PS3 Tosses Sony $1.71 Billion Into The Red
Last week, the game industry's biggest companies reported their quarterly earnings ending September 30, and several reports weren't surprising. For example, Microsoft's game division lost $96 million, but at least it was a vast improvement over last year's same-quarter loss of $173 million.
But it appears Microsoft isn't the only industry big-wig to lose a ton of money in their games division. At a recent press conference in Tokyo, Sony CEO Howard Stringer announced some depressing news: losses at Sony Computer Entertainment are now expected to total 200 billion yen (about $1.71 billion) for the fiscal year ending March 31, 2007. Unfortunately, that estimate is nearly twice the original prediction.
"Considering some of the additional costs of PlayStation 3, we have to generate some excitement and profits from elsewhere in the company to offset the performance of PlayStation 3," Stringer told the Reuters news service.
One of the primary reasons for the increased costs is Sony's decision to lower the price of the 20GB PS3 model in Japan from 60,000 yen (about $515) to 49,980 (about $429). But despite the exorbitant costs surrounding the PS3 project, Stringer remained confident that the console would be a success.
"The point really is that PlayStation 3 is already finished and has been tested in America and has been deemed a creative success," he said. "In the end that is what counts."
Somewhat surprisingly, Stringer further expressed apparent confusion regarding the PS3 delay to March 2007 in Europe.
"I think the idea of worrying about a delay in PlayStation is slightly strange to me," said Stringer. "Every complex technology runs the risk of delays."
With the PS3 launch fast approaching, Sony is kicking their North American and Japanese advertising campaigns into high gear, but will it be enough to carry the system to another victory in the next generation? Or will these crazy high costs and extremely limited launch allotment put the PS3 in an early hole?
10/30/2006 Ben Dutka