Sony's game division finally turns a profit -- sells 4.9M PS3s in Q3

After bleeding red for months, Sony's games division finally turned a profit last quarter. Sony sold 4.9 million PS3s last quarter after slashing console prices, boosting game titles, and cutting production costs internally. Of course, we're sure Wii shortages aren't hurting Sony's bottom line either. Sony did lower its annual sales goal of PS3s from 11 million to 9.5 million (citing a slow start) while increasing PSP projections to 13 million from 10 million as originally expected. Sony's fiscal year ends in March. Overall, Sony's profits rose 25% for the quarter. Welcome back to black Sony, it's been a long time coming.

[Chris @ Jan 31st 2008 2:23AM]

Good job, Sony!

[Kizorblade @ Jan 31st 2008 2:27AM]

Indeed. Well done! Now lower the price of the PS3.

[tom @ Jan 31st 2008 8:18AM]

Kudos to Sony.

P.S. still need more kick ass games!

[Johan S @ Jan 31st 2008 2:29AM]

Sony has a lot to do if they plan on keeping their profitability.

They need to release a decent cellphone .. maybe with the "mylo 2" form factor, or something.

They need to reinvent the HDTV .. make them all have wireless PC media center/ps3 type thing built in .. and the busy-ness of remotes should be reduced -- get rid of 90% of buttons become touchscreen and OLED button driven.

Where the hell is the PSP 2?

[Ayle @ Jan 31st 2008 3:09AM]

Are you telling me that Sony Ericsson don't make great phones?

[lochack @ Jan 31st 2008 3:21AM]

are you kidding? I have the K790 Sony Ericsson, one of the best phones i have ever bought.

[batfastad @ Jan 31st 2008 3:54AM]

I've bought a SE P1i
It's the best phone I've ever used. By miles. And there's still a few things they could improve!!

[primetime4 @ Jan 31st 2008 9:33AM]

You haven't heard of the PSP Slim? Or are you holding out for next gen HD graphics in a handheld?

[DrXym @ Jan 31st 2008 10:21AM]

Sony Erisson phones are generally neat and usable. My last two phones were SE models, not through any particular loyalty but because they packed a lot in for the price. I've just moved to a Nokia 6300 which is a great phone too with a great screen. Motorola on the other hand appears to make phones that are consistently underspecced compared to their competitors.

[djs @ Jan 31st 2008 2:31AM]

once you go black....

[cherie22984 @ Jun 9th 2009 2:41AM]

...you're gonna need a wheelchair?

[bob @ Jan 31st 2008 6:47AM]

my ps3 is on ebay as we speak.

[CB17 @ Jan 31st 2008 2:33AM]

Insert AC/DC here...

[Dave @ Jan 31st 2008 2:42AM]

Well PS3 was success in every way you look at it.

[Dave @ Jan 31st 2008 3:04AM]

Not if you look at it this way:

http://youtube.com/watch?v=MFoyp71xw3w

[shane broughton @ Jan 31st 2008 2:43AM]

Well they sure turned a profit a heck of a lot faster than the Defectibox unit at Microsoft.

[JP @ Jan 31st 2008 2:48AM]

While your post is trollish in nature you've got a point. It would seem that Sony's strengths as a hardware company are shining through. Even with the (let's face it) pathetic start off the PS3 had they've still managed to get the unit profitable while Microsoft seems to struggle in almost every division except their core Windows and Office businesses.

I guess my old Economics lecturer was right! Companies perform best when they focus on their core competencies.

[Zack @ Jan 31st 2008 3:47AM]

I'm wondering how much of a part the well established PS2 and PSP influenced this though. While I have to admit that Sony has done a nice job with their hardware, its the Sony Games Division that's making a profit, not the PS3. At this point the PS2 is probably so refined that they can manufacture it with very good profit margins. I'm not defending the Xbox 360, which has definately been unacceptable, Microsoft has done a pretty good job entering the market considering they dont have any low cost handhelds/older consoles to boost their profits.

[Mark @ Jan 31st 2008 4:59AM]

Funny how Microsoft never made a cent from Xbox division (except a small $600,000 one last quarter because they put aside the $1.15billion losses in the previous quater).

Seems Sony start all their Playstations at a loss, but pretty quickly get them upto speed.

[Jon Acheson @ Jan 31st 2008 10:01AM]

Zack:

Unfortunately for MS, they couldn't do the same thing because unlike the PS2, the XBox was never profitable.

[John @ Jan 31st 2008 10:16AM]

You seem to forget that the Xbox was never intended to be profitable. Microsoft just wanted to get a foothold into the console industry. The 360 was intended to be profitable, and now it is. This is how Microsoft works; they make a small foothold, then they make it larger and larger until money falls in.

[ET @ Jan 31st 2008 3:40PM]

That is because Sony game station has a lot more than just the ps3. So while the ps3's production cost finally reach $400, the ps2 milk cow which has continued to provide profit to offset the ps3 lost.

[webon @ Jan 31st 2008 2:45AM]

guess bluray is also somewhat of a hook right?

[CubeGuy @ Jan 31st 2008 2:57AM]

Naw, but it's gonna end up winning the war just because of the PS3.

*buries HDDVD player*

I'll miss you.

*lays flower on grave*

[Nitin Kumar @ Jan 31st 2008 3:06AM]

I just went through the results and it really is an impressive set of results. Though one thing stands out for PS3....units moved in 4Q was 4.9m versus 4.3m of XBOX360..

Although i am biased towards ps3 purely because of the impressive feature list the damn box has (i dont own either, but own a Wii); I must say PS3 taking lead over xbox360 in just its 1st anniversary of launch very impressive. And this when PS3 lags on number of quality games and more so because of the HALO effect on xbox.

Definitely a must watch space for 1Q08. We might find game publishers scrambling towards PS3 by mid-08 if this trend continues.

[Jettic @ Jan 31st 2008 3:28AM]

Yeah, I don't think many people noticed but the PS3 has been outselling the Xbox 360 worldwide consistently for a while now, and recent multi platform games are looking exactly the same instead of the PS3 version being gimped, I agree with David Jaffe, I think this may be a shift in the market towards the PS3.

(http://www.ps3fanboy.com/2008/01/26/david-jaffe-comments-again-on-state-of-consoles/)

[Barky @ Jan 31st 2008 7:18AM]

How does this story jibe with the report that the 360 outsold the PS3 by a large margin in December?

http://news.digitaltrends.com/news/story/15474/surprise_the_wii_ruled_2007_console_sales

"According to NPD, Nintendo sold 1.35 million Wii consoles during December, bringing total Wii sales for 2007 to 7.4 million. Microsoft sold 1.26 million Xbox 360's during the month, fueled in part by sales of Activision's Call of Duty 4 (which itself sold 1.47 million copies during December) and Halo 3, which has sold 4.8 million copies since it's much-heralded launch in September, making it the top-selling game for 2007. Sony's PlayStation 3 sold 798,000 units in December, bringing its total installed base to about 3.3 million."

[kingofwale @ Jan 31st 2008 8:03AM]

>How does this story jibe with the report that the 360 outsold the PS3 by a large margin in December?

because frankly, this world consists of places OTHER than US?

try to grasp the concept here.

[orielsydiaz @ Jan 31st 2008 12:53PM]

U know I really don't get what people mean when they say things like "impressive list of features" when they are reffering to the ps3.

I get the whole blu-ray thing (its a bargain). But besides that the processing speed and the RAM (which are 2 of the 3 biggest deciding factors on performace, the other factor being operating system) are the same as the 360?

I know the ps3, it has the complex sixaxis controler, many usb ports, bluetooth and blu ray capabilities. Out of that list I say the blu ray, and the sixaxis are the most inovative. With the only drawback being the lack of rumble (which will soon be adressed) The other two in the list aren't even worth mentioning. Who the heck is going to have eight different peripherals hooked up at once all being used at once?. (I own a decked out PC and the most usb ports I use at once are 5 and thats using wireless keyboard/mouse, external drive, printer, internal multicard reader and I forget the other one I think iPod).

Anyways I'm not putting down the system, personally the system is a beast from a hardware perspective.

I'm just saying "What LIST man?" for there to be a list you got to have at least 4 or more features worth mentioning. Stress on WORTH MENTIONING. I know the system has more than 4 features duh... I'm talking about things that aren't already standard in todays gadgets.. like Blu ray and the motion sensing technology.. besides that bluetooth or some other form of wireless capability is pretty much standard now..

ps.. yes I'm aware of the web browser.. it's a step foward I like it..

but it can not replace having a real pc web browser.. the way I see it the browser is as potent as my pda's web browser.. just faster.

[David @ Jan 31st 2008 3:21AM]

Doing good.. now just increase the HDD capacity to 100+ GB, add backwards compatibility again, ship this with the new Dualshock 3, and keep the price at $499. Also it would be great if the free blu-ray movies offer is still valid.

If sony does the above, the PS3 will definitely move a few units.

[rstark @ Jan 31st 2008 4:21AM]

David,
If they did that and sold it for $399, I might just fork over the $$$ to buy one.

[Nitin Kumar @ Jan 31st 2008 4:25AM]

if Sony did that, my guess is it's more or less game over for M$, although Sony would be none the richer

[bob @ Jan 31st 2008 7:22AM]

adding that stuff probably wont make much of a differenece. the average person is only intrested in the bottom line. if they want to sell more they should just keep the 40 gb , maybe add the dual shock and lower the price .

[Corey @ Jan 31st 2008 8:09AM]

All they need to do is go back to hardware BC and they'll get my money, day 1.

[John @ Jan 31st 2008 10:18AM]

The hard drive size is pretty irrelevant. It's user replaceable, and it's really well set up so that you don't have to store much on it. You can stream media over a network, read flash drives, etc. Or, of course, replace that hard drive.

[Rob @ Jan 31st 2008 4:36AM]

I have been looking at getting a PS3 over the last few weeks. And as far as all of the blogs say replacing the hard drive for a bigger one is really easy and doesn't invalidate your warranty.

Not only that but it will cost you a hell of a lot less than if you were buying it pre-installed. So now do the sensible thing, buy a 40GB PS3 and shove in a 250GB 2.5" 5400rpm drive and bask in the glory of capacious hard drive.

Alternatively you can do what I was planning and setup a UPNP media server (this includes tversity, windows media player or mediatomb on linux). That way you can shove in as many hard drive as your heart desires and not bog down the PS3.

Or even just plug in a USB hard drive to play content from (it supports almost everything out there, apparently)

As there aren't currently movie downloads and the UK/Europe DVB-T adapter hasn't been officially announced yet I'm not sure what other uses there are for the Hard drive other than game demo downloads and save games (I'm sure I'll be corrected though).

That said I recently setup a whole house system using a Media Centre PC and XBox360's as media extenders using HomePlug adapters (ethernet over powerlines) and it was a breeze and if you wanted to add DVB-T or DVB-S (or in the states DVB-C) cards it will show the EPG around the house and let you remotely schedule recording and then stream the recorded content. Very slick. And I think this is a very neat trick up the Xbox's sleeve that has been vastly overlooked.

[Keith @ Jan 31st 2008 5:06AM]

Yep, even the official Playstation Blog tells you how to swap out your HDD.

What I think Sony, or some independent company should do, is bulk buy PS3's from Sony, with no HDD, and then offer a "build your own" service.

You select your console:

a) No PS2 compat, no SACD, 2xUSB, No Card readers
b) Software PS2 compat, SACD, 4xUSB, card readers

Select your HDD size:

a) 40GB
b) 80GB
c) 120GB
d) 200GB
e) 400GB
f) 500GB

Select your preloaded games:

[x] Warhawk
[x] Gran Turismo 5 Prologue

Select your shipping method:

a) express.
b) regular.

YOUR TOTAL PRICE: xxx

[Jay @ Jan 31st 2008 6:52AM]

Dude! Head over to your local bank small business manager and sell them that business model. You might have something there.....

[Frank @ Jan 31st 2008 8:40AM]

Ofcourse it turned a profit. and they will make many more profits... It doesnt cost $60 to burn a cd.

[Joe @ Jan 31st 2008 11:06AM]

If it was that easy, you'd be a millionaire. However, the writers, programmers, audio engineers, producers, actors, graphic designers, marketers, and a whole bunch of other people would like to get paid.

[cduran01 @ Jan 31st 2008 11:28AM]

But it costs millions to make whats burned on that CD, it also costs money to print labels, the plastic cases it comes in, shipping to the stores, the employees at the retail store don't work for free (though close to it), the stores need to pay light, taxes, etc......need I go on?

[jsn @ Jan 31st 2008 8:58AM]

All this means is that they reached a balance between what the PS3 is bleeding and what everything else is bringing in. the PS3 is still bleeding money like a stuck pig and will continue to do so. It'll never be the top games console in this generation and the majority of its sales are for blu-ray, not games.

[AJ in the East Bay @ Jan 31st 2008 9:19AM]

Exactly, this is a profit for the game division, not the PS3. Remember Sony makes the PSP and the PS2. The PS2 still outsells the PS3.

The PS3 just reached a manufacturing cost of approx $400, so even if the sell 10 million consoles at $400, the console itself will not profit.

Bottom line: no profit for the PS3 yet. Just the game division.

[Dahk @ Jan 31st 2008 9:54AM]

Yeah, but revenue also comes from software and accessories, does it not? With the dualshock 3 shooting out, and loads of ps3 folks flocking to get a crack and being vibrated, lol there's plenty to boost revenue.

Some of the PS3's best games are first-party games, and offering games like Warhawk on PSN (zero cost except for infrastructure maintenance and initial startup costs) all help towards driving up the revenue and turning a profit.

[Aaron @ Jan 31st 2008 10:55AM]

Its common for consoles to take years to get production costs down to where the game system itself is profitable, at least for sony. They could easily be making a profit on the PS3 now through the sales of games for it now that they not longer take the huge hit from production costs. By the end of this year they will probably be making a profit on the console itself as well.

[Silverfrog @ Jan 31st 2008 10:32AM]

Re: AJ

If Sony sells mostly the $499 units, that is $100 profit per console. I realize the 80 GB version is being phased out, however the 80 GB unit is speculated to be replaced by another top-end model, so this will most likely continue being profitable for Sony well into its future.

[z @ Jan 31st 2008 9:28AM]

This has more to do with better than expected PS2 and PSP sales rather than good PS3 performance. Both of them continues to outsell PS3 and they are pure profit.

[BJ Sisco @ Jan 31st 2008 10:24AM]

Sony = Masters of Spin

[Brent @ Jan 31st 2008 10:37AM]

This is good news. The PS3 really is a great piece of hardware. With Haze/Killzone 2/MGS4/Little Big Planet/etc all coming (fairly) soon, I think this year just might be the year of the PS3.

[Allen @ Jan 31st 2008 12:43PM]

I think you are all missing the point: it turned a profit in Quarter 3 of 2007, that does not mean it is profitable as a console overall. They still have to make up for all the bad quarters they have had before it. Also the 40 gig and 80 gig versions are still on the old 90nm process, meaning costs have not come down that much.

Also, the consoles themselves are probably not profitable yet, considering 1) the processors and 2) the new, smaller blu-ray modules are not out yet. Once both of those combine, the consoles will be profitable. I think the main reason for profitability was sales of accessories (PS3 labled HDMI cables, controllers, games and Blu-Ray movies).

Like someone else mentions, this says nothing about the PS3 being profitable, just the Games Division (so royalties on games and such, like I mentioned above, could've drove this).

I still expect it to be quite some time before all the losses incurred to get to this point are made up for. The Xbox 360 at least has Xbox Live to keep itself in the black, that division has by itself been profitable for some time I bet, just the consoles themselves hold Xbox back.

And to $100 made on the 80 gig PS3: bullshit. Original costs on 90nm processors exceeded that of the sell price of the console by over a hundred dollars, I doubt even with internal cost cutting that the console is now profitable, given the price slashing we have seen.