PlayStation 3 may never turn a profit, developer says

I suspect both successors to Xbox 360 and PS3 will be priced at a breakeven or profitable level (with more game-focused feature sets). Although we all like the idea of Jack-of-all-trade Xbox 360 and PS3 systems, most of us find even these heavily discounted prices to be on the expensive side. Non-gaming features (e.g., DVD/Blu-Ray playback, media extender, web browsing) can be sold as add-ons.

So SONY has become Microsoft. Except for one quarter of Halo-driven sales, Microsoft's Entertainment and Devices division has consistently lost money. Why do they (Microsoft and SONY) continue this ridiculous path? Both companies are lumbering old-school behemoths that will do whatever it takes to win at any cost. If that means running divisions at a loss in order to buy market share, so be it. They're like two neighbors that keep buying more expensive cars to outdo the guy next door. Meanwhile, a few doors down, their more practical neighbor just keeps driving his sensible midsize sedan, running a profitable business and laughing at the dinosaurs as they swing their d**ks around and get out the measuring tape.

Lotsa, that is a fantastic parallell! I've never actually laguhed out loud at a post here before! Genius!

The gaming device market has been run on a model of "lose money on the console and make it up on run-time licenses from the games - both 1st party and 3rd party" ever since Nintendo brought that model to the market. Sony added to it with "and consider some of the loss a way to get penetration for our proprietary BluRay DVD format and make it up on the disc license fees"

DRWAM Maybe. It was a multi-billion dollar gamble that involved a lot more than just PS3. Whether it will make up the costs is still up in the air and Sony burned a LOT of bridges in a lot of industries at a time when over the air distribution may make BluRay obsolete before it pays off. Honestly, I'm not sure whether the Sony victory will turn out Pyrrhic. It's too early to know with too many variables.

I really don't agree that Sony and MSFT are going to move away from the "jack-of-all-trades" approach to these systems. In fact, I think the next Xbox and Playstation will aim even higher. These guys are making a gaming system first, sure, but they are really after getting their entire entertainment platforms into the living room. The whole idea of the the entertainment division as far as MSFT is concerned is getting sales on movies, tv shows, and acquiring Media Center users locked into Windows. If they have to do this through a game system, so be it, they will make some games too and loose a bit on the hardware. Expect the next big consoles to be more media focused than this generation, just as this generation took it way beyond the original xbox and the PS2.

excuse the re-post... but... Off Topic... I'm producing all the promotion for the Video Game Awards on Spike this year and would love to hear from anyone that's a gamer and has an opinion on the show and what was noteworthy in gaming this year. We're brainstorming ideas for stuff we could do online and possibly in Xbox Live beyond just the on-air commercials. I'll also repost this in the PS3 thread as it's more relevant there. Feel free to use the messaging system on paul's site to ping me with thoughts and ideas.

Sony is going to make a killing off of Blu Ray. Blu Ray is probably the last great physical format for things like movies. Over the air will kill off any chance of another physical format to dominate past Blu Ray. However right now over the air is in its infancy. Broadband speeds are just to slow and prices to high.

@shark - For the most part, I agree with you on the XBox 360. My primary use is as a Media Cener extender...bt the daughter and her friends use it a lot. She didn't take it to college with her, so maybe I'll try some of the games...but I am probably too old and and slow to fare very well at games like Halo. wouldn't mind trying some of the driving games.. After reading Paul's series on MC extenders, I may begin to look at those...but I think that I will wait until one comes out with Blu Ray...since it is the next gen video disc format. --tayme

I think that both Sony and Microsoft made foolish decisions with the processors. That alone jacked up the prices of both systems and opened the door for Nintendo. Why the heck did Microsoft go with the Power PC processor? Did Sony really need the Cell processor? Why not stick with Intel and AMD? Even Apple had the common sense to switch to Intel. If both console makers had done it with the processors on the market, the systems would have fared better. I think Sony is shooting itself in the foot. They might make a great amount of money on Blu-Ray, but debt is debt. It kills your ability to do more. Also, the kinks in digital distribution will be solved. Sony's been on the slide for a long time. Along with upcoming next generation broadband services or improvements, the ISP's that are enforcing bandwith caps will be faced with those networks who don't. Right now Verizon is not placing bandwith caps on its DSL or FiOS. AT&T is not on its DSL or its U-Verse. Personally, I'd tell everyone in Beaumont and other places to switch off Time Warner and Comcast in those regions. With services like Hulu, Live Mesh, YouTube, TV networks, and other content services, the need for greater bandwith is going to go way up. Throttling down for 1 percent of bandwith hogs isn't going to make up for greater demand. Instead of massive U.S. CEO pays, bring the management pay levels down and reinvest in more robust network capacity or next generation broadband distribution. AOL tried to limit bandwith back in the day and we know how well that went for them. Comcast is paying a penalty for its throttling down of torrents. The current methods might work in the short term, but in the long term they are merely fighing an inevitable outcome. More people will be caught paying more and consumers will switch off to networks who keep broadband truely unlimited. I also agree that there should be add on accessories to video game consoles. Accessories have worked very well with PC's and could be an effective life extender for future consoles. Upgradeable memory, storage/HDD, and others can work. I just wish they'd do that with notebooks more than they are.

Still I reckon the days of people willingly downloading 50+gigs are at least 5 years away in most western countries, and possibly even more. Also, as a data backup medium, bluray is excellent. We fuly intend to get a bd burner next year as our main archiving for video projects. At the moment it's just too cumbersome to have to split them acros several dvds.

DRWAM "I had read somewhere that Comcast lost a lawsuit that would not permit them to cap bandwith. Either way, I plan on trying FiOS [triple play] and may cancel Comast TV and probably Internet if it all works out. Two of my buddies tell me FiOs triple play works well. I just don't trust Comast well enough to try their phone service for the triple play." Something Mac and PC users can agree on is that FIOS is great. I've had it since the day in became available in Northern VA and I just love it. Comcast (and to a lesser extent, Direct TV) are fighting back and the war seems to be centered on who can provide the most HD programming, both in live channels and VOD. The Verizon DVR is a horrible Motorola unit, but soon you'll be able to buy fancier cable cards (M-cards, so called) and use a Tivo. The "router" they give you is this strange Actiontech thing that has BOTH ethermet and coax connections, and, as a router, it is a mess, but it does work. These are minor quibbles. The punchline is that you can't beat the fiber network.

Thanks Chuck, I'm definitely going to get FiOS Tripole Play and at least dump Comcast Cable TV. In time, I'll dump it's internet, which my company pays right now, but I own the compant, so I'm paying any way. As I posted before, I must get over the trauma of giving up my Comcast email accounts that I have for 7 or 8 years, starting when they were @Home. Then, I'll reimburse myself the $45 every month to pay for triple Play. Has anyone tried the online games that internet comapanies provide, like Comcast?