Support NeoGAF

[mckmas8808]

Might deserve its own thread:



Kind of an important thing to clarify, Sony. IJS. Would've saved a lot in terms of the doom-and-gloom discussion that has been getting pushed online the past few days

Insane to me that this isn't the number one thing Sony wasn't screaming from the rooftops.

Lol where did you pull out that false fact. Even SONY themselves said portal isnt designed to make profit nor is it planing it will happen in the future. Just because it was sold out in the first week doesnt mean they made millions of copies. Its a limited manufacturing product for a select few that want to extend their PS5 experience. Its not at profit its at a heavt LOSS.

Industry vets have done a teardown of the PS Portal and have assessed that the BOM cost doesn't supersede the MSRP of the product.

From the transcript it seems that they only expect a slight margin uplift despite the lower acquisition-related costs.

"Although the burden of acquisition-related costs will ease next fiscal year, we expect profit from first-party software to decrease slightly from this fiscal year due to the impact of the decrease in sales. Based on this, operating income for next fiscal year is currently expected to increase slightly from this fiscal year. However, while this is our base-line, we are reviewing measures for further improvement in profitability in advance of the annual financial results announcement this May."

Edit: Another piece of information that illustrates the margin concerns. Expected ROIC for FY23 drops nearly 4ppt YoY to 12.5%.

Edit 2: Went back and checked actual ROIC for past years. FY19 (pre-covid) ROIC was 35.9%. FY20 and FY21 was over 40.0%, likely from the covid tailwind. FY22 16.4%. Clear indication how increased spending is not yielding expected returns.

Edit 3: Added a chart to illustrate returns vs spending.

Bro in your own post you state that Sony says.......

Although the burden of acquisition-related costs will ease next fiscal year, we expect profit from first-party software to decrease slightly from this fiscal year due to the impact of the decrease in sales.

The issue isn't just the raising costs, but the fact that they aren't releasing those big AAA games that are decreasing the profits. How can people not see or understand this? It's not just a spending problem. Their production speed and number of releases have slowed. THAT is the bigger issue. Clearly!

 

[BobLeeSwagger]

The issue isn't just the raising costs, but the fact that they aren't releasing those big AAA games that are decreasing the profits. How can people not see or understand this? It's not just a spending problem. Their production speed and number of releases have slowed. THAT is the bigger issue. Clearly!

We are on a gaming forum, no one cares about the bottom line. Revenue and active users are obviously the metrics that gamers care about.

 

[Bulletbrain]

Bro in your own post you state that Sony says.......



The issue isn't just the raising costs, but the fact that they aren't releasing those big AAA games that are decreasing the profits. How can people not see or understand this? It's not just a spending problem. Their production speed and number of releases have slowed. THAT is the bigger issue. Clearly!

It's all interconnected. Increased dev times also lead to higher costs: more days than what was initially planned for a project means more Dev salary costs being allocated to said project, increasing its budget. It's a form of cost overrun. It's a form of inefficiency and has a real impact on spending Vs return.

 

[Raonak]

We are on a gaming forum, no one cares about the bottom line. Revenue and active users are obviously the metrics that gamers care about.

Also, potential profits that are reinvested into growing the company is a good thing.

 

[mckmas8808]

It's all interconnected. Increased dev times also lead to higher costs: more days than what was initially planned for a project means more Dev salary costs being allocated to said project, increasing its budget. It's a form of cost overrun. It's a form of inefficiency and has a real impact on spending Vs return.

Yeah but not releasing a game like TLOU: Factions is hurting Sony BIG time! That was supposed to be a 2024 game. Nobody seems to remember that.

 

[Mibu no ookami]

Well, they went from VR development to GaaS, so I wasn't expecting much of them being shown anytime soon. Especially with Bungie's live service center of whatever that most likely slowed down everything.

Thoughts?

 

[nial]

Thoughts?

I would say it's much bigger news than London Studio closing and something totally unexpected for everyone.

 

[Mibu no ookami]

I would say it's much bigger news than London Studio closing and something totally unexpected for everyone.

Are you serious?

My guess is that Totoki is planning generally 10% across the board cuts at all Studios (likely dependant on current profitability and potential) and planning on closing a studio or two.

Studios that are likely to be closed: Media Molecule and London Studio. With runners up being Bend Studio

 

[nial]

Are you serious?

I won't deny your great insight on the matter, but is 10% of each studio workforce really ~900 employees?

 

[Mibu no ookami]

I won't deny your great insight on the matter, but is 10% of each studio workforce really ~900 employees?

Including the closure of an entire office? Probably.

You have studios of varying sizes and as I mentioned the 10% would be largely dependent on the individual studios' profitability.

Insomniac, Naughty Dog, and Guerrilla of the three largest studios in the company and they probably got significantly more than 10%

 

[Mibu no ookami]

I won't deny your great insight on the matter, but is 10% of each studio workforce really ~900 employees?

It's being reported as 8%.

I think I was once again pretty prophetic here.