Wii to be only profitable console? – PS3, Xbox 360 losing billions

August 22, 2008

Wii to be only profitable console? - PS3, Xbox 360 losing billionsThe games industry is going through a great period at the moment, with sales up and optimism widespread. But in hardware terms at least it seems that the Wii is going to be the only profitable console this generation. The PS3 and Xbox 360 are actually costing Sony and Microsoft heavy losses to even get them on to store shelves.

One little news tidbit to emerge from the Games Convention Developers Conference earlier this week was about how much Sony has spent on developing and manufacturing the PS3 so far this generation. It turns out Sony has lost more money on the hardware side of the PS3 than it made from the stupidly successful Playstation 2.

Dave Perry, legendary game designer best known for his Shiny Entertainment brand, gave his opinions on how the games industry was shaping up at this stage of proceedings and while skilfully managing to stay neutral, he spoke knowledgeably about the hardware side of the industry and how hard it is to actually make any money.

It’s already accepted that console manufacturers lose money on the hardware in order to make it back in game sales, but the PS2 went against that trend by making money for Sony on every unit sold. Now Sony has piled all of that money, and much more, back in to developing the PS3, and it’s unlikely that the deficit will ever be dragged back to the black.

Perry didn’t make this point to make Sony or the PS3 look bad, but instead tried to indicate what a huge investment Sony has made in this, and every other, generation it has been involved in. And it isn’t alone, with Microsoft also doing the same, and losing money as well. Microsoft reportedly lost $4 billion on the original Xbox and the Red Ring of Death cost $1 billion to put right on its own.

This generation is seeing Nintendo actually turning a profit on every Wii sold, regardless of how many games Wii owners do or do not buy. And it’s likely that Nintendo will be the only one of the three companies to do well from hardware sales alone.

This kind of explains why both Sony and Microsoft have committed to 10-year-lifespans for the PS3 and Xbox 360 respectively. So much money is spent developing these behemoths of gaming that it takes that long for the machine to actually make any kind of profit for the company behind it.

As 1up asks: if the PS3 has cost that sort of money to develop, then how much is the PS4 (possibly due to appear in 2011) going to end up costing Sony?

19 Responses to “Wii to be only profitable console? – PS3, Xbox 360 losing billions”

  1. winner:

    Correct me if i’m wrong, but I thought the 360 was turning a profit?

  2. CAD:

    Winner

    That is because Dave is trying to use figures from the original Xbox to justify his positon. The PS3 is loosing more money in a quicker amount of time then the whole time xbox was on the market and now they make money on each console sold wiht the 360. Dave just refuses to acknowledge it.

  3. SW:

    I can’t say I care, the only thing the losses will cause is ‘no next generation’ from a particular company (seeing as we already have big enough install bases on all machines to justify the continued creation of games for $$$) so that doesn’t affect my current purchases one bit.

  4. H20:

    Hey CAD, why do you even go on this website is all you do is bag out the bloggers. If your so smart why don’t you start your own website called CAD kisses Microsoft’s loud white ass, among others.

  5. Bourne:

    They’re both losing money, leave it at the ffs! Lets not turn this into a fanboy war about whose losing money because they both are.

  6. CAD:

    “It turns out Sony has lost more money on the hardware side of the PS3 than it made from the stupidly successful Playstation 2.”

    What the fuck was so stupid about the fucking PS2 you dumb fucking fanboy just STF^ with your fucking myths and useless post.I know Xbox has lost the most money but please shut up.

  7. Bourne:

    that*

  8. idiot:

    Hahaha, you can’t post anything about any system without it immediately turning into a jr. high “my console can beat up your console” fight. There needs to be a minimum age to use the internet.

  9. Wiggy:

    Cad: What the fuck was so stupid about the fucking PS2 you dumb fucking fanboy just STF^ with your fucking myths and useless post.I know Xbox has lost the most money but please shut up.

    Way to show maturity. You’re the one that’s a fanboy, because of how quickly you took offense. Plus you didn’t even bother to google anything you back your “facts” and when insane and proved your immaturity. Here’s an article that states Microsoft lost some money on the 360 during its initial release: http://www.gamespot.com/news/6140383.html

    Is it still costing more to make? I’m not sure, because I can’t find an article leaning either way yet. But the fact still stands that yes, at first, Microsoft lost money on each console sold.

  10. Enos88:

    why it there the a nead for this.

    do you like the console you own?

    are they still making games?

    if the answer to both is yes than play the games enjoy the console and loosen up.

  11. Jay:

    Ok the whole idea with consoles is to create a revenue stream. You take a loss on the hardware to lock down millions of profit in software. Thats business as usual in the console space. IMHO Sony and Microsoft both over spent and over developed the PS3 and the 360… both are simply computers in a case thats 75% smaller than a desktop. I wonder why laptop tech was not used to deal with the tech curve? Why did Microsoft design its own motherboard and put the dead end Apple chip in it? Why did Sony design its own chip and push bluray? Why did Nintendo design the wii on almost ten year old tech? Why the sad attach rate for Nintendo? In business choices are made for many different reasons (not all of them good) Sony and Microsoft are super rich multi national companys that will gladly take a loss for market share as a investment in the future. even the fact that they are loosing money is free public relations. It was all or nothing for Nintendo and they played the best hand they could… Im glad their silly little machine is doing well as the number one birthday gift for 8 year olds. This xmas if Nintendo keeps up the fake shortages the 199 xbox 360 arcade will pick up the slack…If Nintendo stocks the shelves to meet demand the BUZZ will die soon after xmas…. So let it be done!

  12. Wiggy:

    I’d have to disagree with the so-called “BUZZ” dying. A lot of analysts predicted that the Wii would fail within the first year, it’s still surviving deep into it’s second year.

  13. Ricochet:

    I own both the PS3 and the 360, and knowing that I made MS and Sony both lose some money… makes me feel good :-)
    Deal with it fanboys!

  14. John:

    This article failed to recognize that the PS2 initially lost money on every console sold, and didnt turn a profit until later one………exactly like the PS3 is doing now.

  15. tiko:

    Oh NO!!! Not another console article from DAVE PARRACK!

  16. EBS:

    I have to laugh at people who predict that the buzz will die on the Nintendo Wii, like somehow people will suddenly come to their senses and drop it like a hot potato. People, let’s remember. The Wii is now going into its THIRD holiday season. And it’s still considered to be one of the most sought after gifts. Major chains still have trouble keeping them in stock. And from the people I’ve talked to in retail, the Wii Fit is slated to continue or ramp up the trend.

    This is no fad. And it’s no accident. Nintendo has created a comfortable niche market for itself, and it’s going to keep raking in the cash until one of the other game makers decides to challenge them head-on with motion control games. End of story. Believe that the buzz will continue.

    From my own personal experience, I own a Wii and an Xbox 360, and this Christmas, will invest in a PS3 partly for the exclusive titles, partly for the Blu-ray. And I have to say that the Wii doesn’t get used as much, moreso because I love FPS titles and the Nintendo doesn’t really deliver big on that genre. But it definitely delivers a completely different experience from the other two. So much so that I don’t even compare them anymore. Nintendo games are different. The Nintendo experience is different. Period.

  17. winner:

    Ok, but let’s draw a line through last gen (Xbox and PS2) and leave this gen as Wii, PS3 and Xbox 360.

    Wii is definitely making money.

    From all accounts, 360 is turning a profit, unless I am wrong.

    PS3 is the only one that isn’t making money yet. This is only a matter of time, as the install base is growing.

    However it needs to be pointed out that DAVE PARRACK needs to be more careful in his posts, especially in the title. Sensationalism is fine, but untruths aren’t. The title says that 360 is losing billions, which is far from the case.

  18. harry sachz:

    Right on winner! Seems like parrack and ferro to a lesser extent like to make shit up. This site has no integrity. If it weren’t for the crappy videos on xtube I wouldn’t be here that often.

  19. tgrass21:

    Xbox 360 turned a $240 million dollar profit last quarter in hardware, over 460 million all together including software but not inluding the online transactions which is another 200 + million…..this is after deducting their losses and expenses.

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