Sony loses $3 billion on the PS3!

Wednesday 25th June 2008 - 11:00

Selling at a loss comes at a cost, Metal Gear Solid moves a million and Command and Conquer Red Alert 3 screens

Never let it be said that the videogames business is an easy ride. In a recently released financial report it has been revealed that the Sony Corporation has lost $3.3 billion dollars so far on the PS3.

According to the report filed with the US Securities and Exchange Commission and reported in Forbes magazine,,the massive loss is down to "strategic pricing" - in other words, selling the console at a loss in order to build a precious installed base of customers.

The article noted that "Even if the platform is ultimately successful, it may take longer than expected to recoup the investment, resulting in a negative impact on Sony's profitability."

Market analyst Michael Pachter of firm Wedbush Morgan was equally critical - suggesting a further price drop would be required. "The console is still too expensive for the masses. A recession isn't going to help HDTV or Blu-ray sales."

Even though Sony is losing the kind of money normally associated to a country's balance of trade deficit, the losses are gradually reducing over time - with Sony commenting that the year-on-year cost reduction was due to "successful PS3 hardware cost reductions."

But for how long can even one of the most successful corporate giants be prepared to make this kind of financial sacrifice? Let's just hope that better quality PS3 exclusive games encourage more cost conscious gamers that the PS3 is an essential purchase.

One such game (and in our view there is still too few of them) is Metal Gear Solid 4: Guns of the Patriots. Konami has just announced that the highly rated soldier stealth shooter has managed to sell a whopping one million copies across Europe in a little over two weeks! The company also confirmed that an additional 25,000 limited edition box sets were "snapped up almost immediately"

A Konami spokesperson commented: "MGS4 is nothing short of a masterpiece - an epic conclusion to the Solid Snake story. We are extremely pleased with the positive feedback we have received from retail and consumers alike, and will keep satisfying their needs with updates to the game's 'Extra' option, and via new content to Metal Gear Online."