Sony sales dropping...

[kai123]

http://www.gamespot.com/all/news/news_6077227.html

[Darth Sensei]

Hey, perhaps that $99 Christmas price drop isn't that ridiculous after all. :hmm:

[zmweasel]

http://www.gamespot.com/all/news/news_6077227.html

Wow. This is ugly, ugly news -- not just for Sony, but for the videogame industry as a whole. When Sony suffers, so does almost every third-party publisher and videogame retailer, as well. I knew that Sony as a whole was struggling, but the gruesome details of the PS division's woes caught me way off-guard.

-- Z.

[omnedon]

Sorry guys, it's all my fault.

I've obviously repaired too many PS2 systems, and totally fu**ed up their business plan.

I've started the next crash!!! :(


;)

[Ed Oscuro]

I agree with zmeston. I, like everybody else, likes to get cheaper stuff, but not with the knowledge that the business is hurting. I doubt this will result in more intense competition in better games, since at this point money isn't there in the first place to make the games, and secondly we've already started to see this competition.

Looking forward to a good import PS2 someday soon though.

[Hep038]

I don't understand something, I thought that once a company made their hardware got it into everybody's home that's when the money was going to start kicking in. I have always heard that Xbox and Sony could sell consoles for a loss because they would make it up in software sales. Now I suspect that 80% of the people that were ever going to buy a PS2 have already bought one. So now all sony had to do was rake in money from third party software sales. Now I know that the PS3 is eating a lot of cash and man power and not making 1 cent for sony. But I just don't see how now is when they would be losing money. The only thing I can think of is that people are only buying 2-5 games for their PS2. If this happens to Microsoft, the red ink is really going to fly.

[SFCfan]

:bullshit: Look, Sony doesn't care about dropping the price of PS2, they are so obsessed with PS3 and the PSP is going to be super-popular anyway. So why worry about them not having as many sales, they still probably gained more money from sales than :puke: xbox :puke: and \^_^/ Gamecube \^_^/
So what's the big deal? :hmm:

[zmweasel]

Hey, perhaps that $99 Christmas price drop isn't that ridiculous after all. :hmm:

A massive price drop will compound Sony's financial woes, but they have to drop MSRP somewhat to boost demand -- a classic no-win situation. I'd guess $129, which leaves 'em maimed instead of murdered.

AND they have to approve more third-party games to boost their primary source of income. Looks like Sony needs SNK and Working Designs after all!

-- Z.

[zmweasel]

:bullshit: Look, Sony doesn't care about dropping the price of PS2, they are so obsessed with PS3 and the PSP is going to be super-popular anyway. So why worry about them not having as many sales, they still probably gained more money from sales than :puke: xbox :puke: and \^_^/ Gamecube \^_^/
So what's the big deal? :hmm:

You're young, so I will forgive you your ignorance this once. Read that article again, and note the financial ripples that Sony's announcement generated throughout the videogame industry. Sony's health, at this point, equals the game industry's health.

Sony most DEFINITELY cares about the sales performance of the PS2, along with dozens of third-party publishers and their thousands of employees. Nor can third parties just "jump" over to Microsoft or Nintendo and instantly be okay, because the PS2's market share is larger than the Xbox and Cube combined. Not to mention third-party Cube titles aren't moving at all, with the exception of Soul Calibur II (which has Link in it, so it's a notable exception).

-- Z.

[zmweasel]

The only thing I can think of is that people are only buying 2-5 games for their PS2. If this happens to Microsoft, the red ink is really going to fly.

I don't have any stats in front of me, but in fact, the average consumer DOES only buy a handful of games for his console. I expect this number has gone up with the advent of budget console releases, but not a great deal.

Look at the NPS/TRST sales charts -- the raw numbers, that is -- and note that a handful of videogames generate the majority of sales. GTA3, Madden, Zelda. Those are the games which break through to the "mainstream" player. Everything else fights for the table scraps.

-- Z.

[Ed Oscuro]

Ah well, I don't need to chime in again. I will say that the picture of a BS-X unit with the words "Super Famicom lives on!!" is rather misguided, to say the least...did you think that was the prototype PlayStation or what, dude?

I doubt this will generate any opportunity for Nintendo, either. PS2s will simply drop in price and Joe Schmo will sit up and say "HEY! cheap! Cool!"

[SoulBlazer]

Zach is right in what he said, of course, but I can't help but hope that Nintendo and Microsoft use this as a chance to increase their own market sales and try to throw Sony off it's crown as a 'big bad monoply', which they are in HIGH danger of becoming!

[Ed Oscuro]

Nah, Sony has to stay competitive and I don't see how they're becoming this "monopoly." After all, GC sales outpaced PS2 sales this month.

[zmweasel]

Zach is right in what he said, of course, but I can't help but hope that Nintendo and Microsoft use this as a chance to increase their own market sales and try to throw Sony off it's crown as a 'big bad monoply', which they are in HIGH danger of becoming!

It's a nice thought, but Nintendo and Microsoft are struggling just to maintain their market slices of what, judging from this mind-blowing news, is a shrinking pie. Neither of them are in a position to capitalize.

I mean, what can Nintendo do? They can't drop the Cube's MSRP any lower, and they've already shipped all their A-list franchises.

As for Microsoft, everyone's waiting for Halo 2, and that doesn't ship 'til next year.

This could be the ugliest Christmas for the game industry in a long, long time.

-- Z.

[ChuckthePlant]

This is where the sound financials of Nintendo need to be understood in context. The game market like many media markets is cyclical and trend driven. Nintendo realized this early on, most likely from the examples of Atari and Sega et al. They have diversified their properties, somewhat, and maintain large cash positions with reasonable liquidity. This is not dissimilar to Apple Computers cash position and is the key to their survival as a entity. It is a sound and conservative course that insulates the companies from radical market shifts.

Sony, as I have suspected, is in a much worse position as the market leader. They rely on diversification within their core areas of competency to hopefully insulate them from market swings. Unfortunately, their areas of business are getting hammered at once as they are within electronics and media production or dissemination. These all demand a great deal of cash to maintain manufacturing and R&D.

It will be interesting to see the success and follow through the have with PSP. I am eager to see if they can launch this device at a price point that will be consumer attractive and not hemorrhage cash. My guess from past attempts is that they will follow the model of marketing the PSP as they did the PS1 and PS2. If so they will introduce it at a loss intending to break even a year or two into the life the product. This will be very hard in a shrinking market, and with Sony's other lines of business demanding cash infusions. The next 5 years will be hard for Sony.

[SoulBlazer]

Like I said, it's just hopefull thinking. :)

I think Sony needs to lower the price of the PS2, entice more third party companies to make more games for the systems, push their 'improved' PS2's that are starting to go on sale, and offer 'bundle' deals to get people to buy more.

I hope this news is'nt as bad as it sounds, but it goes along with other articles I was reading this year that this is a sluggish year for hardware sales due to no new systems and sluggish for software due to lack of A titles coming out in the forth quarter. This should be a short term slump, with things better by the end of 2004.

The PC gaming market is affected also, as their A list games are being delayed (Doom 3, Half Life 2, etc.) and the top quality systems and video cards are WAY too expensive right now. Still, I'm buying more PC then console games these days. :)

We have a tightly connected and high money gaming industry now and it's interesting to see how one company has affected it this much. Economics is not my strong suit, however. :)

[zmweasel]

This is where the sound financials of Nintendo need to be understood in context.

But not sound enough to keep them from recently suffering their first-ever losses. They have a remarkably different corporate structure than Sony, no question, but the next battle of the Console Wars is going to be at least as trying for them.

-- Z.

[SoulBlazer]

I have to admit that I AM surprised that Sony was affected this badly. After all, the video game division is just one small part of the company, and they crank out hundreds of products. Unlike Nintendo, which makes games and games only. I recall reading in 2001 that Sony made 40 percent of their TOTAL money from the PlayStation division. Could Sony be depending too much on their video game division to make money for them, similar to how Paramount depended too much on Star Trek? Does Sony need to do some changing in ALL aspects of the company?

[zmweasel]

I have to admit that I AM surprised that Sony was affected this badly. After all, the video game division is just one small part of the company, and they crank out hundreds of products. Unlike Nintendo, which makes games and games only. I recall reading in 2001 that Sony made 40 percent of their TOTAL money from the PlayStation division. Could Sony be depending too much on their video game division to make money for them, similar to how Paramount depended too much on Star Trek? Does Sony need to do some changing in ALL aspects of the company?

What with Sony's non-gaming businesses getting hammered, Sony is unquestionably depending on its videogame division for profits. There was plenty of speculation that the PSX and PSp (but especially the former) were created at the behest of Sony management, as opposed to the PS division seeing new opportunities.

-- Z.

[Chunky]

how many people need to buy another console. man more or less everyone i know that plays games at this time has a ps2, and like me 3 of them have bought ones to replace broken ones, and mroe fo another 4 have bought japanese playstations.

What i'm saying is i have never bought so many games for one system new, so many systems new. Everyone i see getting this game or that. I don't get why the slump, unless they have reached everyone.

[kai123]

I think everybody is forgetting the gba. It is the best selling system out there for now.

[zmweasel]

I think everybody is forgetting the gba. It is the best selling system out there for now.

And what with the recent belly-flop of the N-Gage, Nintendo (which is now working with Motorola on wireless tech -- VERY interesting) has smacked down yet another would-be competitor. My former unbridled enthusiasm about the PSp has been greatly tempered by today's news, and by Nokia's failure; it's going to be a much tougher battle for Sony than I initially thought.

-- Z.

[ChuckthePlant]

But not sound enough to keep them from recently suffering their first-ever losses. They have a remarkably different corporate structure than Sony, no question, but the next battle of the Console Wars is going to be at least as trying for them.

-- Z.

It is going to be a difficult launch for all the players. The industry has begun its usual cycle of over supply and failure to recognize market realities. Nintendo's first ever loss, despite much of it being a result of currency fluctuations, can be seen as bellwether for all the players. Microsoft is charging ahead loosing cash at an ungodly rate. The recent news regarding Sony's overall profit picture is not surprising and highlights the developing situation. It still amazes me how immature the video game industry is. There are many antecedents for it in electronics and media but yet hardware makers and publishers fail to plan effectively for down markets.

Nintendo, of all the players, seems best to have realized the actuality of their situation and the market as a whole. Microsoft is an exception to the market rules due to its monopoly power in other areas. One wonders how they will react when profit is squeezed in its core line of business. Their history of long-term commitment to any other division beyond Windows and Office is questionable at best. Sony is probably in the worst shape. Unless it can rebound its other lines of business it will become increasingly more difficult to operate any portion of it business at a loss even temporary. It is these realities that will shape the next generation of consoles form and launch strategy.

[zmweasel]

It is going to be a difficult launch for all the players. The industry has begun its usual cycle of over supply and failure to recognize market realities. Nintendo's first ever loss, despite much of it being a result of currency fluctuations, can be seen as bellwether for all the players.

Absolutely agreed. Although Nintendo pinning its losses on the currency thing is much like Sony pinning its decline on PS3 R&D -- a distraction from the more significant long-term reasons behind the financial woes.

-- Z.

[Hep038]

But of the big 3 Nintendo is in the worst position to lose money. And I assume they do not have the cash or resources sony and Microsoft do to start the next generation wars. Like I said in my original post all three should be making money not losing it. Even with Nintendo's careful planning they posted a loss. To tell the truth only Halo 2 and Mario kart are the only 2 games I see myself running out to buy at full price.

[Flack]

Would dropping the price of the PS2 really help Sony? This is just speculation, but I'm guessing the people who have waited this long to buy a PS2 because it's too expensive are the same people who would only buy used or pawned games, the exact things Sony needs to boost profits.

Do you all think this has anything to do with the prices of games? I know my nephew gets $5/week for allowance, which means he can buy one new game every 10 weeks or so ...

[Lost Monkey]

Absolutely agreed. Although Nintendo pinning its losses on the currency thing is much like Sony pinning its decline on PS3 R&D -- a distraction from the more significant long-term reasons behind the financial woes.

-- Z.

Are you aware that the US dollar has declined in value by up to 25% in other countries? Take all of Nintendo's US assets. convert them to Yen = LOSS.

Sales aren't helping, but the hit on the exchange is big news. I run a small business (in Canada) and deal primarily with US dollars. I've had to take a 25% reduction in my margins this year... which was essentially the original margin I had.

[zmweasel]

Are you aware that the US dollar has declined in value by up to 25% in other countries? Take all of Nintendo's US assets. convert them to Yen = LOSS.

Sales aren't helping, but the hit on the exchange is big news. I run a small business (in Canada) and deal primarily with US dollars. I've had to take a 25% reduction in my margins this year... which was essentially the original margin I had.

I wasn't aware of the extent of the dollar's plunge. Thank you for the info -- and I'm sorry you had to come about that info the hard way.

-- Z.

[zmweasel]

Would dropping the price of the PS2 really help Sony?

As mentioned earlier in the thread, no, it wouldn't. They're virtually required to do it at this point to goose hardware sales, but it will obviously do them financial harm, unless software sales skyrocket.


Do you all think this has anything to do with the prices of games? I know my nephew gets $5/week for allowance, which means he can buy one new game every 10 weeks or so ...

Nah. On the average, unless someone can point to a contradictory stat, games are cheaper now than ever before. Hell, we're in an era where new console games are released at $10 and $20. A far, far cry from the $60-$80 carts of the 16-bit era.

I would argue that this news has something to do with the NUMBER of games available, and the quality of those games, but that's another topic.

-- Z.

[calthaer]

Monkey hit the nail on the head, I think. The US economy is hurting overall and the dollar is relatively low compared to the yen, Euro, etc. That means that when foreign companies are selling a $150 system today, it is no longer bringing them the same amount of money that it did two or three years ago.

I likewise hope that Nintendo can use this opportunity to gain market share. I think the GCN is the strongest console out there. The PS2 may be decent but it doesn't have specs that are anywhere near as good as the other two and, frankly, its list of AAA titles is pretty slim compared with all the "must-haves" on the GCN. Its biggest strength IMO is PS1 backwards-compatability - which is pretty sad.

And, of course, you could forget all about consoles and go out & get DEUS EX: INVISIBILITY WAR when it's released in December! OK, so that's coming out for Xbox, too, but...

[zmweasel]

The PS2 may be decent but it doesn't have specs that are anywhere near as good as the other two and, frankly, its list of AAA titles is pretty slim compared with all the "must-haves" on the GCN.

Thing is, GameCube sales didn't explode because Nintendo shipped all of its triple-A titles (Super Mario Sunshine, The Wind Waker, Metroid Prime, Mario Party 4, F-Zero GX, et cetera); they exploded when Nintendo chopped the price to $99. These releases are evergreen, to be sure, but the marketplace didn't receive them as "killer apps." The only pending triple-A game is Double Dash!!, but that's not a bigger deal than Mario or Zelda or Metroid, and it certainly won't sell as well.

-- Z.

[ManekiNeko]

BWA HA HA!!!
Did someone say "video game crash"? I knew you could.

JR

[badinsults]

A lot of companies are suffering now, because of the drop in the US dollar (the Canadian dollar is up 15 cents from where it was last year relative to the US dollar). I imagine that the video game industry will be in a slump for the next few years, until there is a rebound in the economy.

[Duncan]

BWA HA HA!!!
Did someone say "video game crash"? I knew you could.

Here's a scary list of parallels for everyone to ponder. Think back to 1983...

1) We've already had bottom-feeder, bargain-basement (read: shit) games appearing for the PS1 and PS2 for the last year or so. Think back to 1983 and recall the absolutely deplorable Froggo and Data Age releases on the 2600...

2) We've had price-drops galore, most recently Nintendo's long-awaited plunge to $100 for the GameCube. This is a cutting-edge, state-of-the-art video game system that is now leaving stores for about the same price as a small television. And I don't think it's going to be too long until Microsoft does the same. Think back to 1983 and recall that the Atari 5200, perhaps the absolute pinnacle of gaming technology in its era, could not find its way out of the stores without serious price cuts...

3) We've had news that the market leader, Sony, has apparently not been as financially successful as everyone assumed. Think back to 1983 and remember how Atari's once-glowing financial reports quickly turned into depressing journals of failure...

4) We've had new console releases by supposed "giants" in the electronics field that have attracted virtually no interest from the public -- I refer, of course, to the singular failure of the N-Gage. Think back to 1983 and remember how the Emerson Arcadia effectively entered and exited the market on the same day, despite its great specs...

5) We've had lots of shaky promises. 1000 Marios (or whatever it's going to be called) was due out a long time ago, and is supposedly still in the works. Halo 2 is on the way, but won't be out in time for the Christmas rush (and MS had better pray to God that it doesn't suck). Sony continues to push back the release of its PS2 hard drive, basically ensuring that there will be no support for it once it finally arrives. And we've all realized that the Phantom certainly lives up to its name. Think back to 1983 and remember how Atari, Coleco and Mattel consistently made promises they could never keep -- or worse, kept them (as in the case of Coleco's ADAM) and wished they hadn't.

6) We've seen the need for consoles to be more than they are. Sony's PS2 and Microsoft's Xbox both play DVDs, which is great. Now they're trying to be online gaming centers, which is somewhat less great. Sony is planning for the PS3 to be a "entertainment center" on its own (with a TiVo system, DVD burner, online terminal, and...oh yeah, games), which is probably not great at all. Think back to 1983 and remember that every competing video game of the era was trying its damndest to be a home computer as well, despite the fact that the computer market hadn't really taken off yet -- and wouldn't until a few years in the future.

7) We've had over-exposure of certain themes. Platform games have now been done to death, and are currently in a state of flux. Puzzle games have become non-existent, save for the ever-present Tetris. Certain characters and universes are becoming over-used -- Sonic the Hedgehog is failing to win new fans, and the market can't support many more Yu-Gi-Oh games. Movie licenses, as always, continue to disappoint -- Enter the Matrix is perhaps the best example. And proven past winners seem unable to maintain their dignity -- witness the last couple of Tomb Raider games. Think back to 1983 and remember the following: Pac-Man, ET, Pitfall 2. There are other examples, but I'm not as familiar with the era as some others here probably are. (I'm just a good student of history. :) )

With all that firmly in mind, who does everyone think will be the savior of the video game industry in 2005?

And, conversely, who does everyone think will be the first of the "big three" to leave the industry entirely?

Duncan :D

[Sylentwulf]

Sony also RECENTLY announced that Everquest 2 wouldn't ship until 2004, which I'm sure hurt their forecasted sales a lot since they keep mentioned SCE as a major contributor of lost sales.

This is also the worst time all year, every year for videogames. Everyone is going back to school, and noone is buying games, waiting for the christmas rush. NOONE buys games in the third quarter, it just doesn't happen. HEll, there aren't even that many game RELEASES in the third quarter, and why would there be?

Sorry, just no shocking news there for me. This happens every year, and every year, I see a post like this one where everyone acts all shocked, then forgets about it until feb-march when once again people are "shocked" at how little games are selling again.

[Hep038]

But wouldn't the financial reports be based on the summer months if they are coming out now? And you are right Sylentwulf, after reading most of the post I realize most of this is just fanboy bashing.

[hydr0x]

@Hep you're right, it is 2nd Quartal, not third, but the 2nd isn't the best quartal, though it also isn't the worst

as sylent i'm in no way shocked by this as it was clear to me since month that sony will be getting problems soon due to their totally flawed behaviour...

as some others mentioned, sony is in a really bad position right now, they should have realized by now what is happening but chances are good that it's to late, they will suffer, but of course not enough to leave the market...
MS also doesn't seem to realize the situation, but it's no problem for them as they have so much money. Nintendo did realize what's happening a few month ago and they are doing the right thing right now, due to the price drop they will get closer and closer to the PS2 installed base, and when the next generation arrives they will have gained enough ground to be in a much better position than they were at the beginning of the 128-bit era

Duncan you got some points there but you're also missing some, the companies we have today (ms, sony, nintendo) differ a lot from atari and the other's, Atari would also have gotten into huuuge problems if there hadn't been the crash, none of the current manufacturers acts as bad as atari did!!

The company with the least money of all right now is Nintendo (and probably will ever be), but they seem to have found a good way to survive the next years, they already HAD their bad years, they are doing quite good considering things like exchange rates...

The company with the most money is MS and they have so much money, if they want to they could produce consoles forever even if there is no market at all, a crash would be no real risk to them

Sony also has a lot of money, but not near as much as MS has, and they could be threatened by a video game crash due to their late reaction to the current situation, they ARE reacting though, and i think they will make it into the next generations of consoles, but they will suffer on this way...

[Mayhem]

The company with the least money of all right now is Nintendo (and probably will ever be), but they seem to have found a good way to survive the next years, they already HAD their bad years, they are doing quite good considering things like exchange rates...

And even them, I'd hardly call billions of $ a small amount of money now ;)

[Captain Wrong]

Duncan you got some points there but you're also missing some, the companies we have today (ms, sony, nintendo) differ a lot from atari and the other's, Atari would also have gotten into huuuge problems if there hadn't been the crash, none of the current manufacturers acts as bad as atari did!!

How do you figure that? First off, I think a lot of the revelations about what went on inside Atari came out after the fact, so isn't it safe to assume that any similar craziness currnetly going on at Sony, MS, or Nintendo is going to take a while to come out as well?

Second, I'm not sure I understand how you figure Atari was in trouble regardless of the crash or not. Yes, they were being rather careless with their money and making very stupid decisions (ET and Pac-Man over-runs for example) but Atari was practically printing their own money at that point. From everything I've read, it sounds like Atari was kinda like Microsoft in that aspect and even though they were making some really bad decisions, I strongly doubt those would have been enough to tank the company had the market not been collapsing at the same time.

I have a Sony/Atari parallel that I could be way off the mark about. It seems to me like Sony corporation has done with it's videogame division the same thing Warner Communications did when they owned Atari. That is, they've leaned on the videogame side of things to prop up slipping profits for the entire orginization. It wasn't a smart move for Warner, and the videogame crash almost took down all of Warner Communications, they were leaning so heavily. I would think Sony would be smarter than to make the same mistake.

Oh, and I tend to agree with Sylent, this is kind of a cyclical thing. I agree this looks rougher than the last cycle, and the cynical part of me has to admit there are a lot more "1983" type things going on now than last time around. But I still don't think we're to a crash yet.

[slurpeepoop]

I'd just like to toss in that Sony has been putting hojillions of dollars into the Cell chip, the PS3, and the PSP.

Nintendo threw out every license they had to offer this past year, and still have the handheld market pretty sewn up, but are researching and working with different companies on their next console ( a console that has to measure up against more expensive, costlier consoles).

Microsoft has yet to profit a dollar, and it doesn't appear that they care.


It seems that everyone is spending like maniacs to stay ahead of the others in the next generation, and if it boils down to who can spend more, Microsoft's sitting pretty.

Sony's only profit comes from its games division, Nintendo's struggling to keep up with two giants whose office vending machines generate more income than Nintendo's net worth, and Microsoft is an exception to every rule in the book.

It's going to be interesting, but I have to give Nintendo the recognition they are due. To contend in an environment where they are financially nowhere near the competition, they deserve credit. It goes to show the strength of Nintendo's licenses and brand names.

However, once Sony has their parts, systems, and everything else developed and put on the production line, there will be no stopping them.

[bargora]

However, once Sony has their parts, systems, and everything else developed and put on the production line, there will be no stopping them.
I don't know what's going to happen, crash or no, but this statement makes me think of Sony as Star Wars's "Empire", building their PS3 Death Star.

There will be no one to stop us this time.

[slurpeepoop]

I don't know what's going to happen, crash or no, but this statement makes me think of Sony as Star Wars's "Empire", building their PS3 Death Star.

There will be no one to stop us this time.


Is that far from the truth?

The cell technology they're planning will suppoedly connect every electronic gadget in your home, even your dog.

If Sony has its way, everyone will have their PSTV hooked into their PS4, and you can tell your PSToaster to get the toast nice and brown while playing online, using PSOnline. Every form of media will have the Sony or Playstation logo proudly displayed.

If that's not a plan of galactic conquest, I don't know what is.