Sony still losing money on the PS3 Slim. Earning it back on accessories and games

27 August 2009

Posted by:Ferry

Sony has always priced the PlayStation 3 console below its production costs, even at the originally high retail prices between $600-$500 to $400 more recently.

As a result Sony made a loss of $3.32 billion on PS3 hardware sales from the 2006 launch up to Q1 2008. Since then, they’ve been working hard to shrink both the PS3′s internals and related production costs. Last week the company finally announced the result of their endevours: the PS3 Slim. Which allows them to cut the price of the system down to $300 worldwide.

While losing money on hardware has long been accepted in the media industry as a way to gain footing and later earn back the loss through software profits. Will that still be the case with the PS3 Slim?

Sony Computer Entertainment boss Kazuo “Kaz” Hirai answers that question with: “If you’re just talking about the hardware alone, the quick answer is yes. That makes good headlines, but I don’t actually know that that’s the true nature of the business that we’re all in, whether it’s PlayStation, Xbox or the Wii. I think the better indicator is to look at the business as a whole platform, to ask: are you profitable in terms of the hardware, software and peripherals. And the answer to that question is yes on a gross profit level since the last fiscal year.”

But his console statement isn’t entire correct. The Xbox 360 may have started out as a money-loser, but Microsoft is said to be breaking even on every Xbox 360 sale, and Nintendo has made a tidy profit on each Wii sold since launch. Good to know their business model at least turned profitable a year ago. At least now we know why extra PS3 controllers are so light in your hands yet heavy on your wallet.