Sony Says PlayStation 4 is Already Profitable
Sony published the transcript of a corporate strategy meeting today that states that the PlayStation 4 hardware has already become profitable, only five months after its launch.
While the news of the PS4’s profitability is a pleasant surprise, “Corporate Strategy Meeting FY14”, headed by Sony’s President and CEO, Kazuo Hirai, is by no means all positive. Sony has now recorded net losses in two consecutive fiscal years. Much of the meeting was focused on how Sony can break this pattern, and Hirai touted the company’s many entertainment holdings, like 'Amazing Spider-Man 2,' the Game Show Network, Daft Punk and 'Breaking Bad' as key elements in the recovery.
Sony is first and foremost, an electronics company, and the bulk of the transcript discusses the company’s successes and failings in the field. After mentioning that Sony will no longer be producing VAIO PCs, Hirai moved on to the PS4. He stated, “following its introduction in North America in November 2013, in 5 months, PS4 has launched in 72 countries and regions achieving cumulative sell-through of 7 million units as of April 6.” He added, “From a profitability perspective, PS4 is also already contributing profit on a hardware unit basis, establishing a very different business framework from that of previous platform businesses.”
Console makers generally expect to lose money on the actual hardware for years after launch, counting on software licensing to eventually recoup their losses and make the system profitable. The PS3 took 13 months to become profitable, while the Xbox 360 took over two years. Microsoft’s original Xbox, released in 2001, never turned a profit from a hardware standpoint.
It has become clear that the PlayStation 4 has pulled well ahead of the Xbox One this generation’s console war. While Sony has proudly boasted about their hardware sales milestones, Microsoft has been cagey with their own numbers. The last time we heard anything sales related from Microsoft was in February, when they touted that Xbox consoles (Xbox One and Xbox 360) were leading in terms of software sales. Since then, Microsoft has moved Phil Spencer to creative director and announced a Kinect-free $399 version of the Xbox One. Leading most to believe that Microsoft is scrambling to keep up.