Will The Playstation 3 Save Sony?
After Sony said that they would be cutting jobs, Katsuhiko Mori, fund manager at Daiwa SB Investments, said in an interview with the BBC: "Sony doesn't have any core businesses that generate stable profits". But will the Playstation 3 help Sony?
Although some people may point out that since the Playstation 3's release in 2006, the console hasn't actually made a profit, and this is because of the simple fact that Sony are selling the console for less than it costs them to make it. And it's been that way since the consoles release back in 2006. Sony dropped the price on purpose so that they could break into the market at the time.
However, it may seem odd, but Sony has use this tactic every time they have released a console, even though the competition was tough, they did it with the Playstation 3.
Their plan is that they release a high spec console at a loss which will last for many years and eventually turn them in a profit. But can it work this time? With high pressure price reductions of the Xbox 360, and the new market of the Nintendo Wii, will Sony manage to cope and make enough money to cover their losses?
The dilema is that Sony will not reduce the price of the console until they start making a decent profit. But as the consoles prices is alot higher than the competition, they won't get a huge proportion of the console sales, which, in turn will cause them to lose money for longer.
Although it all sounds a bit down and bleak for Sony, they do have one upside, Blu-ray. It was lucky for Sony that Blu-ray came out on top of the DVD battle. If HD DVD has won, it would have been alot worse for Sony.
So, currently, it's not looking good for Sony, and with their release of Playstation Home being criticised by Microsoft and founder of EA, Trip Hawkins. Both of them have said that their latest attempt at creating a social community is outdated and not directed.
Senior manager at Xbox 360 game console division, Aaron Greenberg, said: "When they unveiled it, it seemed innovative. I think what’s happened is now here we are a couple of years later and we feel beyond that. It feels like 2005 tech in 2008.”.
Hawkins said: "I can't tell if they're going towards this mass market idea…or if they’re being lured into essentially trying to compete with Warcraft or Second Life”.
After Sony has spent alot of time and money on their new online community, it has just been shot down, personally to me it just seems like an idea of earning money, there are several things within the new world that requires money to buy, and they also have sections of the world which are sponsored by different companies like Red Bull. I'm sure that all gamers don't want to have to walk around while being spammed with adverts.
Overall, it's not looking bright for Sony, they are relying on Playstation 3 sales to increase so that they can make a profit, but as the price is very high, it turns many buyers off, but they won't reduce the price until they make a decent profit. Who knows where Sony will be if their console doesn't sell more.
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