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[Son of Godzilla]

From the Sony earnings PDFs, broken down into both quarterly and full year results (taken from my spreadsheet which the earnings post is based on). R (Day) is the exchange rate given on the day of the earnings release to convert JPY into USD. $bn (C) is the calculated value based on the R (Day) exchange rate and $bn (R) is the reported value from the financial reports (they're the same in this case, but weren't always reported in dollars). The sums are the bottom are the quarterly values combined for a comparison with the reported / calculated full year values.

Maybe I'm just dense, but I don't see how those numbers mesh with the releases at http://www.sony.net/SonyInfo/IR/financial/fr/index.html at all. I mean, even the exchange rate and whether there was a friggin profit or loss are different.

 

[itxaka]

Gaming division is not at risk. Gaming division is not going anywhere. Restructuring ... maybe. Most companies today are going through restructuring plans.

SCE is part of SE. Its a division. The division is not doing well, thus the need to re-structure, re-org, and re-launch (if this happens). Same Sony ... but just a bit thinner.

SCE is NOT GOING ANYWHERE!

They can kill SCEE. Probably no one in europe will give a shit about them, me the first to celebrate it and start buying all my games online

 

[Woo-Fu]

worst case maybe sony will start charging for PSN >.>

They can't start charging for PSN features that are already advertised on existing games. Well, they could try and get massively sued quite quickly.

 

[Private Hoffman]

Only thing that I think will happen is they'll cut first party spending, and not lower the price of the PS3 anytime soon.

That's all it means for gaming IMO. Also I suspect they'll cancel financially non viable games like the new Team Ico game, you heard it here first.

Team ICO isn't a big studio, and it's been producing quality titles.

Sony is a company that tends to fund projects that do well critically, even if they aren't instantly successful commercially.

Team ICO has become a proven developer for Sony Japan, and its popularity will only increase in the coming years. That's not something you cut off.

IMHO, the projects that you "cut off" are the riskier endeavors; the getaway, 8 days, heavenly sword...that sort of thing. They already have Infamous for their open world title...they already have Uncharted for their third person shooter title...they already have God of War 3 for their action adventure title...all of these projects are redundant. It's no wonder that Heavenly Sword 2 wasn't developed (even though they claim Sony offered to fund its development...I'm not so sure about that).

Sony should be looking towards projects that are either top-notch (Killzone 2, GT5, God of War 3, etc), or looking to broaden their lineup with projects that could potentially break new ground in an industry that has largely stagnated (LittleBigPlanet, Eye Pet, etc). TEAM ICO projects tend to fit into the latter category, and they're not gigantic expenses anyway.

 

[Jinfash]

They can kill SCEE. Probably no one in europe will give a shit about them, me the first to celebrate it and start buying all my games online

What the fuck is that supposed to mean?

You know SCEE makes loads of games? Games targeted at Europe? You know Sony's biggest market?

Who's gonna do Localisation for Europe if SCEE is killed? Americans? Japanese :lol :lol

 

[Stoney Mason]

Here we go again.

I've stated this a million times in the MS threads and now it's gonna be in the Sony threads.

Losses are not cumulative in the way I am perceiving people here understanding it. The loss is only per fiscal year -- that's the running total and once a new fiscal year starts, the loss counter resets at $0. (for the purposes of our discussion in this thread) So, but this virtue, the division isn't "approaching $4bn in debt" for these purposes, they're only as much in debt as they are in the current fiscal year.

That being said, "cumulative losses" are important to look at with respect to trend and severity of that trend. If the losses are getting smaller as time goes on, well, being in the red isn't a good thing, but it is an encouraging trend and means the, as the losses decrease quarter per quarter, any particular division's exposure to major restructuring is far more minimal than to other divisions who aren't trending upward or who are flat, but in the red. REGARDLESS OF HOW WELL OR BADLY THEY HAVE DONE YOY for however long you're looking at.

That being said, global economies are looking pretty crappy now and companies will look at ways to streamline operations to minimize losses/maximize profits in the months/quarters ahead. That's the reality, because there will be generally less revenue overall, liquidity will be lower because share prices are down, etc. Not because any particular division of any company is "in debt" because that concept does not apply in the discussion we are having.

so to recap... if I'm reading the numbers earlier in this thread right, the gaming division is consistently losing LESS money each quarter than the quarter which proceeded it. this indicates that the gaming division will be looked in a more positive light than a division who is not trending upwards. but again, let me caution and reiterate the previous paragraph, that does not mean the gaming division would be immune to cost cutting procedures to get it into profitability quicker. in addition, profitability also seems a bit harder to reach than before given the current economic climate.

This. Quoted because its one of the few posts that actually makes sense in this thread.

 

[firex]

first on Sony's firing block: Wollan and Private Hoffman for their negative impact on sales.

 

[Parl]

Panasonic's profits are down 90% and Toyota made first ever loss. The strength of the yen is seriously hurting every Japanese company.
The yen has gained 40% in the last few months compared to the dollar/euro wiping out huge portion of every profit and amplifying every loss.

Even Nintendo have revised their profit forecast down to a conservative "giggling all the way to the bank" because of the strong Yen.

 

[spwolf]

What the fuck is that supposed to mean?

You know SCEE makes loads of games? Games targeted at Europe? Youn know Sony's biggest market?

Who's gonna do Localisation for Europe if SCEE is killed? Americans? :lol :lol

he will buy his games made by SCEE from SCEA, at discount, when SCEE is "shut down"? I dont think he realizes that SCEE makes a lot of games, such as upcoming KZ2 :lol

 

[Jinfash]

Or Wipeout :lol

I don't think he knows what he's talking about.

Also SCEE makes Buzz, which is very big in Europe. Plus all the localisation that's needed for the European market, fat chance that Americans or Japanese can do that.

 

[itxaka]

What the fuck is that supposed to mean?

You know SCEE makes loads of games?

Im not meaning the dev houses, I'm meaning upper management guys. The ones that recommend bittorrent or waiting for games 6 months.

 

[zaidr]

So can we get a wrap up of what went wrong in the OP as compared to Psychotext's numbers?

From what I've gathered, for the last 2 years (Q2-2006 to Q2-2008), Sony has an operating loss of 3+ billion (approaching 4 billion).
The problem with the initial 5+ billion number was that the OP was taking into account the Q4 cumulative number (for the year) as its own quarterly loss.

What I don't get still is what arne is saying. No one is saying that the individual quarter to quarter losses are cumulative, but that they are adding the quarter to quarter losses together to get the net operating loss. If thats not what you're saying, please indicate.

I can get that YOY profits/losses are reset every Q4, but is it not helpful to look at the net operating loss? I think you're getting held up on syntax. Sure you are talking about trends and others are talking about overall totals, but that doesn't make the overall numbers wrong.

 

[Jinfash]

Are you talking about Nintendo or Sony here? As far as I've seen most Sony games release pretty much on time here. Not that it matters because PS3 is region free so if something is released later you can import it if you really want.

 

[arne]

What I don't get still is what arne is saying. No one is saying that the individual quarter to quarter losses are cumulative, but that they are adding the quarter to quarter losses together to get the net operating loss. If thats not what you're saying, please indicate.

I can get that YOY profits/losses are reset every Q4, but is it not helpful to look at the net operating loss? I think you're getting held up on syntax. Sure you are talking about trends and others are talking about overall totals, but that doesn't make the overall numbers wrong.

I'm going to oversimplify here, but to get my point across.

Nobody in any management position is going to go "oh my god we've lost nearly $4bn in 5 years, how are we ever going to make that up?!" and then make short or long term financial decisions based on recouping this notion of debt. it's written off as a loss, game over, next game starts new fiscal year.

they are going to go "oh my god we've lost $X amount THIS YEAR and we're still losing money, how do we stop the bleeding and return to profitability next quarter/year and continue that growth for X undetermined time (typically i believe it's 5 years at a time) so that our share prices continue to raise and we grow the business" and then, first they're going to make decisions that will bring them into the black in the short term (because of shareholder pressure most likely) but continue on whatever long-term plan that takes them and puts them in the black.

 

[Steroyd]

They can kill SCEE. Probably no one in europe will give a shit about them, me the first to celebrate it and start buying all my games online

No one in Europe except the EUROPEANS.

Im not meaning the dev houses, I'm meaning upper management guys. The ones that recommend bittorrent or waiting for games 6 months.

upper management guys = SCEE... okay. ('o')

 

[zaidr]

they are going to go "oh my god we've lost $X amount THIS YEAR and we're still losing money, how do we stop the bleeding and return to profitability next quarter/year and continue that growth for X undetermined time (typically i believe it's 5 years at a time) so that our share prices continue to raise and we grow the business" and then, first they're going to make decisions that will bring them into the black in the short term (because of shareholder pressure most likely) but continue on whatever long-term plan that takes them and puts them in the black.

I can get that YOY profits/losses are reset every Q4, but is it not helpful to look at the net operating loss?

So....no. heh.

 

[Segata Sanshiro]

I'm going to oversimplify here, but to get my point across.

Nobody in any management position is going to go "oh my god we've lost nearly $4bn in 5 years, how are we ever going to make that up?!" and then make short or long term financial decisions based on recouping this notion of debt. it's written off as a loss, game over, next game starts new fiscal year.

they are going to go "oh my god we've lost $X amount THIS YEAR and we're still losing money, how do we stop the bleeding and return to profitability next quarter/year and continue that growth for X undetermined time (typically i believe it's 5 years at a time) so that our share prices continue to raise and we grow the business" and then, first they're going to make decisions that will bring them into the black in the short term (because of shareholder pressure most likely) but continue on whatever long-term plan that takes them and puts them in the black.

so basically sony is doomed and the ps3 has no good games

 

[zaidr]

so basically sony is doomed and the ps3 has no good games

great edit. you didn't get your point across well enough with just "doomed". :lol

 

[lowlylowlycook]

Yes because the previous 2 years are indicative of the next 7-10 years.

There has always been a massive investment during the start of each console cycle from Sony. No one is going to argue that Sony probably spent way too much on the PS3, however what's done is largely done; Sony had to keep the PS3 afloat during its first few years taking on massive losses on the hardware.

Now that the PS3's manufacturing costs have come down considerably, and Sony hasn't dropped the price further for this quarter, they are looking to get back in the black for their gaming division. They shouldn't be too far removed from that reality.

In other words, just because the previous 2 years saw massive losses doesn't mean that, going forward, the gaming division will continue to bleed like that. In fact, if anything, if Sony manages to continue cutting costs further, then their gaming division may actually be one of the better divisions of Sony. The problem is that they may not be able to drop the price as much as they want to in order stop the bleeding from Sony as a whole, but certainly I wouldn't expect the gaming division to be anywhere near the axe compared to some of their other divisions.

Well the money spent on launching the PS3 is a sunk cost, sure. But how can they move to profitability as long as they are in a price war with Microsoft? Only by losing yet more marketshare thereby making the PS4 yet more difficult to get off the ground.

Thing is, the PS4's development costs are not yet sunk.

 

[Psychotext]

Maybe I'm just dense, but I don't see how those numbers mesh with the releases at http://www.sony.net/SonyInfo/IR/financial/fr/index.html at all. I mean, even the exchange rate and whether there was a friggin profit or loss are different.

What are you struggling with? Maybe if you point out examples I can help you.

For instance, are you looking at the figures for the whole company? Revenue vs operating income?

 

[arne]

so basically sony is doomed and the ps3 has no good games

exactly and now we can finally be reunited for the first time in console heaven segata! we can then enjoy our dead, before they went third party, consoles in peace, away from the squabbling of internet forums.

 

[LiquidMetal14]

Good luck to them getting back on track. If it ain't meant to be then we have other venues to enjoy some great games. Let's see where they are this time next year. The games are certainly coming.

 

[Segata Sanshiro]

exactly and now we can finally be reunited for the first time in console heaven segata! we can then enjoy our dead, before they went third party, consoles in peace, away from the squabbling of internet forums.

but then who shall I explodo?

Sadly my friend I must remain earthbound, doing the Lard's Work, until the last fool is exploded.

 

[Mashing]

I can safely say I thought I'd never see the words "sacred cow-slaying" in a news post.

 

[tribal24]

gaf never change-_- wasnt this a off topic thread

 

[arne]

but then who shall I explodo?

Sadly my friend I must remain earthbound, doing the Lard's Work, until the last fool is exploded.

ah well, well maybe my job will be safe until the last fool is exploded. give me a ring then.

 

[SimpleDesign]

Well the money spent on launching the PS3 is a sunk cost, sure. But how can they move to profitability as long as they are in a price war with Microsoft? Only by losing yet more marketshare thereby making the PS4 yet more difficult to get off the ground.

Thing is, the PS4's development costs are not yet sunk.

Sony is kind of fucked either way when it comes to pricing the PS3. Microsoft has them by the balls right now with their $199 model and Sony is still apparently losing money on each PS3 sold.

So what can they do? Lose a ton of market and mind share to Microsoft by keeping it's current price or cut price and lose even more money while still ending up in third place.

Keep in mind this scenario has been a Microsoft wet dream since 2001. Even if dropping the price of the Arcade to $149 makes them lose a bit of money on each one sold, Microsoft will still do it to put even more pressure on Sony to drop price and lose money.

 

[Crisco]

Seriously guys? You're going to throw down over a worst case scenario interpretation of an unsubstantiated rumor? Let me break it down for you: Playstation isn't going anywhere. It took 3 generations of losing consoles to put down Sega, who is a gnat in comparison to Sony. MS took a $6 billion bath on Xbox, and they aren't nearly as used to absorbing losses of that magnitude as Sony. Yet, Sony is going to cut off a brand that has been a decade long success story over 2 years of lagging sales? I know all the Nintendo fans and Sony haters are furiously masturbating over the idea, but it's never going to be anything more than a wet dream. Jesus christ you people are fucking insane.

 

[Xapati]

gaf never change-_- wasnt this a off topic thread

Yes and the OP was being egged on to post it here to generate drama. So far it's all been going according to the keikaku.

 

[Brimstone]

Nobody in any management position is going to go "oh my god we've lost nearly $4bn in 5 years, how are we ever going to make that up?!" and then make short or long term financial decisions based on recouping this notion of debt. it's written off as a loss, game over, next game starts new fiscal year.

There is no such thing as a free lunch. A high debt level is like a boa constricter around the body of Sony. It becomes more expensive to borrow money (higher intrest rates) as the red ink builds up into a sea of crimson.


If Sony doesn't meet their commitments, bond holders can pull the plug on Sony. Bonds aren't issued with no conditions. If Sony is near to violating their terms with the bond holders, Howard Stringer is sweating bullets.

 

[Wolves Evolve]

This is a question to arne and more knowledgeable Gaffers than I: So, given your excelllent post above and some rudimentary research about how the basics of corporate finance, we cannot say that Sony's gaming division is 'in debt 4 billion dollars'. But is it correct to say that, over the given period, Sony's gaming division has lost 4 billion dollars, with the provisos you've given about the role of quarters in determining profitability?

Given that the gaming division is losing less money, that would be encouraging. Though we understand that the high-risk nature of the games industry and Sony's current position still poses a risk to its viability, even given the track record of success. If shareholders see games as a bad business for Sony to be in, then thats the danger zone. So what we're really looking for are diagnostics of the current trend that would lead to specific cuts inside Sony gaming, rather than some apocalyptic end-of-Sony. Unless Stringer has it in for the games division and needs to make his mark, in which case there's more danger.

 

[lowlylowlycook]

So a lot of people have been talking about Sony's 1st party publishing.

Do people really think they could be profitable while 3rd party publishers struggle to make money selling to the larger PS3+360 install base?

I guess it depends on how Sony handles the internal accounting for pack-ins.

I really wish Sony would break things down to this level in their annual reports.

 

[SkySonata]

Sony announces temporary cuts and informs employees they will be hired again once Sony finishes cleaning up their financial mess.

Stringer takes $1 pay for the entire year. Forgets to take lots of stock to make up for the drop in income.

Sony drops all future Home support and leaves it as is. Home soon becomes hacked to hell and back, becomes apartment complex of porno theatres and private snuff meetings.

Nintendo and Microsoft both give $1 billion each to Sony to help it get back on its feet.

Sony's creditors forgive half of all debt. Sony throws thank you party and cries "You guys are so sweet!"

Bluray drops in costs, as well as PS3 manufacturing costs. Team ICO makes another great game, LBP2 is marketed properly and is a million hit, Killzone2 sells respectably, FF13 finally hits, Sony gaming division is spared.

Kutaragi is seen walking barefoot near a beach in sunset, clad in his hood-rich Hawaiian shirt and disheveled business pants, lifting a thumbs-up in the direction of Sony headquarters.

 

[squatingyeti]

Yes because the previous 2 years are indicative of the next 7-10 years.

There has always been a massive investment during the start of each console cycle from Sony. No one is going to argue that Sony probably spent way too much on the PS3, however what's done is largely done; Sony had to keep the PS3 afloat during its first few years taking on massive losses on the hardware.

Now that the PS3's manufacturing costs have come down considerably, and Sony hasn't dropped the price further for this quarter, they are looking to get back in the black for their gaming division. They shouldn't be too far removed from that reality.

In other words, just because the previous 2 years saw massive losses doesn't mean that, going forward, the gaming division will continue to bleed like that. In fact, if anything, if Sony manages to continue cutting costs further, then their gaming division may actually be one of the better divisions of Sony. The problem is that they may not be able to drop the price as much as they want to in order stop the bleeding from Sony as a whole, but certainly I wouldn't expect the gaming division to be anywhere near the axe compared to some of their other divisions.

Great, glad we've established this idea Hans. Now you will never repeat some of the nonsense you have about MS taking losses. On MS' side they not only have the potential future gains they looked at, but also the cost of inaction (which you've shown time and again to not have a clue about).

Oh yeah, welcome back, don't stay long and keep trying to hide from your perma-ban. :lol

 

[Y2Kev]

nevermind

 

[AndyD]

Yes and the OP was being egged on to post it here to generate drama. So far it's all been going according to the keikaku.

And in Japanese, keikaku means plan!!

 

[jett]

Well, as a PS3 owner, now I'm getting kinda worried about my purchase.

 

[Segata Sanshiro]

In all seriousness, Sony isn't a company that gives up on a business sector easily, particularly one where they've demonstrated an ability to generate a lot of money. That they've taken a complete bath on the PS3 doesn't change the fact that there's a lot of money to be had in the video game industry and more often than not Sony has shown themselves to be fairly adept at grabbing a pretty big chunk of that money. That's the sort of thing that helps shareholders sleep well at night.

I think the only risk of Sony leaving the video game business is if Sony completely and utterly fails to exist as an ongoing concern, which is a ridiculously unlikely outcome in any reality.

 

[FirewalkR]

Hey guys what's going on?

 

[Segata Sanshiro]

I mean, except the reality where Y2Kev got that pony he wanted for Christmas. All sorts of bad shit went down in that reality, as many of us know, and that's why it had to be eradicated from Possible Space.

 

[lowlylowlycook]

Sony announces temporary cuts and informs employees they will be hired again once Sony finishes cleaning up their financial mess.

Stringer takes $1 pay for the entire year. Forgets to take lots of stock to make up for the drop in income.

Sony drops all future Home support and leaves it as is. Home soon becomes hacked to hell and back, becomes apartment complex of porno theatres and private snuff meetings.

Nintendo and Microsoft both give $1 billion each to Sony to help it get back on its feet.

Sony's creditors forgive half of all debt. Sony throws thank you party and cries "You guys are so sweet!"

Bluray drops in costs, as well as PS3 manufacturing costs. Team ICO makes another great game, LBP2 is marketed properly and is a million hit, Killzone2 sells respectably, FF13 finally hits, Sony gaming division is spared.

Kutaragi is seen walking barefoot near a beach in sunset, clad in his hood-rich Hawaiian shirt and disheveled business pants, lifting a thumbs-up in the direction of Sony headquarters.

I agree with all of this but you seem to have forgotten that FF13 went multi. :lol

 

[Touchdown]

Sony going 3rd Party Confirmed??!!!

 

[Barrett2]

Hey guys what's going on?

Throw your PS3 out the window; the jig is up.

 

[arne]

There is no such thing as a free lunch. A high debt level is like a boa constricter around the body of Sony. It becomes more expensive to borrow money (higher intrest rates) as the red ink builds up into a sea of crimson.


If Sony doesn't meet their commitments, bond holders can pull the plug on Sony. Bonds aren't issued with no conditions. If Sony is near to violating their terms with the bond holders, Howard Stringer is sweating bullets.

fair enough and generally true as Sony as a whole needs to pay back all their bonds, corporate loans, etc. of course and so on to operate and maintain liquidity, etc.

However, that and the report is about Sony as a whole, but this discussion in this thread has been around the GAMING division, and I'm discussing only how people choose to interpret the gaming division numbers, which is generally incorrect.

(which, if you look, despite all the doom and gloom, and trending towards a positive cashflow, just not maybe fast enough for shareholders/execs/beancounters/etc.)


plus this:

I think the only risk of Sony leaving the video game business is if Sony completely and utterly fails to exist as an ongoing concern, which is a ridiculously unlikely outcome in any reality.

 

[Y2Kev]

I mean, except the reality where Y2Kev got that pony he wanted for Christmas. All sorts of bad shit went down in that reality, as many of us know, and that's why it had to be eradicated from Possible Space.

You bitch. She was real and I rode her and we were married!!!!

Really, guys, I feel like you do this to yourselves. OP posts thread, the concern is addressed within 2-3 posts (Sony: No, we're not, shut up), but then you catch hold of some troll and you argue with the troll until you are blue in the face. At which point you look like the crazy people. If you ignore trolls, they die. A bunch of trolls trolling each other gets lame reaaal quick.

 

[FirewalkR]

A bunch of trolls trolling each other gets lame reaaal quick.

Unless you're a troll!! Then it's cozy.

 

[Panajev2001a]

The problem with video store launching in Europe is all to do with licensing and classification of films for all countries in the EU.
Films were released and licensed by totally different companies in each EU country and trying to get this sorted for every release is logistal head-ache. Then the films have to be classified into age group and accessed by the film censor in each EU country.
Its a huge undertaking, nowhere as easy as releasing films on US PSN store.

Microsoft managed to do it earlier than Sony, the Live Video Marketplace already launched in EU (Italy too ) on November 19, 2008.

Again, Sony is late... an OS+SW company beating it in an area where Sony invests lots of money each year.

MS had to go through the same issues and worse licensing wise, Sony could not even launch a Video+Music store on EU PSN using its own content it produced and has license to (I am sure Sony must own some of the content it makes and sells on the EU iTunes stores ).

 

[LegendofJoe]

Panasonic's profits are down 90% and Toyota made first ever loss. The strength of the yen is seriously hurting every Japanese company.
The yen has gained 40% in the last few months compared to the dollar/euro wiping out huge portion of every profit and amplifying every loss.

Yep, and if these conditions continue Japanese publishers will begin to focus much more on their domestic market. Publishers like Nintendo and SE who already do well in Japan don't have as much to worry about. Regardless though any Japanese based business is going to suffer as a result of the current ridiculous trading value of the yen.

 

[FirewalkR]

Microsoft managed to do it earlier than Sony, the Live Video Marketplace already launched in EU (Italy too ) on November 19, 2008.

WHERE IS SONY?!?

Oh c'mon now you're being naïf. It's not like Sony has a movie division or something. They know nothing regarding movies and stuff. Cut them some slack.

 

[Yazus]

Sony. Stop relasing SKU. Only one SKU:
40GB
One USB Port
WiFi
One Controller
No PS2 retrocompatibility
349$, 399$ with LBP Bundled

Also, Order Team ICO to make a MMORPG, a massive one, exclusive for PS3, a REALLY BIG ONE. A JRPG meant for japanese people, start getting the trust of japanese again. Then think about Europe and America. Start paying massive money for exclusivity of BIG GAMES. Who the fuck cares if you get exclusivity of games like Pony Games. Get exclusivity of JRPG. Gather as much as JRPG you can get.