Microsoft: Xbox profits down by $1 billion, R&D costs are up
Microsoft released its quarterly financial report just this week, which held clues as to what the company is doing with the Xbox division. According to the report, console sales and profits were down within the Xbox division.
Microsoft’s Entertainment and Devices division houses the Windows Phone, Xbox and other minor devices. While the entire division managed to increase its profit by 15 percent to $596 by reducing operating costs, the Xbox division saw a drop in profit of $1.1 billion, or 29 percent year over year.
This was mainly attributed to the drop in Xbox 360 sales from 8.2 million last year to 5.9 million this past quarter. Microsoft wrote, "This was due mainly to lower volumes of consoles sold and lower video game revenue.”
While the Xbox 360 was the number one selling home console in the US for 22 months, its failed to overtake Sony’s PS3 for the number one spot globally. On the whole Microsoft reported $21.5 billion in revenue and saw $6.4 billion in profits.
While revenue was down in the Xbox division, Microsoft’s flagship product, Windows did help boost revenue by three percent. Microsoft’s stock dropped by two percent on the heel of its report.
While Windows seemed to have done decently last quarter, things are looking a bit gloomy for the OS this quarter with Windows 8 off to a slow start along with the Surface tablet. Last month, NPD analyst Stephen Baker stated, “I think everybody would have hoped for a better start,” using the words “shaky” and “tepid” in the report.
According to research firm, Detwiler Fenton the Surface tablet is selling poorly, with an estimated 500k to 600k units moved, way below Microsoft’s three to four million target.
There was an interesting note in Microsoft’s financials that revealed that research and development expenses have hit $98 million last quarter. It appears that Microsoft’s putting things into high gear as its most likely ramping up to unveil its Xbox 720 later this year.
100 Responses to “Microsoft: Xbox profits down by $1 billion, R&D costs are up”
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January 27th, 2013
“On the whole Microsoft reported $21.5 billion in revenue and saw $6.4 billion in profits.”
…hmm…
Microsoft value: $233B
Sony value: $14B
Microsoft profits in 2012: $6.4B
Sony losses in 2012: $5B
“Sony is under pressure to achieve three objectives it set for itself in the year to March – to make an operating profit in electronics; to make a net profit at the group level and to have positive free cash flow at the group level, Mr Ezawa said.
He added that, since ‘the first objective is probably impossible’ – due to the recent strength of the yen and poor sales of its PCs, TVs, games and cameras – it is likely that Sony sold the NY headquarters in order to achieve the latter two objectives. It would not be able to do this through its business operations alone, Mr Ezawa said.”
http://www.theglobeandmail.com/report-on-business/international-business/asian-pacific-business/sony-sells-new-york-headquarters-for-11-billion/article7509230/
January 27th, 2013
Microsoft value: $233B
Sony value: $14B
… hmm…
… and yet with all their billions M$ fails for the second chance to totally dominate the PlayStation brand much more the whole gaming industry. What a shame. M$ thought it can wipe out the PlayStation brand with its billions.
PlayStation brand the best video gaming brand in history.
There is a big difference between creating new games and new IPs for console gamers and just shoveling to developers crap loads of money to steal exclusivity or timed DLCs.
M$ clearly has no interest in making new games for gamers. All they are after is money and market share.
How shallow.
And they want to lead the industry?
No way, Uncle Scar.
January 27th, 2013
Gotham City needs a better class of criminal, M$.
Go back to ripping off gullible Americans. XP
January 27th, 2013
“M$ fails for the second chance to totally dominate the PlayStation brand”
I don’t think they had any illusions of “dominating” Sony within two generations. What they did do was get a foothold and establish themselves, while at the same time completely eliminating Sony’s previous “dominance”.
January 27th, 2013
Every quarterly financial report about the video game sector turn into a pissing contest about total share valuation of the entire company, which has remained pretty much the same year after year.
January 27th, 2013
Since the release of the PS2 in 2000 Sonys market cap has gone down 90%.
I can kind of see why too. If Microsoft can charge for stuff that Sony has to give away for free it makes profitability all the harder.
January 27th, 2013
“total share valuation of the entire company, which has remained pretty much the same year after year.”
100B for Sony in 2000 is “pretty much the same” as their valuation of ~14B today?
Okay.
January 28th, 2013
@CarlB, I think you misunderstood my point. Sony’s market valuation has remained around that ballpark for some time now yet its not exactly hot off the press.
What I was saying is that any quarterly fiscal report talking about video game revenue/profit (up or down) always seems to turn into a pissing contest about which company has a bigger market value – Its no longer PS3 vs Xbox 360, it turns into company vs company debate.
Outside of the video game consoles, does anyone really care? Is there anyone thinking of Sony while watching the new James Bond movie, Skyfall? Or anyone really thinking about Microsoft while using Windows?
January 28th, 2013
My point being Sony can’t keep losing money like it has been year over year. It’s running out. Why care? Because if the host company of Playstation continues to bleed money it means less resources invested in Playstation. It means less games/lower quality games for things like PSN+ (hello Foosball 2012). It means less ability to maintain studios, and the closing of them as we saw last year. Color me crazy, but yeah, I care about that stuff and the future of the Playstation brand.
January 28th, 2013
If that’s the case what prompted or was the intent of posting this comparison?
January 28th, 2013
The point of including that in my post was to reflect the relative financial health of the two corporations.
One has a lot more resources for future investment and current losses, while the other does not.
January 28th, 2013
What gets me about all these financial results getting published is that its made out that there is a HUGE loss and the company is in trouble when there is no growth year on year.
A whole article can be written to make a 1% fall in growth look like a fiscal loss. In a lot of cases there is still growth, just not as quick. Which when you think about it is normal. Expecting growth to grow year on year is like painting yourself into a corner. At some point the market is saturated that doesn’t matter when it comes to keeping share holders happy.
That’s going to be the case with both Microsft and sony. Their products are at the end of their life cycle. To be honest I am still amazed they are selling the such high figures! Its normal that Microsoft will see a fall in revenue and an increase in R&D costs as they move between products. Likely the same with sony. But if I were Microsoft I would be very happy to make $6.4 BILLION in profit.
January 28th, 2013
Xbox and 360 division are still operating at a $2.8B loss from
2003-2012.
January 28th, 2013
“The point of including that in my post was to reflect the relative financial health of the two corporations.
One has a lot more resources for future investment and current losses, while the other does not.”
What does it even matter when one company is doing so much for their userbase, and the other is phoning it in year after year?
January 28th, 2013
@andrewds
Yeah. To be fair, MS did unbelievable last year during this quarter. Comparing that (their best quarter ever) and this one isn’t the best indicator.
January 28th, 2013
Well said Andrew.
Reporting a reduction in profit is some how construed as failing or as a loss?. . and share prices drop, as a few of the greedy bastard investors try to switch to something that will pull in bigger rewards for them next year.
The way I see it, MS are in good shape as we enter the next generation. They have a a few strong products and a fanbase who like what they offer, despite it being from MS. It’s a bit like windows, everyone loves to hate on it, even though there is nothing better at doing what it does.
I hope Sony can stay in shape, and somehow turn things around, They really need to start making profits, or they simply will not be here more than another couple of years.
As for Nintendo. .I think we will finally see their cheep ass strategy crumble, as the buyers get ever more savy about what it is they are buying into.
I’m still pretty confident about my 20 million total sales prediction for the Wii U. I think sales will plummet when the PS4 & Nextbox are launched.
January 28th, 2013
“What does it even matter when one company is doing so much for their userbase, and the other is phoning it in year after year?”
It matters because if Sony performs financially the same as it has in the past 10 years over the next ten, they will no longer exist.
January 28th, 2013
A lot of this stems from the perception that public companies have to expand more and more to keep the share holders happy. Personally I would be happy to invest in a company that returns a profit year on year.
And sensationalist journalism is also to blame. I mean look at the headline to this article. Made to look like doom and gloom. Could have said “Microsoft make a healthy profit and invests in R&D”.
I work in financial services and when the big crash happened in 2008 one day on the BBC news they reported the biggest one day drop in FT100. Oh my god the worlds going to end. They failed to even mention the next day that the FT100 had its biggest ever one day rise.
I agree about the Wii U. I have never felt more dis-enchanted by Nintendo. They cannot reply on the fan boys buying a Wii U to play the next Zelda or Mario Kart. And I am sick to friccing death of them re-making old Zelda games. I have lost count of how any times Ocarina of Time has be re-released. now its The Wind Wakers turn. I hope sony get there act together as I dont want a one horse console race.
January 28th, 2013
“It matters because if Sony performs financially the same as it has in the past 10 years over the next ten, they will no longer exist.”
Then I see it as being odd you’re making a comparison between MS and Sony at all. Like I said, MS is doing nothing at all with their financial success, and Sony keeps pushing the envelope of creativity with projects and giving to the community back something of substance.
January 28th, 2013
phranctoast – But at the end of the day sony are a business and need to make money, not a charity doing good deeds in the community. They need to change their business model and compete in all sectors they are in.
So Microsoft make money. Good for them. They are doing something right. And it doesn’t necessarily come down to show is the most forward thinking or innovative. It comes down to cold hard sales figures and product margins.
I don’t know the exact ins and outs of sony’s (or any other companies) business model but if they are selling millions of tvs, playstations, cameras and phones etc… and they are not making a profit, then they have a problem that needs addressed. Just because their products are good is maybe not enough.
January 28th, 2013
I find nothing odd about comparing Sony to one of it’s competitors. Unlike Sony, Microsoft hasn’t lost around 85% of it’s net value over the past decade. Like I said, Microsoft is now in a position for long term sustainability, able to withstand future losses, whereas Sony’s position is shaky at best, with it’s debt currently about equal to it’s net worth.
January 28th, 2013
You have to love Mikes attempt to make MS look bad on the financial front, despite Sony being on its last legs.
I love this site.
January 28th, 2013
Maybe sony would be in a better financial position if they didn’t keep wasting money buying “professional unbiased” journalism from people like Mike? Ha ha
January 28th, 2013
@CarlB,
I see, so basically as a retort to the story about Xbox profits dropping by $1 billion, you wanted to “reflect” or show that Microsoft is financially “healthier” than Sony and wasn’t really about:
January 28th, 2013
Good Lord Mike, Microsoft makes 1B less in profits this quarter while Sony sells its US headquarters to keep the lights on.
I know which story is more important to gamers.
January 28th, 2013
I’ve long given up on this sites neutrality.
Almost every MS article has a negative spin on it, while almost every Sony one has a positive spin.
Like Andrew said, This article could have been headed along the lines of MS still making a healthy profit despite world wide recension and very difficult times being had by all.
I’ve been taking digs at this for some time now. problem is this site is full of Sony fans, so it would only stir up a shit-storm to have the cold hard facts painted in a fair light.
I can see the future. . .PS3 fanboys, all be singing the praises of the good ship Sony as it sinks headlong into the abyse, then they’ll morn the loss of such a great company, that cared so much for them for the next 10 years. (just as all we Amiga fans did).
Sony needs to make the books balance, they have to be able to offer a great service, and (probably more importantly)make a profit doing it.
Right now, MS is doing better than Sony at hitting both these very important goals. it probably isn’t difficult to provide the better service while making huge losses to do so., the better trick is to make it financially viable.
January 28th, 2013
Who cares which company is more profitable….most of Microsoft profit comes from Windows, enterprise and Office. The Xbox division doesn’t make much money more Microsoft.
In the end, Sony is the one company offering better games, graphics, hardware, service, more value for your money.. and better in house gaming devs
January 28th, 2013
So by the end the day MS is a company we should more likely invest in and Sony is the company we should support as they do more for us.
January 28th, 2013
I expect more from you Roca. As the only Sony employee here I expect you to increase your astroturfing by 160% this year to help out.
January 28th, 2013
Based on the leaked next gem specs, it seems the PS4 will be more powerful than the X720…with 50% more raw processing power, much faster ram and Sony will most likely offer better games.
But you xbots shouldn’t be worried, Kinect 2 will keep you guys busy. Hopefully Microsoft won’t finish in last place again next gem
January 28th, 2013
http://www.neowin.net/news/report-microsofts-xbox-division-has-lost-nearly-3-billion-in-10-years
January 28th, 2013
@me_
“Good Lord Mike, Microsoft makes 1B less in profits this quarter while Sony sells its US headquarters to keep the lights on.”
No me_, specifically the Xbox division made $1B less, if it was Msft as a whole you would see that article on Tech.Blorge, unless the Xbox played a major role in it. Sony selling its NY building would also be on Tech.Blorge.
As always, there will be a story on Sony’s financials, more specifically about the PlayStation.
Just putting this out there – has anyone really thought about the meaning of “news”? To put it simply – If Joe Shmoe a highly paid executive took a 20% paycut, is that more newsworthy then if he earned as he normally did year after year? or if John Doe who has been down on his luck for some time suddenly gets a pay raise. Just food for thought.
January 28th, 2013
Don’t have to wait long. Sony releases their fiscal info on Feb 7th.
January 28th, 2013
Phranc
The figure don’t truly reflect the performance of the 360 for MS.
Firstly, it carries forward 2 years of massive losses from the original Xbox. It also includes the money sunk into the mobile and new tablet platforms, both of which are currently loss making.
Take these away, and the xbox360 itself, has probably made money for MS. I couldn’t find any breakdown that gave details on how the 360 itself is performing, But I’d be willing to bet it’s a positive erner for them just now.
Sony started this gen, with a positive carry over in the first two years(probably the PS2), but have managed to lose even more than MS over the last 6 years across the gaming division. It’s clearly been a struggle for both to make any money.
January 28th, 2013
Sorry I meant to include this link
https://docs.google.com/spreadsheet/ccc?key=0AmSmlk-Wo4uhdEhXMy1GcmFERGQ2TGtkdll2OVBXNGc#gid=0
January 28th, 2013
Roca – So by your logic sony should throw high spec components at the ps4 and that will make them out and out winners this next gen. And as such will make sony billions of $. Of course, how come all these highly paid execs couldn’t work that out already!
And with regards Microsoft finishing last in the next gen, you could be right! Especially as last play might also be second place, if sony doesn’t event get to the fishing post.
January 28th, 2013
@godless
“The figure don’t truly reflect the performance of the 360 for MS.”
Never said it did. Just the XBOX division, and it ignores two years of massive XBOX losses.
“It also includes the money sunk into the mobile and new tablet platforms, both of which are currently loss making.”
” It’s clearly been a struggle for both to make any money.”
Yeah.. It makes on wonder how Valves really plans on coming into this and not losing money hand over fist.
BTW.. Link broken
I found the breakdown. They still lost 400M in XBOX division in 10 years, which excludes 2 years of sales which were in the negative, and XBOX R+D.
January 28th, 2013
http://www.eurogamer.net/articles/2013-01-28-rare-veteran-george-andreas-leaves-microsoft-for-sony
Rats leaving the sinking ship!
January 28th, 2013
“I see, so basically as a retort to the story about Xbox profits dropping by $1 billion”
Not at all. I actually appreciate the story. My post just reflected what I was thinking and my point of view on the topic: a larger paradigm which I personally think is important.
“Who cares which company is more profitable…”
It’s more of a case of which company is more economically viable, but yes, profits are definitely a part of that picture. Why care about that? Well, beyond the fact that a company can’t survive unless it is profitable, usually console manufacturer’s sell their console at a loss at launch in order to establish a user base and then make money back on software. We’ve seen what has happened with Vita since they haven’t been able to cut the price on it as Nintendo did with 3DS. It’s not pretty, and developer’s, as reflected with Capcom recently, tend to follow the money.
Now, consider a similar situation happens with PS4 and 720. Microsoft launches their console, and as long they don’t repeat an RRoD scenario (or perhaps even if they do), they are in a stronger position to sell a similar hi-spec machine at a loss, whereas Sony is not. Maybe Microsoft launches their console with an MSRP which is too high, as Nintendo did with 3DS… no big deal, they simply make a massive price cut to the hardware because they have the financial resources to do this. Sony? They haven’t even been able to cut the retail price of the core SKU Vita yet.
“So by the end the day MS is a company we should more likely invest in and Sony is the company we should support as they do more for us.”
Actually, by the end of next gen, if Sony and MS perform financially as they have been in the past five years, only one corporation will be around for us, regardless of how much I personally prefer to support Sony and Playstation.
“Based on the leaked next gem specs, it seems the PS4 will be more powerful than the X720…with 50% more raw processing power, much faster ram and Sony will most likely offer better games.”
Great. If true, that means it will be that much more expensive out the gate, and cost Sony that much more. Sony lost $55B in the last 5 years. They are worth ~$14B today. You do the math. PS3 is also “more powerful” than Wii, but look where that got them in comparison this gen. Vita is also “more powerful” than 3DS, but look where that has got them so far. PSP was also “more powerful” than DS, but look where that got them.
Don’t get me wrong, I like having “more powerful” consoles, which is part of the reason why I purchased a Vita and PS3. Unfortunately, Sony is still bleeding money regardless of the “more powerful” philosophy. Sony used to be the leader in several electronic product categories. Now they aren’t even in the top 5 for any except one, consoles, where there are only 3 major players.
All those with the “why care” mentality should remember Sony wouldn’t even be in the home console business if it wasn’t for the success they had in the other electronic product categories to begin with. Sorry, but they didn’t fund the launch of the Playstation brand with magic that rained down from the “good intentions rainbow”.
@me_,
No worries, you can catch those stories on pretty much all the major video game sites. Regardless of whatever disagreements I have with Mike, I respect him, and I appreciate what he does here as an author of these articles, enjoying the discussions they spur.
Personally, I do think it is news if a parent corporation is barely able to sustain operating income for it’s divisions, has been in the red by billions for the last few years, has lost ~85% of it’s value in about a decade, and will go under completely if that pace of debt, overall losses, and continuing losses is sustained. As for highly paid executives, I don’t think he made up the majority of the 10,000 jobs lost last year.
“Don’t have to wait long. Sony releases their fiscal info on Feb 7th.”
Mr. Ezawa doesn’t sound to bullish about the potential outcome (see first post). That said, I wouldn’t be surprised if they made ~$100M profit at some level. Not too sunny considering they lost $5B last year, and are about to go through a launch where they will likely make little to no profit off a brand new “more powerful” console this year, which will probably be about on par with the immediate competitions’.
The only significant difference may well be the direct competition is able to offer their similar/slightly lower spec console at a lower price, because they are in the financial position to do so.
January 28th, 2013
“Rats leaving the sinking ship!”
Going to another ship that is already much further underwater?
January 28th, 2013
http://www.ign.com/articles/2013/01/18/sony-expected-to-turn-first-profit-since- 2008
January 28th, 2013
http://www.pocket-lint.com/news/49526/china-reviewing-10-year-console-ban
Maybe this can help Sony out a bit……….
January 28th, 2013
1/29/13 update!!!!
Sleeping Dogs (PS3)
Free for PS Plus members (Not sure if NA or EU)
Ninja Gaiden Sigma Plus (PS Vita)
Free for PS Plus members
Madden 13 Sale (PS3 and PS Vita)
30% off for PS Plus members
Madden 13 (PS3) – Original Price: $41.99; PS Plus Price: $29.39
Madden 13 (PS Vita) – Original Price: $27.99; PS Plus Price: $19.59
Gatling Gears (PS3)
50% off for PS Plus members (Original price: $4.99; PS Plus Price: $2.50)
Section 8: Prejudice (PS3)
50% off for PS Plus members (Original price: $9.99; PS Plus Price: $5.00)
Greed Corp (PS3) (US and Canada only)
50% off for PS Plus members (Original price: $4.99; PS Plus Price: $2.50)
January 28th, 2013
Booo. Sleeping Dogs is EU!
January 28th, 2013
@CarlB,
Okay, so reading what you have been saying, the reason you brought up the very old news around Sony’s current worth, which have remained about the same for nearly a decade on a story about the Xbox division losing $1 billion in profit last quarter while highlighting my sentence (about Microsoft reporting $6.4 billion in profit as a whole)
- was because you truely care about Sony and want them to do well and also to tell us in that same caring spirit that:
…totally following you now.
Sony’s finanicals quaterly report will be interesting for better or for worse regardless, come next week. You can show how much you care then also.
Yes, we have them here too on Tech.Blorge. Other gaming sites really don’t have much of a choice where to post their stuff.
January 28th, 2013
@Phranc
“Booo. Sleeping Dogs is EU!”
HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA!………
HAHAHAHAHAHAHAHAHAHAHAHAhaha ha ooh ah e ooh ha….
I CAN NOT believe you even pondered if Sleeping Dogs would be given to US or EU.
What a joke.
Next thing you know, EU will be getting vouchers for a free PS4 for their PS Plus update.
January 28th, 2013
Goes back to playing Darksiders.
Just picked up Unfinished swan, Warp, Machinarium, and Jax and Daxter HD for a grand total of $10.75. J+D alone is worth that.
PS+ owns.
January 28th, 2013
Cut the crap MS fanboys, you’re acting like you’re being victims on this blog (but to be more precise you guys are, since MS isn’t providing hardly no new IPs for hardcore gamers). And it’s interesting that people is avoiding the very fact that MS lost billions, and yet attacks Sony.
@CarlB If the rumors is true, regarding PS4 using APU fusion tech, faster memory with 4GB RAM GDDR5, and so on, doesn’t mean that the ps4 will cost as much as the PS3. When the PS3 launched, it had innovative hardware: built-in blu ray drive (this alone was pricy in the market), wifi, Cell, XDR rambus ram (one of the most fastest memory out there) clocked at the same CPU, ability to install OS on the hardware…
It appears you’re saying that Sony shouldn’t provide powerful hardware and the same going for next gen. The point is Sony are risky, innovative, gave better strategy, and it paid off. If they didn’t, they wouldn’t offer so many PSN+ discounts, free games for PSN+ members, new IPs, development costs, and so on. The only thing that’s bad IMO is Sony didn’t give enough support with the PSVita at the moment.
January 28th, 2013
“Sony’s current worth, which have remained about the same for nearly a decade”
The financials seem to indicate otherwise, reflecting a loss in value of about $55B in just the last 5 years, $5B lost last year, and incurring billions more in debt than they did a decade ago. The start of this year reflected Sony hadn’t reached that low a value since the ’80′s.
Meanwhile, net income over the last five years has also been riding the negative train:
2009: -$98.94B
2010: -$40.8B
2011: -$259.59B
2012: -$466.66B
All this happening while many of their product lines are no longer at or near the top of the mountain as they used to be around 2000. Now it has a lot more competitors with better products, better resources, and better reaction times.
“because you truely care about Sony and want them to do well and also to tell us in that same caring spirit”
I mentioned a serious financial problem that exists because I do care and don’t want to see them go under. If they continue on this path of declining financial performance, they will.
“Sony’s finanicals quaterly report will be interesting for better or for worse regardless, come next week. You can show how much you care then also.”
I will, thanks for the invite. Hopefully the couple hundred million they might manage in profit on that report because they sold their U.S. headquarters will propel them enough to be able to eventually pay off their billions in debt and have their first year in the black since 2008.
If they make approximately $250M for the quarter, and somehow manage to maintain that pace, it will only take them 20 years to regain the $5B they lost just last year.
“I CAN NOT believe you even pondered if Sleeping Dogs would be given to US or EU.”
Perhaps they can only afford to give such newish games to the market that supports them the most. This would seem to be yet another reason why we should care about Sony’s financial standing as gamers. I understand why they are cutting back in the U.S… if you are forced to sell your headquarters there in order to have operating income, you are probably not going to be as inclined to give as many newish major retail titles away there with your paid sub as you have in the past.
“doesn’t mean that the ps4 will cost as much as the PS3.”
I personally hope you are right. However, if it is less expensive, it may increase the odds they will be selling PS4 at or near a loss, a contingency which they are much less financially prepared for now than they were the start of this gen w/PS3 (which may well be at least part of the reason they are saying things like, “we’ll wait on Microsoft,” instead of “People are going to get second jobs to buy it!”.
Vita had one of the largest game lineup launches in console history with the “most powerful” handheld. Unfortunately, not enough people bought it, likely because they deem it is too expensive, and or the competition’s products (or products they already have – such as smartphones/tablets) are sufficient for their gaming needs.
Sony was not able to sell Vita at a loss in order to get it in enough people’s hands early on, so many devs have not decided to risk supporting it, or if they do, they may do so with a minimum investment as we saw with CoD. So far, Persona 4 Golden is the only game to get over 90 on MC, and devs such as Capcom have recently pulled support (in Capcom’s case- Resident Evil Revelations).
Perhaps the reason Sony hasn’t given “enough” support to PSVita “at the moment” is because they haven’t been able to afford it. Ads, development, and price drops cost Sony money… money which is currently being used to pay off increasing amounts of debt and gearing up for the launch of a console which may be initially sold at a loss.
I would say they made an impressive effort with the new bundles last year… it’s just a shame about CoD… and even though they couldn’t afford a permanent price drop, at least they could afford one day’s worth (Black Friday).
January 28th, 2013
@CarlB,
Sure, I can now clearly see how you spontaneously felt the desire to “care” about Sony’s financials after reading Xbox’s $1 Billion loss in profit. This is the very first thing you posted on this story:
Its all good mate, I’m just joshin ya. just found it too funny.
January 29th, 2013
Actually, I was looking into this before you wrote your article. Comparing them to the immediate competition from a larger paradigm doesn’t seem so strange to me. It appears the financial divide between these two competitors has grown to the point over this last decade to where if it continues a similar trend, Microsoft would actually be in a position to buy out Sony (actually, they already are). And if they did, well, my guess is more people would start “caring” at that point.
No worries though, I’m often entertained by your articles as well. Cheers, and keep up the quality writing.
January 29th, 2013
“Meanwhile, net income over the last five years has also been riding the negative train:
2009: -$98.94B
2010: -$40.8B
2011: -$259.59B
2012: -$466.66B”
Sure that was in the Billions, and not the Millions? Those numbers don’t look correct even for the Yen.
January 29th, 2013
Phanc
Numbers are in Yen
If you divide by 100, then you get a very approximate value in US billions of $
January 29th, 2013
“it’s interesting that people is avoiding the fact that Ms lost billlions yet, attacks Sony.” Look in the mirror much fanboy. How about you cut the Ps3 fanboy crap. Yes, Microsoft has suffered a loss but no where near the epic failure level that Sony is. Sony stock has been declared “junk” stock. Microsoft did not squander away their entire fortune like Sony has. As far as Ps3 exclusives goes, the cold hard truth is that this hasn’t made that big of difference for Sony this generation. Ps3 fanboys love to brag about Sony’s exclusive titles but the majority of Ps3 gamers have not bought very many Ps3 exclusives titles. Regardless of the reasons why, most Ps3 exclusives don’t sale as well as they should.
January 29th, 2013
“Sure that was in the Billions, and not the Millions? Those numbers don’t look correct even for the Yen.”
It’s possible it could be in yen, though the header of the spread I’m look at now is all in dollars.
Scroll down to the “Net Income” row:
http://www.marketwatch.com/investing/stock/sne/financials
January 29th, 2013
Yeah. Numbers are in Yen.
Using Sony’s own Fiscal 2011 to verify.
http://www.sony.net/SonyInfo/IR/financial/fr/11q4_sony.pdf
January 29th, 2013
“Those numbers don’t look correct even for the Yen.”
So it seems the numbers are correct, my mistake for adding the dollar sign.
Still seems to be a very negative trend:
2009: -$1B
2010: -$442M
2011: -$2.8B
2012: -$5.1B
January 29th, 2013
@twilight
Who cares whether a majority of PS3 gamers bought PS3 exclusives? Even if a minority out of 77M consoles bought them that still is pretty damned impressive. All games don’t need to sell like Halo to be deemed a success.
In fact, I personally rather have many moderate selling games like the PS3 does have rather than a few great selling games like the 360 does. More great games for me to play rather than the alternative.
I’m sure Sony would like to have it where all their games sell like Halo, but it simply can’t happen when they’re actually competing for game market-share with themselves.
Early this year alone. Count the amount of PS3 exclusives coming.
Jan- Ni No Kuni
Feb- Sly Cooper 4
March- GOW:A, Atelier Ayesha: The Alchemist of Dusk, MLB 13: The Show,Hyperdimension Neptunia Victory
June- The Last of Us
And that’s even not taking into consideration games that have no set release date like Puppeteer or Beyond Two Souls.
Sure, Carlb can paint some nice FUD about the future of Sony, but let’s be realistic for a second. For the last 5 years, the PS3 has been losing money, yet for the last five years, Sony continues to dominate in providing better/unique gaming experiences than the competition, and 2013 looks no different.
January 29th, 2013
Sorry, seems those would be off too as the exchange rate can differ substantially… for example… Sony is reporting -$5.5B, or $400M more in losses than today’s exchange rate would reflect.
January 29th, 2013
@phranc,
Would you agree with roca that last year was the worst year for PS3 exclusives? Do you think that might have anything at all to do with their financials? Do you think Sony is too big to fail?
I agree in that I think at least 4 of those titles you mentioned I will enjoy thoroughly, but I’m not going to stick my head in the sand and pretend that they are not in a dire financial position right now and for the foreseeable future.
This doesn’t mean I’m going to immediately right Sony off and say they are completely doomed, but at the same time I realize some of the things we are seeing (closing studios, selling U.S. HQ, 10,000+ job losses, less titles with PSN+ U.S., struggling Vita, etc.) are likely the result of it’s financial difficulties.
I just hope they can turn it around, because I would definitely look forward to more titles like God of War in 2014 and beyond on PS4 and later consoles.
The future is still an unknown, but what is known is that if they continue on this financial trend they will go under. In the meantime, at least we can enjoy all the quality titles they are still scheduled to put out (as long as they aren’t delayed/cancelled).
January 29th, 2013
“Would you agree with roca that last year was the worst year for PS3 exclusives?”
I would agree that they had less exclusives last year. I happen to really enjoy Twisted Metal a Starhawk. More so than some other more higher rated/selling games.
” Do you think that might have anything at all to do with their financials?”
I think they lack of advertising for the games had to do with their financials. I also tend to notice that the year seems either loaded or not. One year is nuts followed by less games the next year. I think this is more in line with the development process than anything dire…
“Do you think Sony is too big to fail?”
I doubt any company is too big to fail. Restructuring needs to occur, which looks like is happening. We can’t blame Sony for the financial situation with the value of the Yen vs Dollar or for natural disasters than hurt them bad, but there’s a lot they can take blame for.
-Early high price of PS3 to shoehorn the BRD in was a win for consumers but a loss for Sony, if they’re not raking in the dough on BRD fees.
-They’re shooting themselves in the foot releasing Streaming/Download copies of movies BEFORE they come out of BRD!
-They need to bring back up the quality of their products to the past glory. Samsung should have never be deemed higher quality than Sony. With that said, they need some better lower cost products so they can compete with Vizio/LG in that market.
-Better coordination between different facets of their own organization. It seems like their no communication from an outside POV. At least they finally got a service like Music/Video unlimited on their products. These represent great services exceeded others in the same market.
That’s all I can think of now, but I need to get back to work.
January 29th, 2013
I agree with most of your points.
I would add that yes, some years are better than others, however, the main difference is for the last five years they have had substantially less money to seed new development/studios. Five times less than they did in 2009.
As for streaming releases, I’m thinking either they take advantage of it or someone else will (actually, they will regardless).
Even if they did bring up the quality of their products, however, the market has been so transformed and saturated at this point it may make little difference for existing categories, and I don’t see many new ones they can take advantage of.
If they do get their products back to the top of the categories in quality, they are going to also have to advertise and market them appropriately, actions which require money they don’t have nearly as much of as they used to.
I also think they need to exploit a partnership with Google as much as possible if they wish to turn this around.
January 29th, 2013
“I would add that yes, some years are better than others, however, the main difference is for the last five years they have had substantially less money to seed new development/studios.”
I think we’re seeing many redundancies eliminated with certain closures while they still appear to be hiring developers…
http://www.examiner.com/article/xbox-720-s-darksiders-3-saved-sony-santa-monica-to-the-rescue
“As for streaming releases, I’m thinking either they take advantage of it or someone else will (actually, they will regardless). ”
Yes, but they own a movies studio. They have some clout to dictate whether a release happens on disc first or digital first. They can also keep discs out of redbox or off of netflix for a certain period of time as shown prior so the disc release first shouldn’t hurt them. Personally, all disc versions should come with a digital copy anyway. There’s no reason for the studios to double dip in this respect.
“I also think they need to exploit a partnership with Google as much as possible if they wish to turn this around.”
Agreed. I would have thought that Google would gave jumped at the opportunity to show MS up and put a browser in the PS3.
January 29th, 2013
Phranctoast,
As a gamer, it is a gamer’s dream to have all kinds of games to choose from. I respect Sony for bringing innovative and new games to the market. However, the only thing that I am saying is that Sony may not be able to continue gaming business as usual if they continue going down the road they are going and don’t get out of the “red.” It is great to have exclusives but exclusives cost money so profit returns need to be there. Ps3 exclusives have been a sore point for me. It pisses me off that Ps3 gamers don’t support the exclusive titles enough.
January 29th, 2013
Afterall, there are only so many copies that the Ps3 legion can buy around here to help out. For example, Resistance 3. This game should of sold a lot more copies then this game actually did. I usualy buy new Ps3 games to support Sony and the developers. The only exception is the new Devil May Cry game. There was no excuse for an inferior Ps3 port so I made an exception and purchased this game used out of principle.
January 29th, 2013
Last year was a weak year but not for the lack of investments from Sony. In fact there were more new IPs last year than any pi other year, Journey was unique and it was the highest rated exclusive in 2012.
This Sony is going all out with many AAA exclusives (God of War, The Last of Us, Beyond, etc)
January 29th, 2013
You don’t get it, Twilight. If ps3 gamers don’t support exclusives enough as you claim, then why is it that games like the Uncharted franchise, which is less than 10 years of existence, sold over 17 million copies then? Why did GT5:P sold 5.3 million copies? Why did GT5 sold over 9.1 million as a whole then? Why did GOW III sold over 5.2 million? The very fact that there’s other exclusive games to choose from, giving gamers more flexibility in their choosing. And you forgot the mention about PS+ subscribers for other free exclusives. If Sony lacked exclusives like MS, I’m more than sure there will be a sale increase in those titles. You’re not giving them enough credit. I definitely disagree with your perspective.
The bottom line is Sony isn’t going anywhere.
January 29th, 2013
@twilight.
Well good news. Looks like Sony will be in the black this quarter. PS3′s are selling better than all their competition, including the Wii U from Ninty. They’re the only console making increases and I believe we’ll continue to see that trend.
It sucks that PS3 exclusives don’t sell like the best of the best from their competition but they’re doing well enough to justify sequels so I’m happy with that. No reason to get frustrated even though I can totally relate when games I know are awesome get little love due to Sony’s poor advertising. Is what it is I guess….
January 29th, 2013
“Looks like Sony will be in the black this quarter.”
By “this quarter” do you mean Apr-Jun?
January 29th, 2013
“The bottom line is that Sony isn’t going anywhere.” I certainly hope not greenLanternfan. Some people may not care but I personally would be devastated if if Sony went under. I may not love everything that Sony does but I really do love my Ps3 aka the sexy slim beast as well as other Sony products that I own. As far as Ps3 games go, I am not saying that Ps3 games don’t sale but I am simply saying that there are many Ps3 titles that I feel that should of sold a lot more copies then they actually did.
Phranctoast,
This is some good news. I have to say that Sony has defintely earned it.
January 30th, 2013
@phranc,
Having to sell the U.S. HQ for $1.1B in order to meet a $233M net “profit” goal for the entire fiscal year doesn’t sound that “good”.
January 30th, 2013
All part of the restructuring you already agreed was a necessary means carlb……
January 30th, 2013
Sony sold its US HQ in January… It won’t be taken into account in their Oct-Dec numbers
January 30th, 2013
I was specifically talking about Oct-Dec when I said this quarter as meaning the quarter we’re about to get official data from come Feb 7th, in which news about the results have already been leaked….
Sony’s fiscal year however ends on March 31st.
January 30th, 2013
“I was specifically talking about Oct-Dec when I said this quarter”
I know you were Phranc. My post was for Carl b
January 30th, 2013
“All part of the restructuring you already agreed was a necessary means carlb……”
Dire means to an end, hopefully it translates to a profitable year instead of just one quarter, as they may not have that many more HQ’s to sell.
January 30th, 2013
They have many other things to sell
Lets see how they are doing in their 3 core business
-Digital imaging: Sony is the market leader
-Gaming: Currently outselling its competitors and has been doing so for years…2nd in market share this generation
-Mobile: Currently #5 in market share (Oct-Dec)
also: Sony Pictures led all other film companies in worldwide market share in 2012. Also was No. 1 in market share in North America.
January 30th, 2013
“also: Sony Pictures led all other film companies in worldwide market share in 2012. Also was No. 1 in market share in North America.”
You reminded me of another thing that Sony should do but different divisions don’t communicate.
Sony should advertise some of their 1st party games during Sony movies. Cost them nothing, and they can tailor it to specific audiences depending on movie.
January 30th, 2013
“Mobile: Currently #5 in market share (Oct-Dec)”
Even better, they are currently #4 in market share.
Excellent progress, though Samsung and Apple are still leading.
http://focustaiwan.tw/ShowNews/WebNews_Detail.aspx?Type=aECO&ID=201301270009
“Digital Imaging: Sony is the market leader”
Do you mean camera sales? Do you have a current link to manufacturer sales rankings worldwide? I would be genuinely interested in seeing it.
January 30th, 2013
Sony is #2 behind Canon in worldwide camera market share as of this year with about 17%.
They lead in camcorders as far as I can tell with a whopping 44%.
January 30th, 2013
http://www.android.gs/samsung-galaxy-note-2-vs-sony-xperia-z-specs-showdown/
This was interesting but while Sony won overall they lost in the OS category which is the most important IMO.
January 30th, 2013
Sony is the camera censor market leader.
January 30th, 2013
“Sony should advertise some of their 1st party games during Sony movies. Cost them nothing, and they can tailor it to specific audiences depending on movie.”
You’ve got to remember that there’s the opportunity cost of not letting somebody else advertise in that space.
It doesn’t really make a difference to the money side of things. In fact, it all works out to be the same cost really.
Though you’re right in that they could tailer it to specific audiences, but you’d think they’d be doing that already anyway..
January 30th, 2013
You’ve got to remember that there’s the opportunity cost of not letting somebody else advertise in that space.
It doesn’t really make a difference to the money side of things. In fact, it all works out to be the same cost really.”
Or rather than having seven trailers they still do and have one game. Studios movies typically adhere to the studios properties. The games are their property. They delegate how many trailers appear.
January 30th, 2013
“Sony is #2 behind Canon in worldwide camera market share as of this year with about 17%.
They lead in camcorders as far as I can tell with a whopping 44%.”
…”Sony is the camera censor market leader.”
I believe both of you, but could you please link to the source for this information? Thanks.
January 31st, 2013
Sorry. It’s a pain in the ass to do this on phone, and work filters out too much usually making most of your links unread by me so you’re always best posting as much as possible if you want it read by me.
January 31st, 2013
I was wondering why you’ve been copying and pasting multi-page articles in their entirety here lately lol. Is copying and pasting your source links really harder than copying and pasting entire articles?
January 31st, 2013
The most relevant information I could find on the subject was for Japanese sales only, which may be just a wee bit biased towards Sony to begin with, so please let me know if you find anything better:
“These are the market shares based on the camera sales number of 2012. There is no such report available in any EU or US market…
Digital camera (integrated lens)
Canon 17.6
Sony Corporation 16.5
Nikon Corporation 14.1
Digital camera (SLR)
Canon 52.7
Nikon Corporation 35.1
Sony Corporation 7.1
Digital camera (SLR mirror-less)
Olympus 29.8
Panasonic 23.3
Sony Corporation 20.1
Digital video camera
Sony Corporation 40.2
Panasonic 24.8
JVC Kenwood 18.2″
http://www.43rumors.com/olympus-is-the-leader-on-the-japanese-mirrorless-market/
January 31st, 2013
https://www.google.com/search?q=digital+camera+worldwide+market+share+2012&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a
January 31st, 2013
https://www.google.com/search?hl=en&safe=off&client=firefox-a&hs=zdy&tbo=d&rls=org.mozilla%3Aen-US%3Aofficial&q=camcorder++worldwide+market+share+2012&oq=camcorder++worldwide+market+share+2012&gs_l=serp.12…21135.24186.0.26148.12.11.1.0.0.0.203.1302.6j4j1.11.0.les%3B..0.0…1c.1.-_1lxv9gVrw
January 31st, 2013
yeah. I did the same searches and couldn’t find worldwide camera sales rankings results for manufacturers for 2012 that met your specific quotes.
January 31st, 2013
Might just have to look at 2011, as Sony’s fiscal year isn’t over until March….
Read somewhere else that they are all losing steam due to phones anyway.
January 31st, 2013
Agreed, I think it was about a 12% drop in sales overall so far. Which is fairly massive when you think about it, considering that just represents one year.
January 31st, 2013
What I read was a prediction, which is completely believable btw, but just that, and prediction.
I myself don’t see the need as much for a dedicated camera, and that’s even when I do my job…
January 31st, 2013
I mainly use mine for snaps every once in a great while (49 Palms trail and the new house last year, FB profile pic), but more often for selling things (PSP games right now) on Ebay. I still prefer it over my iPod Touch (3rd gen I think) or Ipad 2 camera, but I suspect the iPhone 5/latest iPad 3 camera, especially with something like Olloclip, would be more than sufficient for my needs.
January 31st, 2013
“FB profile pic”
Is that the really sexy one, yeah?
January 31st, 2013
too kind dans
January 31st, 2013
Well, it’s hard to turn down a guy in a mankini.
February 1st, 2013
@Carl
A whooping 37% market share. 2nd place is Canon with 12%
http://image-sensors-world.blogspot.com/2012/05/tsr-market-share-data-for-2h-2011.html
February 1st, 2013
I agree with their projection for sensors in 2012, as they won the bid and currently make the one for iPhone 5. “If you can’t beat ‘em…”