind that Sony no longer gets one red cent from any Spider-Man merchandise.

It seems to me that selling the Spider-Man film rights for a cool billion dollars would generate the same amount of "profit" as ten successful Spider-Man films. And they could probably get even more for it. If my numbers are close to correct (which, again, they may not be), that seems like a cut and dry business decision.
If your numbers are correct why would someone buy the rights for a billion dollars much less more. Assuming a discount rate of 0% it still would take about 20 years to earn back the investment. Assuming a more reasonable discount rate of 5% and the thing basically never pays off. (I stopped calculating at 67 years, assuming a movie ever 2 years.)
 

Calamari41

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If your numbers are correct why would someone buy the rights for a billion dollars much less more. Assuming a discount rate of 0% it still would take about 20 years to earn back the investment. Assuming a more reasonable discount rate of 5% and the thing basically never pays off. (I stopped calculating at 67 years, assuming a movie ever 2 years.)
Disney would have to pay more simply because both Sony and Disney know that the rights are worth more to Marvel Studios than they are to Sony. Disney would have Spider-Man films clearing a billion worldwide in no time.
 

Ingueferroque

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Jun 23, 2012
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I think a lot of people believe the gaming division is doing extremely well when it's not. It's doing fine, mind you, but the market PS4 has placed itself in is very low margin and thus the gaming division hasn't made a profit since the PS4 launched. Again, this doesn't mean the gaming division is a huge failure, it just means it isn't this smashing success in a sea of failures. If you want that division inside Sony, you're looking for their financial divisions. Their life insurance division is what's keeping the business afloat.

As another note, according to this article, Sony is writing down the value of its mobile unit by approximately 1.68 Billion dollars. That still leaves a net loss of 470 Million dollars expected in cash flow. By writing down the value of its mobile division, Sony is essentially admitting that they've lost the mobile war and have been pushed out of that market as a major player. Thus, the value of its mobile arm goes from "this is a major player in a fast growing market' down to the value of "this is a small-to-mid level player in a fast growing market."
Perfect tag for this post.
 

slit

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You don't think that a company getting 20+ years of future profits from an asset up front in exchange for that asset has the possibility of being "what's best" for that company?
I don't know, since you're only making speculations on what they'd get for the asset and what they would make off it in 20 years time which isn't neccessarily true. Anyway, it just seems this isn't really about Sony and keep in mind I wasn't specifically calling you out, I've seen this argument a lot around here and I just find it amusing.
 
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In a way i think it works out for both parties. Marvel would clearly have to pay significant overs to take that franchise out of sonys desperate hands. On the flip side though if marvel did manage to pick it up you can bet that the films would start making a shitload more money. So even if marvel paid well above market value for the franchise i still think it would be worth it because the franchise would be bigger if they did (imo).
and then Sony's investors would fucking kill them for acting in the moment and not making Spiderman into a financial blockbuster for them. It's very nearsighted and not something you do just because you're suffering losses in the now. At that point, you might as well get rid of your whole cinema division, you just sold your biggest franchise and only blockbuster in recent memory to your competitor.
 

vpance

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Big impairment charge right before releasing what looks to probably be their best selling phone. I guess there's no shortage of crap to clear out or people to fire after years of mismanagement.
 

Sectorseven

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MS isn't going to get out of Xbox because gaming is pretty much one of the most common thing people do with their computing devices and MS can make the case that they need to be there to their shareholders.

Sony... well Sony has a lot of problems but the main problem is that hardware is a commodity now with low margins (aside from the one very notable exception of Apple and some Samsung phones). The money to be made from technology is now in Software as Services and that is a game being played by the heavyweight incumbents of Google and Microsoft. It's just a very very different competitive environment. I think PSN is the only Sony success in that field.
MS can be in gaming with Windows, and they don't even have to sink billions in R&D to do it.
 

Lana Del Rey

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I don't understand how they're still operational with that much money lost. How much dept do they own at this point? Someone cares to elaborate?
 

Abounder

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Spider-man...I think only Disney would buy it, but Disney has the leverage including merch rights already. Disney doesn't need Spider-man meanwhile Sony needs it, and Disney can just sit on Marvel and Star Wars movies while Sony depreciates.

This. Seriously, people actually think the PS4 is a huge money maker? Give it some time and even the gaming division could start to lose money with a few bombs and funding vaporware. I think within 5 years Sony will be gone. This is a sinking ship and the holes just keeps getting bigger.
I don't see a scenario where Sony can stop the bleeding and/or grow, but I think Japan will bailout Sony.
 

Mr.Mike

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If Sony can ever start to get their mobile act together I'll be tempted to buy like a $100 worth of stock. They have some great phones,they just need to actually sell them. Gaming is doing OK from a financial standpoint, but from a marketing standpoint are doing really good things for their brand image right now, and are probably worth keeping around just for that.

Sony isn't going to dissapear. Worst case scenario is they cut off every division except insurance and become a super profitable financial company that gets to liscence out its brand for extra profit.
 

Vanillalite

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I feel like they are leaving money on the table mobile wise as their phones as of late have been great, but Sony can only get them out in Europe in a reasonable time. Lots of lost money from potential NA customers.
 

Calamari41

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I don't know, since you're only making speculations on what they'd get for the asset and what they would make off it in 20 years time which isn't neccessarily true. Anyway, it just seems this isn't really about Sony and keep in mind I wasn't specifically calling you out, I've seen this argument a lot around here and I just find it amusing.
The idea of selling the asset is completely applicable to this thread, and has been presented with thought. To just dismiss it as fanboys dreaming is silly and not very productive.

There are many reasons for Sony to not sell the rights, with
and then Sony's investors would fucking kill them for acting in the moment and not making Spiderman into a financial blockbuster for them. It's very nearsighted and not something you do just because you're suffering losses in the now. At that point, you might as well get rid of your whole cinema division, you just sold your biggest franchise and only blockbuster in recent memory to your competitor.
being one of the major ones. It's just an interesting topic to discuss with regards to their flagging financials. Sony has an incredibly valuable asset that they are not exploiting anywhere near it's potential. Very applicable to the topic at hand.

Like, what happens if three more Spidey-verse movies release and they all make successively less money? What if they stop becoming profitable altogether?
 

riotous

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Honestly wonder if Sony has attracted the "right" customer with the PS4.

- sold hardware for less, which was more powerful
- gives away more games with their cheap PSN
- promotes lots of free 2 play games

While I knows it's all under the guise of making profit in the long run, I wonder if its set expectations too high.

When you give people so much for free, what is their motivation to turn around and spend money?

Part of charging premiums is attracting consumers willing to spend money. Discount "things" attract people trying to spend as little as possible.

It's still technically a loss leader product.

It's also attracting plenty of high end customers but I wonder how many people it attracts that won't make Sony a dime or even potentially loses Sony money overall?

If you bought a PS3 last gen and only used it for a Linux box and media streamer you potentially cost Sony hundreds.
 

dionysus

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I don't understand how they're still operational with that much money lost. How much dept do they own at this point? Someone cares to elaborate?
Well most of this loss isn't because of cash flow. It is an impairment charge. Basically they are retroactively acknowledging past investments were not as valuable as what the money they invested was worth. For example, Sony bought out Ericsson not to long ago for 1.05 billion dollars. Part of this impairment is probably them acknowledging that they overpaid for Ericsson's take in the phone division. I don't know the full details on what exactly they are impairing though.

Them losing 400+ million on a cash flow basis is not trivial either though.
 

hoos30

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It's completely fine for Sony given their market position. Microsoft is the one who is more likely to pull out, if anything.

Stockholders for Microsoft have reason to believe that MS can do something better with that investment. MS' standard is Windows, Office, and now Azure, all which have very high profit margins. From their perspective, a segment that is treading water would be a real disappointment. By contrast, most of Sony's businesses are struggling, so from that perspective a unit that is treading water with strong brand awareness is just fine. This concept is referred to as opportunity cost; Microsoft's opportunity cost is higher than Sony's.
Preach.
 

block tower

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Oct 14, 2012
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Honestly wonder if Sony has attracted the "right" customer with the PS4.

- sold hardware for less, which was more powerful
- gives away more games with their cheap PSN
- promotes lots of free 2 play games

While I knows it's all under the guise of making profit in the long run, I wonder if its set expectations too high.

When you give people so much for free, what is their motivation to turn around and spend money?

Part of charging premiums is attracting consumers willing to spend money. Discount "things" attract people trying to spend as little as possible.

It's still technically a loss leader product.
poor Sony theyre so nice, they care so much, such a good guy Sony. /s

its Sony's job to make the company profitable not the consumer. and all this "free stuff" isnt really all that great.
 

slit

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The idea of selling the asset is completely applicable to this thread, and has been presented with thought. To just dismiss it as fanboys dreaming is silly and not very productive.
Did I say it wasn't applicable to the thread? Disussing where the motivation lies is also applicable since it may be based more on personal feelings than actual unbiased reasoning.
 

riotous

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poor Sony theyre so nice, they care so much, such a good guy Sony. its Sony's job to make the company profitable not the consumer. and all this "free stuff" isnt really all that great.
Obviously it's their job. Not sure where the snark is coming from; you just summarized my point rudely while attacking some straw man "nice guy Sony" argument.

They are calculated business moves. I'm suggesting it may have been flawed despite their hardware lead and unprecedented sales.
 

FonkyByNature

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I have a feeling Sony can't do nothing about their electronic business. They have a very strong competition that can adjust way faster than them.

They will continue to lose money and eventually become a way more leaner company that sell its services like Playstation, Music and Videos and hardware that do sell. I just can't see them getting back on track. It's been years that they're talking about bringing profits, restructuring and all that but nothing happened.

Even though, i think Sony have some of the best products in the world, their marketing is really bad and their prices are above the fierce competition like Samsung, LG...

Their hardware is incredible, i feel kinda bad for them (but not too much, it's a corporation after all) because their products are beautiful, solid but don't sell.

To me, as long as my PS4 is well supported and it will, that's all that counts.
 

Allez Phill

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The need to scrap their TV division. The problem they have is a over saturation of divisions in their company, and while they still have them, they're still pumping money into them even though they have losses. They need to focus on a specific thing. In the early 2000's they were makers of everything, but it's come that time where there are hundreds of companies replacing them.
 

block tower

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Obviously it's their job. Not sure where the snark is coming from; you just summarized my point rudely while attacking some straw man "nice guy Sony" argument.

They are calculated business moves. I'm suggesting it may have been flawed despite their hardware lead and unprecedented sales.
well your making it seem that Sony is over-delivering on some sort of value when they're not. the console is lacking backwards comparability, so by design it is already cheaper, Sony stated themselves the hardware in the machine isn't causing much lose on each unit sold. ps-plus is now mandatory, which it wasn't before, so now if you are a PS gamer you need to pay for PS-Plus to even play most games online,\. so there's an added cost for consumers that didnt exist before, adding some free indie games or older retail games doesn't really make PS-Plus any better, im sure most people would rather have free online and not receive "free" games every month. and your last point about free to play games i dont really get, are free to play games really a selling point to any console owner?

anyway other than the immediate value of a decently priced consoles, im not really understanding all this "value" that you see Sony offering with the PS4. its a good consoles, but the PS Plus games and free to play really aren't a big deal.

unrelated:

i agree with people saying they need to sell of assets. i think one o the biggest assets they could sell would be Spider-Man to Disney and Marvel. im sure Sony could get a decent amount of money from both Disney and Marvel for the property, that'd really change a lot for the MCU and im sure both Disney and Marvel would love to have full control over that cracter. the Sony TV brand also should either go bargain bin prices or be pulled, really not that compelling of hardware compared to what else is already out on the market. i cant speak on their phones, but anecdotally ive never known anyone to own a Sony smartphone since smartphones have been a thing, and i cant recall seeing much marketing for them in the U.S. if at all so id be curious to see what their phone sales are like.
 

killer rin

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The need to scrap their TV division. The problem they have is a over saturation of divisions in their company, and while they still have them, they're still pumping money into them even though they have losses. They need to focus on a specific thing. In the early 2000's they were makers of everything, but it's come that time where there are hundreds of companies replacing them.
And that here is the core problem. Sony can't compete in a market where there is a hundred other companies in both China and Korea selling at rock bottom prices for essentially the same quality product. Its a problem which many companies around the globe have yet to solve and one where being stubborn wont help. If their TV division can't compete after years of attempts at getting it back on track, they need to suck it up and spin it off.
 

CadetMahoney

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Has Marvel made any statements whatsoever about wanting Spiderman back? (they do most likely, I just want to know if they've made any mention of it).
 

SRG01

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And that here is the core problem. Sony can't compete in a market where there is a hundred other companies in both China and Korea selling at rock bottom prices for essentially the same quality product. Its a problem which many companies around the globe have yet to solve and one where being stubborn wont help. If their TV division can't compete after years of attempts at getting it back on track, they need to suck it up and spin it off.
This is the exact reason why the older CE companies have either all folded or transitioned into a services company. Unless you're a big player like Lenovo or Samsung, it's very hard for any Asian company period to compete on a meaningful scale.
 

block tower

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Has Marvel made any statements whatsoever about wanting Spiderman back? (they do most likely, I just want to know if they've made any mention of it).
they expressed that if the opportunity arose they'd reacquire the rights to their lost properties like Fantastic Four, X-Men, and Spider-Man; but do to the nature of those contracts (as long as those studios keep making the films they keep the rights) Marvel isn't holding their breath. the best thing for them is to wait these studios out. if i were Fox and Sony, i would just sell Fantastic Four and the related characters, as well as Spider-Man and it's related characters, back to Marvel and ultimately to Disney so i could get paid. Fox and Sony are in a time period in Hollywood where superheroes are HUGE, the asking price on Spider-Man and Fantastic Four is at an all time high. im sure the money that Disney and Marvel would pay for these characters at this moment in time would be a far better alternative for Fox and Sony than going through the process of coming out with a new film just to keep the rights to these properties every so many years.
 

Zoned

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I doubt they'll be in a position to be in smartphone business after 3 years. Their strategy of releasing flagship phones after every 6 months is atrociously bad. They have been ignoring US market, which is the biggest smartphone market after China. Xiaomi, and Huawei are the dominant players in China. I think it would be better if they cut their TV segment. I doubt they are making any money from that when competition is already offering items at better value. But let's see how how things go in next 2-3 years. Their future is looking dim though
 

Opiate

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Because selling something that turns a profit makes sense... :|
This is all pretty complicated. Just for starters, the problem with selling something that doesn't make money is that you typically don't get very much for it.

The spiderman IP is mentioned for a few reasons. First, because fanboys exist who desperately want the marvel universe to be united. But from a financial perspective, it could make sense for one specific reason: the property is worth more to Disney than to Sony. In other words, something which may only make Sony 500M dollars over the next 10 years (note: I'm pulling these numbers out of my butt) could be worth 1B+ to Disney, because they're in a better position to leverage the property.

That's really what you're looking for when you sell anything, whether that thing be profitable for you or not. If someone else can make better use of it, then you can make them pay more for it than it would be worth to you.
 

riotous

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well your making it seem that Sony is over-delivering on some sort of value when they're not. the console is lacking backwards comparability, so by design it is already cheaper, Sony stated themselves the hardware in the machine isn't causing much lose on each unit sold. ps-plus is now mandatory, which it wasn't before, so now if you are a PS gamer you need to pay for PS-Plus to even play most games online,. so there's an added cost for consumers that didnt
anyway other than the immediate value of a decently priced consoles, im not really understanding all this "value" that you see Sony offering with the PS4. its a good consoles, but the PS Plus games and free to play really aren't a big deal.
My comment was more about how the machine is marketed and perceived.

It's advantages over their competitor generally could be described as being the greater value proposition with a hint of "lots of free stuff."

PSN is known as the more generous service. Sony has attracted more really cheap or free games, etc.

Whether you personally find a ton of value in these thing a is anecdotal. You are also failing at comparing the device to it's more expensive competitor.

It's one of apples advantages for instance in their markets. They know for a fact their customers are willing to pay premiums for what could be described at "less." It's then in turn not shocking their App Store revenues dwarf Android despite Android having far more users.. Android being the standard for anyone looking for any sort of deal or to save money.

Same goes for their anti-DRM campaign last year. The company that instated online passes to try to curb lack of revenue from used game sales turns around and markets their device to anyone who is into buying used games, putting down the completion for doing something to meddle with their ability to sell used (and then sheepishly canceling their unprecedented online pass program, no other manufacturer had one, only pubs.)

Note that nothing I'm saying is actually my opinion of the value proposition; I'm discussing who the device would have appealed to, and who represents the lopsided numbers against the Xbox One.

A lot of those people are cheap gamers is all I'm saying; by design. Sony clearly wanted the most consumers possible without regard to how much those customers plan to spend once they buy the device. Build it and they will come.
 

SMattera

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It's completely fine for Sony given their market position. Microsoft is the one who is more likely to pull out, if anything.

Stockholders for Microsoft have reason to believe that MS can do something better with that investment. MS' standard is Windows, Office, and now Azure, all which have very high profit margins. From their perspective, a segment that is treading water would be a real disappointment. By contrast, most of Sony's businesses are struggling, so from that perspective a unit that is treading water with strong brand awareness is just fine. This concept is referred to as opportunity cost; Microsoft's opportunity cost is higher than Sony's.
Disagree.

For Sony, PlayStation is a platform they can use to sell content -- games, movies, music and now TV shows.

For Microsoft, Xbox is a test bed. A way to experiment and stay relevant among consumers in a world dominated by Samsung and Apple. "Lets try this Kinect 2.0 out on gamers and maybe we'll figure out a way to sell it to businesses."

So long as the Xbox doesn't lose too much money, it won't go away.
 
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I guess I just don't understand the point. If Sony wasn't doing games, then all the billions they invest in it, go back to the company. Right now they throw out billions, and only barely make it back w/ little to no profit. So how does that benefit a stock holder, to basically have your company spend money, only to get the same amount back with no gains?

So basically, because their other divisions are doing poorly, a division that makes no money but breaks even is worth keeping around? Wouldn't the best option be to, I dunno...get rid of the failing division, as well as the divisions that only break even? And only focus on divisions that do make profit? I guess I don't understand business.

EDIT: Sorry, it's not your responsibility to educate me on this sort of thing. Didn't mean to bombard you with questions.
You can kind of look at Amazon with their similar model. A lot of their products and services are sold at such low margins (Kindle, Prime, Fire Tablets) but they have their entire cloud platform which more than likely makes up for those losses. Amazon's profit/net income is almost never in the billions of dollars like Apple or Google, because they're constantly turning that money back around into other avenues for longer term growth. Amazon would not be where it is if all it did was stay as an online retailer.
 

Opiate

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You can kind of look at Amazon with their similar model. A lot of their products and services are sold at such low margins (Kindle, Prime, Fire Tablets) but they have their entire cloud platform which more than likely makes up for those losses. Amazon's revenue is almost never in the billions of dollars like Apple or Google, because they're constantly turning that money back around into other avenues for longer term growth. Amazon would not be where it is if all it did was stay as an online retailer.
Correction: when you say Amazon's revenue isn't in the billions, you mean profit/net income, I believe.
 

reKon

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Do they understand how successful they could have been if they properly pushed their phones worldwide (especially the US)? I just don't get it. Their Xperia line is clearly one of the best and offers more value to people for things they care about (great performing phone, looks fantastic, better battery life than the competition, waterproof/durable, easy to use). Literally everything is there for them to dominate... What the fuck was the point in releasing 10123x mid range phones to different markets?

Also, they really need to go something about their television business.
 
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