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[Qassim]

The platform holders generally don't make *that* much money compared to other consumer electronic markets. To Microsoft and Sony, the PlayStation and the Xbox especially are there to push their overall ecosystem - then they want to just keep plugging products into that ecosystem for people to buy.

Microsoft are a bit more blatant and unapologetic about this. Which is fine, I think Microsoft are probably in a much, much better position to make something beneficial to consumers in that area.

Sony are also, and have been for a while, in a good position to really utilise their vast empire - I'm just not convinced that outside of SCE that Sony can execute on those other products well enough for it to make any difference. I'd like it to help Sony out because when Sony were good, they were actually very good, but despite Kaz's efforts they just seem to fail over and over again on the execution.

 

[H_Prestige]

They need to get rid of Kaz and really take a hard look at how most of their company operates.

Just a tip. This kind of post is only clever when you do it once. When you keep posting it over and over again it makes it seem like you actually got your feelings hurt in one of those Iwata threads and this is your way of lashing out.

 

[Uhyve]

At this point the only next gen system with any kind of viable hook is OUYA. Despite typical start-up niggles Ouya Inc. have successfully crafted an extremely indie-friendly environment, and despite not yet having the sales numbers (those will come), theirs is a passionate, dedicated fanbase where developers and gamers interact routinely through social networking, crafting a shared ecosystem where developer and gamer each takes an equal amount of ownership in the dream of OUYA: which is that anyone and everyone can make a polished game and put it up for sale, where people will play it, can buy it, and give immediate feedback after doing so. That's some real next gen shit, completely free of the big three's bluster and deceptive marketing strategies.

Assuming you're joking, this is amazing, PR BS at it's finest.

 

[zomgbbqftw]

Correct me if I recall wrong, but didn't 5 out of 9 of their core businesses bring in losses according to their latest fiscal report?

Yup. TVs, Laptops and Movies were the big losers though. Movies is a tough one because they made a couple of high profile bombs (WHD, AE) so they really only need a management clear out to ensure that doesn't happen again. Game made a loss, but that's no surprise given there will have been a lot of PS4 related expenditure they won't be able to book as goodwill or inventory.

TVs and Laptops they really need to get out of though, I don't see any advantage for Sony to remain in either of these markets. The only way I could see a "revival" is if they move to the Apple model and fire all of their manufacturing staff and go production-lite. Essentially only keep design, software and the supply chain management in house. Run the division with just a few thousand employees and benefit from low unit labour costs in China and a very low level of fixed costs.

As a Japanese company I'm not sure Sony could do what I am suggesting as it would involve 20-30k job losses in Japan directly and more than that as Sony's supply chain tends towards cheaper foreign components rather than expensive Japanese made ones.

 

[haihoo]

No.

Even with the PS2 Sony managed to loose money and they lost billions of dollar with the PS3 ... and the Vita is another new money burner.

If the PS4 will be a big, big, big success, much bigger than PS2, we will see another gaming machine from Sony, but that is unlikely.

If you look realistically at Sonys gaming division and Sony as a whole ... there is no future. But other companies (perhaps google or apple) will occupy this place in the gaming world after Sony has gone.

 

[jcm]

No.

Their loss-leader business model for the gaming side is beyond broken. For example massively succesfull PS2 brought in only few hundred millions of dollars of profit while PS3 showed us what happens if things go wrong.

We were discussing about Sony as a whole in the other thread, here's what I posted there about their situation:

These two companies are basically worth the same (Sony's market cap is $17 billion and Nintendo $15,5 billion) although the other one tries to offer everything and the other concentrates on one business.

Market cap is a terrible tool to compare them. SNE has an EV of 27.83B, NTDOY is 4.80B.

Indeed. Kaz now needs to show some mettle and dump TVs and possibly laptops. The reason the shares were down so heavily after the release was less to do with the forecast downgrade than the TV division heading back into loss making territory. Many thought that Sony were done with TV losses, and showing a loss in the division is a big setback. There is nothing left for them in TVs and they need to get out. That move would send their shares up considerably.

Strategy-wsie I think you're right, but it'd be tough to be the guy who killed off Sony TVs. Do you have any idea how many jobs that is? (Not being rhetorical, I'm actually asking. I have no idea.)

 

[Pain]

Short term? No. They're taking a loss one each console sold.
In a year or two when the console could be dominating the industry? Yes.

 

[Speedy Blue Dude]

If anything, I think their Xperia phone line is what started their revitalization. Those phones / tablets are godlike

Aren't they all selling terribly? I'm pretty sure the new Xperia is selling worse than a Windows Phone.

 

[Nyoro SF]

There's no reason why Xbox One (are we still calling it Xbone?) or Ps4 should exist, no reason, no justification for their existence. Microsoft and Sony will invest and lose loads on these two systems.

And before we hear cries of fanboyism, Nintendo are in the same boat. Everyone wanted Wii 2, no one wanted Wii U. That system is dying, and it deserves to be fucking dead as a signpost to its creators' idiocy.

At this point the only next gen system with any kind of viable hook is OUYA. Despite typical start-up niggles Ouya Inc. have successfully crafted an extremely indie-friendly environment, and despite not yet having the sales numbers (those will come), theirs is a passionate, dedicated fanbase where developers and gamers interact routinely through social networking, crafting a shared ecosystem where developer and gamer each takes an equal amount of ownership in the dream of OUYA: which is that anyone and everyone can make a polished game and put it up for sale, where people will play it, can buy it, and give immediate feedback after doing so. That's some real next gen shit, completely free of the big three's bluster and deceptive marketing strategies.

You know, marketers have to publicly identify themselves or be banned.

 

[timetokill]

I am not sure why you would say the bolded. Kaz Hirai turned around the sinking ship that was the SCEI division and basically rescued it from almost certain failure if it continued on the path it was under when Kutaragi was in charge. Everything positive you see about PS4 is because of Kaz, although he's not going to get much credit for it. The PS4 project was started under his supervision. If he could fix that, why is he a bad choice to fix the rest of the company?

The two main products attached to Kaz are utter failures: PSPgo and Vita. I do give him credit for handing over the reins to more qualified people for PS4, though.

My problems with him aren't really related to gaming, though. He refuses to get out of the TV industry and his mismanagment of their motion picture, film/tv properties is notable as well. Their mobile initiatives really aren't cutting it in an increasingly competitive marketplace. They're becoming known for overpriced electronics without the prestige that comes with it. It's like desperately wishing they were the Walkman company of the 90s, but those days are long, long gone.

Simply put, I don't think he's willing, or perhaps not able to make the drastic cuts and changes Sony needs to truly turn the company around. They've been flirting with junk status for a while now.

Just a tip. This kind of post is only clever when you do it once. When you keep posting it over and over again it makes it seem like you actually got your feelings hurt in one of those Iwata threads and this is your way of lashing out.

Just a tip: I thought Kaz should be fired well before the Iwata threads. Don't let that stop you getting your feelings hurt though.

 

[Jinko]

Not really, whilst the other divisions are around there is little chance the PS4 could make much difference.

What Sony need to do is get over themselves and start making budget products to compete with Samsung and LG.

 

[Moonstone]

No.

Even with the PS2 Sony managed to loose money and they lost billions of dollar with the PS3 ... and the Vita is another new money burner.

If the PS4 will be a big, big, big success, much bigger than PS2, we will see another gaming machine from Sony, but that is unlikely.

If you look realistically at Sonys gaming division and Sony as a whole ... there is no future. But other companies (perhaps google or apple) will occupy this place in the gaming world after Sony has gone.

You are right in that regard that you don't make money with the traditional gaming business. The Wii is the exception of that rule, but you can't call it traditional.

Console sales + thirdparty licensing is nothing you should build a business on. Even PS2, with its total domination, wasn't a big success from a financial standpoint. They lost too much developing and launching it.

But if Sony manages not to lose significants amounts of money with development and launching of the PS4 and get the online services started, the PS4 business might become a success. At least for a company like Sony.

Sony has two business with a potential of growth: Mobile and online services.
With mobile they need to attack the US market. With online, I don't see a chance for SEN to compete with the likes of Spotify or Netflix. But PSN+ and Gaikaii (on any device)
might turn a decent profit.
But they also have to cut costs in all other divisions.
Vita is okay, they don't lose much money from it. Vita TV is a good initiative. I do think, it's really underestimated.

 

[Wynnebeck]

No.

Even with the PS2 Sony managed to loose money and they lost billions of dollar with the PS3 ... and the Vita is another new money burner.

If the PS4 will be a big, big, big success, much bigger than PS2, we will see another gaming machine from Sony, but that is unlikely.

If you look realistically at Sonys gaming division and Sony as a whole ... there is no future. But other companies (perhaps google or apple) will occupy this place in the gaming world after Sony has gone.

LOL guess all of us should cancel our PS4s now since there in no future at Sony. Hell, they're gonna announce bankruptcy any day now!

 

[Thunder Monkey]

It really depends on how well it sells. If they can sell between 10-20 million units in its first year they are well on their way to a very profitable console.

Parts will scale a hell of a lot better than they did with the PS3. Meaning little chance of enduring losses like with PS3, and then software sales will bolster it further.

I honestly expect PS4 to be Sony's most successful console ever. From both a unit tally and profits standing.

 

[SporeCrawler]

are they still rated as junk bh standard and poors it was big news last year or so)

 

[SporeCrawler]

LOL guess all of us should cancel our PS4s now since there in no future at Sony. Hell, they're gonna announce bankruptcy any day now!

well if s&p says their reliability as a debtor is junk status (lending song money is speculative) that means borrowing money is harder as they have to pay more interest.

 

[Mandoric]

TVs and Laptops they really need to get out of though, I don't see any advantage for Sony to remain in either of these markets. The only way I could see a "revival" is if they move to the Apple model and fire all of their manufacturing staff and go production-lite. Essentially only keep design, software and the supply chain management in house. Run the division with just a few thousand employees and benefit from low unit labour costs in China and a very low level of fixed costs.

As a Japanese company I'm not sure Sony could do what I am suggesting as it would involve 20-30k job losses in Japan directly and more than that as Sony's supply chain tends towards cheaper foreign components rather than expensive Japanese made ones.

This plays into what I've been iffy on posting for a while.

The top end of the Vaio line is worthwhile to keep but needs slimming/presentation as the "Thinkpad for a M.A. rather than an M.S.". It will be a hard row to hoe, but it's doable with either cost reduction or cost increase from competitors.

TVs need to be scaled down to at most an engineering staff, but...
The key point here is demographics, and in these terms the dumbest of the future analysts will look at PS4's later, moneymaking years as a turning point. Key to Sony's profitability in the future are two factors:
a) the late Showa cadre being shown the door to finally right the labor vessel that capsized at the end of the last era. Managers are just starting to come up for golden parachuting, and factory workers can be shuffled out through the 2020s, ending in 2036 when the first man hired from high school in Heisei still under the old social contract will turn 65. This will help pare the Vaio line down to top-end equipment and TVs down almost completely.
b) Japan's electronics manufacturing boom led China's by 30 years, and Korea's by 20; Korea is already suffering the demographic crunch that made low-cost production impossible in Japan, with Samsung and LG shifting production overseas, and China will suffer it soon and hardest of them all due to its one-child policy. There will still be inexpensive places to build electronics, but China will not be as hugely competitive, and the replacements (India, sub-equatorial Africa?) will not be able to gut existing production on the same level

 

[Parakeetman]

Sony actually has been doing that on their own lately and the PS4 is just part of the whole overall picture. Its not some sort of magical pillar that will change the whole company if it sells well or not.

 

[Iacobellis]

I hope so. I miss the days when Sony was the goto name for TVs and audio equipment.

PlayStation is truly their strongest suit, I don't see it disappearing anytime soon.

 

[sickamore007]

more like a slow a death

 

[Nightstick11]

During the PS2 days, the PS departments brought in something like 40% of Sony's revenue (not profit I know I know). After the utter disasters that were the PS3 or Vita, it's not an understatement to say we NEED the PS4 to make Sony money of we want to see a PS5.

 

[GetemMa]

No. Gaming is by and large a low margin industry.

Sony has to change strategies with televisions, which will be difficult.

The competition in televisions makes the competition in gaming consoles seem quaint.

Sony has never been one to offer budget televisions but the problem with that is 90% of people are quite satisfied with a budget television as long as it does 1080p/120hz.

As long as they seem themselves above the fray, they will have a hard time getting back their market share from Samsung, LG, and even some of the lower end brands like Vizio and Westinghouse.

Their push into mobile has to compete with Apple and Samsung.

I doubt we will see the monster that was Sony of the early 2000's any time soon.

 

[Deleted member 17706]

I had no idea there were so many business geniuses on NeoGAF giving out free advice on exactly what Sony need to do!

 

[injurai]

It's more likely to be the death of Sony.

next-gen trolling right here

 

[Iacobellis]

During the PS2 days, the PS departments brought in something like 40% of Sony's revenue (not profit I know I know). After the utter disasters that were the PS3 or Vita, it's not an understatement to say we NEED the PS4 to make Sony money of we want to see a PS5.

The PS4 doesn't have be this second coming of the PS2 to keep Sony alive. Sony lost all of their profits made on the PS1 and PS2 on the PS3, yet the PlayStation brand is still thriving.

 

[Dug]

It's more likely to be the death of Sony.

Damn, Sony is already doomed? Is that a new record?

 

[MattKeil]

Unlikely. Even when the PS2 was a runaway success, the other divisions of Sony still flagged badly. For a time the Playstation division was the only part of Sony making any money at all.

 

[Wolfgang Jr]

their tvs are overpriced and get destroyed by Samsung
their phones are trash and get destroyed by Apple
Vaios are cool but overpriced and get destroyed by everyone


i have a bravia and a vaio

thank god i have an iphone though

Congratulations! You may just be the most ill informed person on GAF!

 

[jey_16]

If you look back 10-15 years ago, Sony fucked it up so bad. They had the content and they had the hardware but still went no where

Now, TV's are a money loser, nothing in tablets and movies are a disaster. Smartphones look like one bright spark but they have yet to bring out that one killer product, it's insane that Apple uses a Sony camera lens in the iPhone yet every review says that the picture quality from the Xperia phones is rubbish compared to the iPhone.

 

[sickamore007]

Sony is a valuable brand but they need to market a more so customers can know about their product. As of right now gaming will give them a push but the ps4 isn't the ipod. The ipod did wonders for apple under a great ceo. For now lets see what happens in the next two years or so

 

[LiquidMetal14]

Simple answer, yes. Let's come back in 2 years.

 

[Y2Kev]

Sony's primary objective these days should be luring top talent to the company so they can start innovating again. I think Sony really needs to just start notching some wins. Financially, no, I don't expect low or negative margin goods to make much of a difference.

 

[Iacobellis]

If you look back 10-15 years ago, Sony fucked it up so bad. They had the content and they had the hardware but still went no where

Now, TV's are a money loser, nothing in tablets and movies are a disaster. Smartphones look like one bright spark but they have yet to bring out that one killer product, it's insane that Apple uses a Sony camera lens in the iPhone yet every review says that the picture quality from the Xperia phones is rubbish compared to the iPhone.

It's all about software. Apple is insanely great when it comes to fully optimizing the hardware in their devices.

 

[TheGreyHulk]

they're too damn big for their gaming division to hold them up. i don't see it revitalizing them as a whole.

 

[IHaveCandy]

Only if everyone who buys a PS4 also buys a Sony HDTV. Otherwise I don't think it's that big of a factor in the grand scheme of things.

For what it's worth, I'm gonna try and get a Bravia on Black Friday.

 

[Captain Smoker]

During the PS2 days, the PS departments brought in something like 40% of Sony's revenue (not profit I know I know). After the utter disasters that were the PS3 or Vita, it's not an understatement to say we NEED the PS4 to make Sony money of we want to see a PS5.

You're overestimating it.

Revenue Shares of "Game" department:

FY3 2008: 14,5 %
FY3 2007: 12,3 %
FY3 2006: 12,8 %
FY3 2005: 10,2 %
FY3 2004: 10,4 %
FY3 2003: 12,7 %

 

[Y2Kev]

they're too damn big for their gaming division to hold them up. i don't see it revitalizing them as a whole.

Kaz making Game a pillar is a pretty clear admission that he plans to dramatically shrink Sony.

 

[theclosetfan]

For what it's worth, I'm gonna try and get a Bravia on Black Friday.

I just bought a Bravia yesterday in preparation for the PS4. That's two!

 

[Nightstick11]

The PS4 doesn't have be this second coming of the PS2 to keep Sony alive. Sony lost all of their profits made on the PS1 and PS2 on the PS3, yet the PlayStation brand is still thriving.

I'm not talking about Sony as a whole. I'm talking about Sony's willingness to make a PS5.

And while you and I subjectively may think the Playstation brand is "thriving", Sony needs it to be financially thriving, not "mind-share" thriving (whatever the fuck that is).

 

[Chuck Norris]

Well its more likely Kaz will capitalise on the successes of the Playstation side of the company and implement what they are doing right into other parts of the business.... Instead of ignoring it and treating each subsidiary as wholly different like Sony of the past.

 

[TheLostBigBoss]

It's more likely to be the death of Sony.

 

[JordanN]

With the amount of goodwill Sony won with PS4, I think they need the console more than ever (and all future ones to boot).

But they would probably need more to reverse the company's fortune who have lost a lot of money [as a whole] over the years.

Makes you wonder why they treat the Vita like crap though given their financial situation...

 

[Nightstick11]

You're overestimating it.

Revenue Shares of "Game" department:

FY3 2008: 14,5 %
FY3 2007: 12,3 %
FY3 2006: 12,8 %
FY3 2005: 10,2 %
FY3 2004: 10,4 %
FY3 2003: 12,7 %

Sorry, I must've mixed up years and money categories. At one point (maybe briefly) Playstation was responsible for 40% of Sony operating profit.

http://cws.cengage.co.uk/thompson5/students/cases/sony_playstation.pdf

 

[Captain Smoker]

Sorry, I must've mixed up years and money categories. At one point (maybe briefly) Playstation was responsible for 40% of Sony operating profit.

http://cws.cengage.co.uk/thompson5/students/cases/sony_playstation.pdf

Didn't backtrack the 90s.

http://www.sony.net/SonyInfo/IR/financial/fr/historical.html <--- my source


In the current state, we can say that the gaming business is responsible for 10% - 15% of Sonys revenues.

But another factor is that the gaming business was always a catalyst for other markets (CD / DVD / Blu-Ray / 4K or Cloud), this isn't listed in those percentages.

 

[Prince Vultan]

Hard to say really, but one thing I am pretty certain of is that the PS4 is the only one of the three next gen consoles I could really see making it through to the end of this gen unscathed.

The Wii U is pretty much already done, and even setting aside the multitude of problems Xbone is facing, there's still the possibility of the entire Xbox division being sold off from Microsoft, and if that happens I don't see that console surviving without a constant, sustained mega-advertising push like no console before it... and no one outside of Microsoft is gonna pay that bill.

tl,dr: PS4 is pretty much ideally positioned for global success in the console market, moreso than any competitor as things now stand. Whether or not that'll be enough to get Sony as a whole going again I couldn't say, but anyone who thinks it's not going to be a big time money maker for Sony at the very least is just deluding themselves.

 

[Louis Cyphre]

Your basically selling hardware in hopes of selling services to offset the losses. This is why there is a push for the music store and now the Plus membership. How much of there games division represent Sony as a whole? There glory years was when people bought Sony Walkmans and Sony TV's, consumers don't care anymore because companies like Samsung can sell TV's for cheap and the iPod wiped the world clean for competitors.

So here we have Mr. Hirai turning a company notorious for being an electronic giant to a game centric business model. It's because he has seen ther other divisions take a beating over the years while the Playstation brand has remained quite strong. But again, how much revenue have they made and expect to make when you continue to invest 10's of millions of dollars into perhaps one game and only sell it on one or two platforms while selling your hardware at a loss?

 

[Bravocado]

next-gen trolling right here

Nuisance Awaits.

 

[Soupstorm]

Your basically selling hardware in hopes of selling services to offset the losses. This is why there is a push for the music store and now the Plus membership. How much of there games division represent Sony as a whole? There glory years was when people bought Sony Walkmans and Sony TV's, consumers don't care anymore because companies like Samsung can sell TV's for cheap and the iPod wiped the world clean for competitors.

So here we have Mr. Hirai turning a company notorious for being an electronic giant to a game centric business model. It's because he has seen ther other divisions take a beating over the years while the Playstation brand has remained quite strong. But again, how much revenue have they made and expect to make when you continue to invest 10's of millions of dollars into perhaps one game and only sell it on one or two platforms while selling your hardware at a loss?

It's not as simple as invest millions in a game -> game is only on one platform -> lowered sales potential. You use that game as a flagship to bring in two things - new PS4 owners that will more than likely purchase additional titles, and new developers who are attracted to the growing user base. Whether these titles are cross platform or exclusive is more or less secondary to the goal of growing the user base. When a game is crossplatform, what matters is which console the consumers own. If the PS4 flagships are good enough, they'll own a PS4 and they'll get that game on the PS4. It's the classic "If you build it, they will come" - only this time around, what they've built is something that doesn't take years to figure out how to use properly.

That said, part of their good positioning here is sheer luck. If Microsoft hadn't dropped darn near every ball they had, the PS4 would be a MUCH harder sell and it could very well have been the seed of Sony's future destruction.

next-gen trolling right here

If you sit back far enough it looks like a constructive post.

 

[Louis Cyphre]

It's not as simple as invest millions in a game -> game is only on one platform -> lowered sales potential. You use that game as a flagship to bring in two things - new PS4 owners that will more than likely purchase additional titles, and new developers who are attracted to the growing user base. Whether these titles are cross platform or exclusive is more or less secondary to the goal of growing the user base. When a game is crossplatform, what matters is which console the consumers own. If the PS4 flagships are good enough, they'll own a PS4 and they'll get that game on the PS4. It's the classic "If you build it, they will come" - only this time around, what they've built is something that doesn't take years to figure out how to use properly.

That said, part of their good positioning here is sheer luck. If Microsoft hadn't dropped darn near every ball they had, the PS4 would be a MUCH harder sell and it could very well have been the seed of Sony's future destruction.
.

I understand how exclusives work, my point was how sustainable is this business model in the future which is why I touched on things like Plus memberships and other services that tie into the Playstation experience. The cost to produce these games don't seem to be going down for titles like Killzone, those flagship titles.

Sony in the past was better positioned because the Sony brand meant something outside of games. The point of this conversation was how much impact will the PS4 be to Sony as a whole? Sony has done a tremendous job marketing to the core gaming audience and if the PS4 is the success many of us think it is it will sell very well, but where does the gaming audience take the company? The PS2 drove DVD sales, the PS3 drove bluray sales but the system cost them dearly. What tentacles will the PS4 do that can bring the company back?

 

[disastermouse]

Sony is improving in a number of ways. Their headphones are getting better (MA900) after being subpar for a long time, I've got a Sony TV in my Amazon wish list because of the low input lag, and now PS4 along with PS+. Since they're giving me Music Unlimited for 30 days, I plan on checking that out too.

Anecdotal, I know - but I'm not an analyst. PS+ especially could be a nice shot in the arm. Low end digital cameras are dead and they don't make a phone I want since I'm comfortable with my iPhone. They've lost out on portable music, but if they could just make Music Unlimited something closer to Spotify, that would be awesome - maybe plug into the PSN network and get an app onto PC/MAC and iOS/Android if they haven't already.

They'll need to make big strides to improve home hi-fi though. They need a halo product there - a truly amazing group of receivers, speakers, amplifiers, etc....maybe even step into planar magnetic or electrostatic speakers/speaker sets.