Sony's PlayStation 3 turns profitable

The PlayStation 3 had lost money since it went on sale in November 2006

Sony has finally begun making money on its PlayStation 3 console and expects its game business to turn a profit this year, the company said Thursday.

The turnaround represents a success for Sony's new management team, which made profitability at the division a key short-term goal when it took over in April 2009.

"The game business achieved a profit in the fourth quarter due to strong sales of first-party software and the elimination of negative margins on the PS3," said Nobuyuki Oneda, chief financial officer of Sony, at a Tokyo news conference. He was referring to the fourth quarter of Sony's fiscal year that runs from April to March.

The PlayStation 3 has remained a money loser for Sony ever since it went on sale in November 2006. High development and manufacturing costs combined with lower-than-expected sales meant Sony hadn't been able to realize profits from the device.

Things began to change in the second half of last year when Sony launched a redesigned PlayStation 3. Advances in electronics and manufacturing meant the console was cheaper to produce and Sony managed to boost sales by reducing the price.

The move paid off. In the final three months of 2009 sales of the console hit 6.5 million, up 2 million units for the same period of 2008. The strong performance continued into 2010 with sales in the first three months of the year of 2.2 million, up 600,000 units on the year.

During the three month period Sony started making money on each console sold.

The turnaround came too late in the year to reverse losses at the game business, which lost around ¥50 billion (US$540 million), but Sony anticipates it will be able to report much rosier results this time next year.

"For this year we expect to be able to generate at least double-digit profits," Oneda said of the games business.

Continued profitability of the PlayStation 3 will play a big part in this.

Sony hopes to sell 15 million consoles this year, up from 13 million in the fiscal year just ended.

The company will also be looking to game software and network sales as it expands the online PlayStation Store beyond games to include movies, music videos and comics.

The PlayStation 3 is also due to shortly get a firmware update that will add 3D capabilities to the device. The update, which will be offered at no cost, will enable 3D games and 3D Blu-ray Disc content to be viewed through the device when hooked up to a suitable 3D television.

Later in the year Sony will launch PlayStation Move, a handheld games controller than can sense and estimate movement and acceleration. The companion PlayStation Eye, a camera with image recognition capabilities, will be launched.

Management's next target will likely be the underperforming PlayStation Portable. The handheld gaming device, which competes against Nintendo's DS, registered year-on-year sales falls for each quarter of the last fiscal year and Sony doesn't anticipate things to get better.

Unit sales of the PSP were 9.9 million in the fiscal year, down from 14.1 million the year earlier. For the current year Sony expects sales to fall to 8 million units.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Martyn Williams

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

David Coyle

Brother PocketJet PJ-773 A4 Portable Thermal Printer

I rate the printer as a 5 out of 5 stars as it has been able to fit seamlessly into my busy and mobile lifestyle.

Kurt Hegetschweiler

Brother PocketJet PJ-773 A4 Portable Thermal Printer

It’s perfect for mobile workers. Just take it out — it’s small enough to sit anywhere — turn it on, load a sheet of paper, and start printing.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?