Surviving apocalyptic console disasters; PS3, WiiU and XBO considerations *spawn

[Nesh]

That's the point I was making. I agree that their 2001 woes were of their own making. It doesn't change the fact that the gaming division has always had an uphill battle. Xbox would have never survived a PS3 level or WiiU fiasco. All 3 companies have made mistakes when arrogant. I also agree with DSoup that all MS cares about is money. Just like Sony and Nintendo.

Actually they can as it was evident with the One fiasco, and the the money eating OG XBOX. Sony almost went bunkrupt with PS3. When MS faces a disaster with XBOX, it only affects a fraction of the corporation's health. If Sony loses the Playstation their existence is threatened

 

[Johnny Awesome]

PS3 and WiiU fiascos were bigger IMO. Doesn't matter though. The point is that they've all made mistakes. It's not exclusively an MS thing.

 

[see colon]

PS3 and WiiU fiascos were bigger IMO. Doesn't matter though. The point is that they've all made mistakes. It's not exclusively an MS thing.

WiiU is a bigger failure. PS3 has a comeback story that not only had that console selling very well at the end, and having some great late release titles, but setting the stage for PS4 to dominate the market.
Nintendo now, though, needs to have a Switch successor that is successful, because they no longer have a portable business to fall back on, like they did for WiiU and Gamecube. If Sony has a poor PS6, they still have the rest of their media and consumer electronics business to fall back on.

 

[Nesh]

If Sony has a poor PS6, they still have the rest of their media and consumer electronics business to fall back on.

As if MS will go bunkrupt if they lose XBOX. PS3 almost killed Sony. If they couldnt rectify its issues, the PS3 would have died and Sony would have been in grave danger. Their finances went in ruins as a company for years because of it. MS on the other hand, in their first attempt in the console market the OG XBOX closed its generation with billions in loses but since MS was super profitable and has the cash they launched a successor for a comeback until it succeeded. The GC didnt generate the billions of loses the OG XBOX did even if it sold less. GC was actually profitable. Only MS has such luxury

Nintendo acted fast to ditch the WiiU and managed to replace it with a new product.

The reason why Nintendo and Sony managed its because they act fast before its too late because their existence depends on it.

MS on the other hand does well by simply maintaining the XBOX and business as usual with their main operations like Windows and services which brings them huge chunks of net profit that fill their bank accounts in the billions. They have the power to move steadilly until they own the market.

The XBOX is here to stay and the multibillion acquisitions is part of the steady long run business that will gradually take over.

 

[Silent_Buddha]

PS3 almost killed Sony.

PS3 isn't what almost killed Sony. MANY of their divisions doing badly simultaneously almost killed Sony. PS3 was just one part of that and not even the largest at the time. TV, phones, their PC business, movies, etc. including PS3 all converged into a perfect storm. Even if PS3 had been profitable at the time, the company as a whole would still have been in trouble and they still would have needed to reorganize some divisions (phones, music players, etc.), spin off some divisions (like Television), they still would have needed to sell off some divisions (like VAIO), they would still have needed to close Sony stores and they still would have needed to cut jobs.

PlayStation at the time was important but it wasn't any more or less important than most of their other divisions which were also doing quite badly.

It also didn't help at the time that Sony's various divisions rarely cooperated with each other and were sometimes actually hostile to each other.

Regards,
SB

 

[wco81]

Sony depends on a consumer electronics business where the margins are thin. They try to command a premium but most other brands are more heavily discounted. Just look at the flagship OLED TV pricing from Sony vs. Samsung and LG.

Their media business is feast or famine. They depend on hits like most other movie studies. One year they could have a big Spiderman release and then nothing until maybe a Spideman sequel. They've had other big franchises but they're nothing compared to Disney.

Playstation was the main source of their profits for years. They're more diversified than Nintendo but they have almost as much dependency on gaming for profits.


Contrast that to MS, where gaming is a side business. They hope it would grow to a bigger portion of their business but it hasn't. They could book losses for decades and Office revenues will keep it afloat forever if they want.

Then we're not even counting on cloud and other growth areas for MS.

 

[see colon]

As if MS will go bunkrupt if they lose XBOX. PS3 almost killed Sony. If they couldnt rectify its issues, the PS3 would have died and Sony would have been in grave danger. Their finances went in ruins as a company for years because of it. MS on the other hand, in their first attempt in the console market the OG XBOX closed its generation with billions in loses but since MS was super profitable and has the cash they launched a successor for a comeback until it succeeded. The GC didnt generate the billions of loses the OG XBOX did even if it sold less. GC was actually profitable. Only MS has such luxury

Sony wasn't in the greatest shape at the time. They put a lot of eggs in the PS3's basket, which is probably why it just did everything. But that doesn't mean that they couldn't absorb the loss and continue to operate. Sega wasn't nearly as diversified and I believe they posted losses from 1996 until 2001. Microsoft is obviously more resilient to losing money on games, but lets not pretend that Sony is some tiny company that only does one thing.

 

[arandomguy]

The PS3 retrospective is interesting.

At the time that generation was touted as having the Xbox winning over the PS3 but it seems more nuanced. The Xbox handedly won in US but the PS3 did show PlayStation branding strength globally. This also has as interesting tie-in with the Microsoft/Xbox global strategy discussion in that it's not as simple as just marketing, we aren't a homogenous world and that regional/cultural preferences and differences do exist.

Another thing is while Bluray was viewed as an anchor cost wise on the console did it ultimately pay off? As Bluray did win out. I actually wonder if there is some licensing issue (if just cost) currently with MS/Xbox and >50GB discs for data/games.

 

[Nesh]

Sony wasn't in the greatest shape at the time. They put a lot of eggs in the PS3's basket, which is probably why it just did everything. But that doesn't mean that they couldn't absorb the loss and continue to operate. Sega wasn't nearly as diversified and I believe they posted losses from 1996 until 2001. Microsoft is obviously more resilient to losing money on games, but lets not pretend that Sony is some tiny company that only does one thing.

The financial statements even today picture Sony in a condition of higher risk compared to either MS or Nintendo. Nobody presents Sony as tiny company and that was never the argument because it is irrelevant to the facts presented.

 

[Silent_Buddha]

Sony depends on a consumer electronics business where the margins are thin. They try to command a premium but most other brands are more heavily discounted. Just look at the flagship OLED TV pricing from Sony vs. Samsung and LG.

Their media business is feast or famine. They depend on hits like most other movie studies. One year they could have a big Spiderman release and then nothing until maybe a Spideman sequel. They've had other big franchises but they're nothing compared to Disney.

Playstation was the main source of their profits for years. They're more diversified than Nintendo but they have almost as much dependency on gaming for profits.

You might want to look again, while PlayStation has had larger margins than their other divisions, historically it was only occasionally their highest source of profits, but obviously never revenue.

Just pulling out a couple random FY from Sony's site. Keep in mind it was the Game division back then becaue SOE was quite profitable and games like EverQuest were raking in consistent large profits for the division.

• FY 1997
  • Operating income 370.3 trillion yen
  • Electronics was 52.0 trillion yen
  • Game was 45.2 trillion yen
• FY 1998
  • Operating income 520.2 trillion yen
  • Electronics was 314.5 trillion yen
  • Game was 116.9 trillion yen.
• FY1999.
  • Operating income 351.1 trillion yen
  • Electronics was 129.9 trillion yen
  • Game was 136.5 trillion yen (EverQuest released to the public this year).
• FY2000.
  • Operating income 240.6 trillion yen
  • Electronics was 118.6 trillion yen
  • Game was 77.4 trillion yen.

Not going to go in depth on more, but from 2001 to 2005

• Electronics: +247 trillion, -8 trillion, +41 trillion, -34 trillion, -31 trillion
• Game: -51 trillion, +82 trillion, +113 trillion, +43.2 trillion (both Pictures and Financial were higher), +8.7 trillion (Pictures, Financial and Others were higher)

So, prior to 2005, their various division doing well from year to year meant they could easily absorb any one or even 2 divisions doing badly.

Luckily for Sony, from 2005 to 2008, Electronics recovered heavily (+160.5 trillion in 2007 and +356 trillion in 2008) so Sony could easily absorb the losses generated by PS3.

From 2009, their FY reports start to get a little weird with division reorganization. Unfortunately, that's also when the shit hit the fan for Sony and suddenly multiple divisions were doing badly. Only Pictures, Music and Disc manufacturing were profitable in FY 2009 and those combined still generated less in total profits than just the PS3 by itself generated in losses. But PS3 wasn't even the largest loss generator, that went to electronics (TV, cameras and phone in particular).

So, at no point was Sony really dependent on PlayStation any more or less than they were on any other division, at least up until PS4. I've got to get back to doing something constructive in RL now, so I'll leave it for someone else to look at FY financial reports from 2013 on.

Regards,
SB

 

[Deleted member 11852]

PS3 isn't what almost killed Sony. MANY of their divisions doing badly simultaneously almost killed Sony. PS3 was just one part of that and not even the largest at the time. TV, phones, their PC business, movies, etc. including PS3 all converged into a perfect storm.

Yup, PS3 was a big financial issue for Sony and PlayStation's success allowed Sony to overlook other divisions that were struggling, or outright bleeding money. Sony Music has always produced profits, but their movies and TV studios perform like a yo-yo depending on the year and content released. TVs and PCs (laptop) used to be big profit driver for Sony but those products declined massively in the 2000s, along with smart phones once Apple launched iPhone and the market shifted. The years-long 2007-2010 re-organisation of Sony saw them mothballing or selling divisions and brands - keeping only those that were actually profitable or had potential to be with a change in focus.