Sony is bleeding money - business strategy discussion

[Silent_Buddha]

Weak Yen you mean, it's a policy that the current japanese government has followed for some time now because one of the main problem for Japans industry has been having was a strong yen.

Whoops, yes. That's what I meant. I'm not sure that is sustainable without longer term consequences though. Government manipulation of currency to affect international exchange rates. They are in a catch 22. Unless, they go all out with currency manipulation like China, it is going to become harder and harder to keep the Yen weak. As a stronger economy and more attractive product line will increase exports versus imports which will put pressure on the Yen to become stronger as more currency enters Japan then leaves it. Added to that will be currency speculation where speculators expecting the above will happen may start buying up the Yen further driving up the price, which they then hope to sell at the higher exchange rate.

Regards,
SB

 

[itsmydamnation]

Whoops, yes. That's what I meant. I'm not sure that is sustainable without longer term consequences though. Government manipulation of currency to affect international exchange rates. They are in a catch 22. Unless, they go all out with currency manipulation like China, it is going to become harder and harder to keep the Yen weak. As a stronger economy and more attractive product line will increase exports versus imports which will put pressure on the Yen to become stronger as more currency enters Japan then leaves it. Added to that will be currency speculation where speculators expecting the above will happen may start buying up the Yen further driving up the price, which they then hope to sell at the higher exchange rate.

Regards,
SB

Except the US and EU have been effectively doing the same thing, Japan just got on the boat later and told people directly what the plan was unlike EU and the US. All the "money" for QE and PIGS has big effects on there currency values.

 

[dagamer]

The last Generation saw a total sale of 250 million consoles, that market is not just going to go away. And the paywall really depends on what you get for your money. If Sony continues it's crazy PS+ offers it's fairly good value and i expect Microsoft to follow suit. Finally many will simply choose not to play online with their games.

I got a good feeling about this generation, way better than the last one.

That's true however no one is expecting the Wii U to be another Wii so unless the PS4 and Xbox One sell much better than their predecessors, this actually will be a down generation.

To be clear, the solo game console is dead. The multi-functional embedded living room computer has arrived. And let's face it, a lot of the huge mainstream success of current gen boxes is with the PS3 as a Blu-ray player and 360 as a Netflix box. Games are a Trojan horse.

With many causal gamers enamored by tablet and smartphone gaming, MS and Sony do need to worry about sales in year 3 and beyond when most "core" gamers have already made a purchase.

 

[Mianca]

Sony need to do something about it's movie business, two big flops in a matter of weeks just shouldn't be happening.

From a financial perspective, After Earth was terrible, White House Down is even worse( it was always going to bomb overseas and yet it had $150mil+marketing budget).

According to boxofficemojo, "After Earth" grossed almost $250 million worldwide (almost twice its budget).

"White House Down" (just like "After Earth") flopped domestically, but foreign boxoffice results look very promising so far. It wasn't even released in Europe, Japan, Australia, and Southern America yet - and still accumulated almost $50 million in foreign markets (adding up to nearly ~120 million worldwide) up until now. It might very well end up somewhere near $200 million worldwide when all is said and done.

If those are SONY's biggest flops, their movie business is doing pretty well - and they could probably finance five really bad flops with the money they made with Skyfall last year.

People need to calm down and stop exaggerating.

 

[bkilian]

According to boxofficemojo, "After Earth" grossed almost $250 million worldwide (almost twice its budget).

"White House Down" (just like "After Earth") flopped domestically, but foreign boxoffice results look very promising so far. It wasn't even released in Europe, Japan, Australia, and Southern America yet - and still accumulated almost $50 million in foreign markets (adding up to nearly ~120 million worldwide) up until now. It might very well end up somewhere near $200 million worldwide when all is said and done.

If those are SONY's biggest flops, their movie business is doing pretty well - and they could probably finance five really bad flops with the money they made with Skyfall last year.

People need to calm down and stop exaggerating.

Grossing twice it's budget would be good if the studio got 50% or more of receipts. I find this highly unlikely.

 

[Shifty Geezer]

To be clear, the solo game console is dead. The multi-functional embedded living room computer has arrived. And let's face it, a lot of the huge mainstream success of current gen boxes is with the PS3 as a Blu-ray player and 360 as a Netflix box.

"PS3 is the largest TV-connected platform in terms of Netflix viewing. This year, at times, PS3 even surpassed the PC in hours of Netflix enjoyment to become our No. 1 platform overall," says Netflix. But that's immaterial to the business, in a way. If Sony/MS make no money from people using their box to watch Netflix, whether they are the best box for it or not doesn't amazingly help them. I think something like Netflix support is more important to try and get people to transition to your own video service. That's where the money would come from (that or plastering your own adverts over other services! ).

 

[I.S.T.]

Grossing twice it's budget would be good if the studio got 50% or more of receipts. I find this highly unlikely.

In the US at least, the amount of money studios get is on a sliding scale. each week the theaters get more and mroe cash. Because most ticket sales are in the first few weeks, theaters don't make a lot of money off of the ticket sales per se. this is why concessions cost so much, in fact. I can't really speak for other countries, but I imagine the main difference is probably in the exact percentages rather than whether they do it or not.

 

[dagamer]

In the US at least, the amount of money studios get is on a sliding scale. each week the theaters get more and mroe cash. Because most ticket sales are in the first few weeks, theaters don't make a lot of money off of the ticket sales per se. this is why concessions cost so much, in fact. I can't really speak for other countries, but I imagine the main difference is probably in the exact percentages rather than whether they do it or not.

The overall average is 50%. First week sales have 90% going to the studios. However, don't forget that the actual budget for a movie that's often quoted does not include marketing, just like games.

 

[I.S.T.]

The overall average is 50%. First week sales have 90% going to the studios. However, don't forget that the actual budget for a movie that's often quoted does not include marketing, just like games.

This is true, a lot of folks forget these costs.

That said, I thought marketing costs WERE included for games usually. It's part of what made Tomb Raider 2013 ultimately not that profitable, no?

 

[wco81]

There's also video sales after the theatrical runs are over.

 

[baten]

Movies get only about 20% of their revenues from box-office. As I said before, nobody actually really knows since the most creative minds of Hollywood are actually the accountants.

 

[dagamer]

There's also video sales after the theatrical runs are over.

Money is made, but whether a movie is a success or a flop is rarely dependent on retail disc sales. Hollywood is only concerned about making another sequel, so if they didn't get the big bucks at the box office, it barely matters what comes after.

 

[tuna]

Movies get only about 20% of their revenues from box-office.

Do you have some source for this statement?

 

[Silent_Buddha]

Money is made, but whether a movie is a success or a flop is rarely dependent on retail disc sales. Hollywood is only concerned about making another sequel, so if they didn't get the big bucks at the box office, it barely matters what comes after.

There are lots of sequels made that only make a ROI in retail/rental. The Police Academy series is an example of that. I don't pay attention to movies as much as I used to so, not sure what more modern examples of this would be, but it wouldn't surprise me if the Scary Movie series was also this way. And some movies spawn sequels that are released direct to video and never hit the theaters.

Regards,
SB

 

[dagamer]

There are lots of sequels made that only make a ROI in retail/rental. The Police Academy series is an example of that. I don't pay attention to movies as much as I used to so, not sure what more modern examples of this would be, but it wouldn't surprise me if the Scary Movie series was also this way. And some movies spawn sequels that are released direct to video and never hit the theaters.

Regards,
SB

True, but they don't spend $200 million with the idea that they'll make that money back in rentals. I mean, there have been some real flops this summer.

 

[Silent_Buddha]

True, but they don't spend $200 million with the idea that they'll make that money back in rentals. I mean, there have been some real flops this summer.

The 200 million USD movies are also looking to cash in on merchandising though. They may not make back the money in the Box Office, but if it does well enough then they try to make back stuff via the OST, t-shirts, movie posters, toys when applicable, etc. as well as the retail/rental market. VoD is becoming quite lucrative for stuff like that as well, hence the almost dead physical media rental business.

Regards,
SB

 

[liolio]

The last Generation saw a total sale of 250 million consoles, that market is not just going to go away. And the paywall really depends on what you get for your money. If Sony continues it's crazy PS+ offers it's fairly good value and i expect Microsoft to follow suit. Finally many will simply choose not to play online with their games.

I got a good feeling about this generation, way better than the last one.

That is funny how people are willing to discard the Wii but are willing to take in account its market shares when it helps one of their points.
Lots of the Wii owners might never buy a console again, at least nothing traditional.
This gen lasted a lot longer than the previous one.
Manufacturers are one things publishers are another one, every penny one puts into a paywall is a penny the publishers won't ever see.

As for now costumers are locked in MSFT or Sony offers, one has no choice. I expect potential competitors to be aware of that. I would also think that publishers are not so pleased about being locked in either.

As for the market going away, I would safely put the Wii numbers out the pictures and say that if doesn't go away (where would it go? there is no valid alternative) it might fluctuate up or down.
I don't like this way of putting things, "" the market going away", does the market (that needed to do floating point operations) went away when the FPU got integrated into the CPU? That is hardware but to me it is exactly the same incorrect line of thinking. If one can integrate gaming into its OS which Windows never really succeeded to do (actually they did the contrary, hindering windows gaming for the sake of the Xbox) and people adopts that OS, would that mean that the market would have gone "away". No the market is still here but there are winners and losers obviously.

 

[Sigfried1977]

Sony need to do something about it's movie business, two big flops in a matter of weeks just shouldn't be happening.

From a financial perspective, After Earth was terrible, White House Down is even worse( it was always going to bomb overseas and yet it had $150mil+marketing budget).

Don't forget Sony's veritable smorgasbord of god-awful movie shit heaps that manage to make their money back and then some for rather elusive reasons. There's The Smurfs (that abomination made half a billion dollars), awful Adam Sandler joints like Grown-Ups, and there's of course Spider-man just to name a few.

 

[rockaman]

Whoops, yes. That's what I meant. I'm not sure that is sustainable without longer term consequences though. Government manipulation of currency to affect international exchange rates. They are in a catch 22.

It's not a catch 22 at all...

It's what government should be doing in fact. They own the currency if they are a monetarily sovereign nation, they are the managers of it. It is literally their duty to manage it's value...

The only reason people think it's a catch 22 is because of the US paranoia.

USA is also a monetarily sovereign nation, but there is much fear mongering about the depreciating value of money and national debt, despite the fact that almost every Western nation has the same proportion of national debt per person and the same falling currency values.

Without thinking about these matters in relative terms will make everyone miss the point.... Western countries didn't get to where they are without printing bucket loads of money.

Japan's falling yen is absolutely necessary for their long term well being, there is not any question about it... the point is to balance the value to maximize domestic consumer spending and domestic investment at the same time as maximizing the potential of industry to export and sell products and even more at the same time to sustain Japan's ability to purchase products and invest outside.

Without lowering the yen, or for that matter the dollar, these countries will amass huge trade deficits, because a high yen/dollar means it's easier to import products into the country than to make them here (re: why everything is made in China).

The real catch 22 is that global and China's success and growth and financial prosperity will help USA if USA is able to export goods to them. It would reignite the American manufacturing industry, much like what Japan is doing "right now."

 

[deathindustrial]

The real catch 22 is that global and China's success and growth and financial prosperity will help USA if USA is able to export goods to them. It would reignite the American manufacturing industry, much like what Japan is doing "right now."

That will only be possible if the US suffers a massive reduction in its standard of living, further erosion of labour laws, environmental standards, etc. so they are able to compete with the likes of Bangladesh, Indonesia, etc.