Sony profit falls 98 percent

<a href="http://www.msnbc.com/news/943463.asp" target="top">www.msnbc.com/news/943463.asp</a>

BTW, this thread is a stand alone thread. I just saw someone that was kinda sorta possibly trying to make it seem that this might be in relation to another thread. It's not. I got the link from the MSN front page. It's news, and it involves the company that keeps us in EQ...so I posted it.

"Profits in the video game sector, which had been Sony’s star division with hefty profits until recently, slid 31.6 percent to 1.8 billion yen ($15 million) from 2.6 billion yen, while sales edged down 18.2 percent to 125.2 billion yen ($1 billion) from 153 billion yen."

They're probably talking about consoles, but you have to wonder...

A lot of people have quit EQ. People are frustrated. I'm sure a lot of it is about the consoles though. I think sales of the PS1 have finally petered out. PS2 had some harsh critics. EQ Online Adventures blows according to the only 2 people I know that have been able to play it.

If I didn't have so much time vested already, I would be playing something else too. That will only get them so far though. I like the game, but since your only voice is to quit playing...

Not too mention in the console arena the launch of the X-Box, Of the people I know with consoles, the ratio of X-Box to PS2 is more than 2:1.

actually you can not pinpoint the reasons for profit loss out of the message.

sales and turnover is not profit. sony could have sold a million more PS/2 worldwide but had to give huge discounts because of xbox. sales up, profit down.

perhaps there was a shortage on basic components and they had do resupply at higher prices. constant sales, profit down.

maybe they fear a big lawsuit in the us and had to build up a reserve. constant sales, less profit.

or money exchange rates went amok. dollar down, yen up, euro higher than dollar. those are of major influence to profits too.

"in key businesses such as electronics, video games, movies and music."

sure, they have issues on their product portfolio: Some movies were flops, music sales are down by P2P and cd burning, they have no "must have" electronic device atm (sony ignored mp3 for quite a while and noone likes memory stick or MD players).

but i doubt EQ plays a significant role for Sony. Compared to billion dollar electronics or cd business the MMORPG genre is no biggie.

According this <a href=http://www.paidcontent.org/pc/arch/cat_sony.shtml>August 7, 2002</a> article, Sony has 433,000 subscribers, generates $5 million per month in revenue from EQ (and $1 million from character transfers) and has a 40% profit margin. That's $2 million profit per month or $6 million per quarter. If their last quarterly figures showed $15 million profit, EQ might account for 40% of it.

I'm willing to bet that EQ doesn't rock the boat a whole hell of a lot in a company like Sony, even in the smaller pond of video games. They're talking about the Playstation in that article, not EQ. "Video games" means Sony Playstation 1, 2 and software for both of those platforms. Everquest is represented by Sony Online Entertainment (SOE) which would be broken down like they did for Sony Music and Sony Pictures.

As for EQ profit, they can also do some "numbers magic" with that - profits probably just mean the money they have after costs, but does not include reinvestment into R&D for new expansions, or new versions.

I'm sure EQ is still massively profitable. But I'd bet some of the newer titles are sucking some profit from SOE.

Maybe I misread it, but I thought the artical said Sony...not individual branches. I could have sworn I saw mention of the smaller parts in there, if not by name. the 98% is Sony as a whole, not a specific part(s).

15 million $ per quarter sounds alot, but sony consolidated worldwide sales in first quarter 03 was 13.4 billion dollars.

no doubt they still make profit of eq. but i do not believe the ceo mr. nobuyuki idei spent more than a few seconds of his time thinking about EQ.

Maody says: 15 million $ per quarter sounds alot, but sony consolidated worldwide sales in first quarter 03 was 13.4 billion dollars.

Revenue != profit, especially when you're talking about the low-margin electronics business.

Keep in mind that companies make almost no money off of console game system sales, and usually do it at a loss especially at launch. Its simply a vehicle to get the games into people's homes, which is where the real money is. But again not all games are published by Sony, so while they make a little off the licensing, it's only a part of the picture. Accessories are the biggest money maker, even at the retail level they are at about 100% markup, but that's because they need to make up for console sales, which are usually at a 6% markup (if that) and barely covers shipping.

EQ on the other hand is pretty much pure profit for them at this point. But they havent posted any decline in active subscribers so I cant imagine that it had any effect on their bottom line. Their published subscriber level has been pretty even for the past 6 months, hovering between 420,000 to 435,000 depending on where you look.

ost likely the decline is due to lagging PS1 sales, on which they can make a profit now because the unit is so old, combined with PS2 sales where they've had to aggresively market and cut prices on to stay competitive with Xbox, they are probably selling them all at a loss. The other sectors, like CD album sales, have risen steadily (despite what p2p naysayers like to repeat) since the proliferation of napster and its decendants. DVD Movie sales are up. Cell phone sales are up. But between the develepment costs and server capital of Planetside and SWG they are definitely in the red, since they have yet to generate any real money.

Tia

Umm, yes. But the whole console & game department is only a fraction of Sonys business activities. EQ is a biggie in SoE. But SoE itself is of minor importance to Sonys console & game branch.

y intention of posting the 13.4 billion $ figure was to show this. EQ, regardless of its profit margin, is of very little to none impact for the overall profit decrease of Sony Corp which is mentioned in the initial MSNBC Article.

Have a look here www.sony.net/SonyInfo/CorporateInfo/Subsidiaries/ (http://www.sony.net/SonyInfo/CorporateInfo/Subsidiaries/) and you get an idea what this company is all about. Insurances, Chemical Plants, Broadcasts, Facility Investment & Management just to name a few not everyone is aware of...

While only a fraction of Sony's business, sales of Playstation and Playstation games during 1999 (right before PS2 came out) were responsible for $510-680 million in sales, adding up to over 40% of Sony's total profits for the year.