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Sony: $3.31B Lost in PlayStation 3 Cost, Pricing Gap

Disparity between the production cost of the PlayStation 3 and its retail price point caused Sony to lose roughly $3.31B over 2007 and 2008, Kotaku reports.

Outlining potential risk factors to investors, the company revealed in its fiscal 2008 annual report that by pricing the PlayStation 3 below production cost, the company shed $2.16B in 2007 and $1.16B in 2008. Sony added that its major investment in the early development and introductory phases of the PlayStation 3 "may not be fully recovered."

These research and development costs are typical in introducing a console to market, but the costs may prove unrecoverable if a platform "fail[s] to achieve such favorable market penetration... resulting in a significant negative impact on Sony's profitability," the company added.

Sony went on to remark that though it may eventually see a return on its investment, it's still possible that the company may end up in the red over the PlayStation 3's introductory period.

At the time of its initial launch, production costs of the PlayStation 3 were estimated at roughly $800 and $840 for the 20GB and 60GB models, respectively. Hardware revisions and cheaper availability of components have since driven production costs down by about a half of those initial figures.

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From The Chatty
  • reply
    June 23, 2008 12:59 PM

    So, that's why they want a 10-year life period, there's no other way for Sony to recover their money and turn some profits.

    • reply
      June 23, 2008 2:04 PM

      What they want and what they're praying for are two totally different things.

    • reply
      June 23, 2008 2:05 PM

      And what they'll get are THREE very different things. jesus i need sleep

    • reply
      June 23, 2008 10:03 PM

      what does that mean? no new system for 10 years or they keep making ps3 shit for 10 years even though the ps5 is around?

      • reply
        June 23, 2008 11:56 PM

        The PS2 gravy train is over. Even Sony can't afford to develop another custom processor like Cell so they're fucked if they try to compete on performance again. It's a zero sum game if you can't bring custom hardware to the table. The PS3 saddled them with billions of losses they may never recover. Their market share is shrinking and they've got competition on every front from causal games to the online space. There is no clear path forward.

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