Will The Playstation Save It's Maker?
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 help Sony?
Even though, some people may point out that ever since the Playstation 3 release in 2006, the console hasn't been making a profit. This is because of the simple fact that Sony are selling the consoles for less than it costs to make them. And it has been like that since the consoles release. Sony reduced the price below manufacturing costs on purpose so that they could attempt to break into the market.
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 released a high specification console into the market at a loss, but because of the spec, the console will last many years, making them profit some years on. But can it work this time? With the high pressure of Xbox 360 and the new market that Nintendo Wii generates, will Sony manage to make enough profit?
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 all that sounds a bit bleak for Sony, there is one upside that they have, Blu-ray. It was fortunate for Sony that Blu-ray cam out the leaders after the DVD battle. If HD DVD had won the battle, it would have not given the Playstation 3 any edge over it's competition.
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 Both of them have said that Sony's attempt at an online community is outdated and not directed.
Aaron Greenberg, a manager at Xbox 360 game console division, stated: "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 stated: "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 spent alot of time, money and effort on their new social community, it has just been shot down, personally, it just seems like an idea of earning money, there are several things within the 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 pretty sure that not all gamers will want to be spammed with adverts while walking around.
Overall, the future is not bright for Sony, they are relying on a exspensive console to make them money, but because the console is exspensive, it turns off buyers, but Sony won't reduce the console price until they make money from it. Who knows where Sony will be if their console doesn't start to sell more.
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