Here’s a tidbit from Sony’s recent investor conference call that everyone but TotalVideoGames apparently missed: The Playstation 3 is roughly 70 percent cheaper to build than it was at launch.
This is according to Nobuyuki Oneda, Sony’s executive vice president and chief financial officer, who provided the figure when pressed by investors. More than any of the rumors we’ve been hearing ad nauseum for months, this is the best indication that the Playstation 3 will have a lower price tag this fall.
Nonetheless, it was only a few weeks ago that Sony’s chief executive, Howard Stringer, said the company would lose money on every console sold if the price were lowered. Both claims can’t be right, so one of these Sony execs doesn’t have his facts straight.
Sony hasn’t disclosed the PS3’s original manufacturing cost, but a couple estimates have pegged the number at $800 at launch, dropping to $400 in January 2008. iSuppli’s estimates from last December said the console costs $448.73 to build, so there’s room for error in the unoffficial estimates.
But let’s just say the PS3 build cost was $800 per unit initially. Knock off 70 percent and you’re left with $240 per unit. That means Sony not only gains from each console sold at $400 each, it can afford to bestow the now-mythic $100 price drop and still profit.
Not that a price cut would surprise anyone. Game publishers have on several occasions raised their cries for a cheaper PS3 to a crescendo. The logic says more console sales equals more game sales, but Sony has always insisted it can’t take the hit up front.
The problem is, both console sales and software sales were down last month, and Sony is taking huge losses. There will eventually come a point where it’s more economical for Sony to invigorate both sides of the equation than to keep maxing out earnings on console sales alone. I think that time is coming sooner than later.




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I’m getting used to the idea that when an online video portal creates a TV-optimized viewing experience, it won’t let people watch any of the content they actually care about.
We’re just over a month away from the release of Wii MotionPlus, an attachment to the Wii Remote that adds much-needed precision. Two EA Sports games, Tiger Woods 10 and Grand Slam Tennis, will be the first to show off the new technology, and hopefully they’ll be the antidote to Wii Sports’ heartless wrist flicking.
When Microsoft boasted of
Admittedly I’m no Michael Pachter when it comes to foretelling the future of video games, but with Microsoft exec Robbie Bach saying that we won’t see a new Xbox 360 for a while, the temptation to speculate is too overwhelming. So join me as I wildly predict when the next round of consoles will come along.






By Jared Newman | Posted at 4:36 pm on Thursday, July 30, 2009
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