As you may or may not know, Sony has been taking a beating over the last year. Some of it is temporary: the Japanese earthquake and tsunami, the floods in Thailand, the ongoing strengthening of the yen (which has also dinged Nintendo) and even the biggest Sony hater acknowledges that, hey, next year they’ll probably return to a profit.
And at least their sales are going up! The problems, though, are multiple: they’ve been losing money for nearly a decade now on televisions as Samsung and other rivals run rings around them. Apple has replaced them with personal MP3 players. The company itself is so dysfunctional that they’re releasing an “Ultrabook” with an outdated processor that’s thicker and heavier than their laptops.
So why would the PlayStation brand be on the chopping block? Well…
#5) Of That $5.7 Billion Loss, The PlayStation Division Accounts for Half
If a division of any company loses $2.8 billion in a year, even the dumbest CEO is going to take a close look at that division and its long term prospects. Basically they’ve got to hope that the Vita is a big hit and the PlayStation 3 continues to sell. Unfortunately…
#4) This is The First Year Their Games Division Was a Liability
Over the last few years, pretty much the brightest spot on Sony’s financials was the PlayStation division. System sales overall have dropped, although software sales were up. Going from helping keep the company profitable to becoming an anchor around its neck in a year is not good news for any brand.
#3) It’s Becoming Clear, and Rapidly, That The PS Vita Is Struggling
It’s sold 1.4 million, according to some estimates, but Sony refuses to release any detailed sales data. A lot of people think E3 will either save the Vita or be its last stand.
#2) The PS3 Is Still Third in a Volatile Market
Granted, the 360 has sold 67 million systems and the PS3 has sold 63 million, but in terms of a kick to the ego, it’s not fun to see your crown jewel beaten out by a company that can’t even sell consoles in Japan. Definitely not helping is the new “subscription” 360 that was just released, or the success of the Kinect, especially compared to the Move. Sony may be forced to experiment with that subscription idea soon as well.
#1) The PS3 Is Struggling At Its Real Job
Here’s something you were probably secretly aware of but just didn’t want to admit: the PS3 is not actually a gaming console to Sony. It’s a Trojan horse for being your home’s set-top box.
Just like the 360 and its content deals, the real money from the PS3 was supposed to come from gamers buying it at first, and then non-gamers buying it because it played back DVDs and Blu-Rays, and streamed Netflix and Hulu. But that was built on the idea that the PS3 was going to be as dominant as the PS2, and that no other streaming competitors would come onto the scene. Why buy a $250 system when you can buy a Roku for sixty bucks?
The PS3 is essentially a bid for living room dominance that hasn’t quite played out as expected. The question becomes, now, whether Sony wants to keep backing that horse now that they understand there’s a serious potential for losing money.
image courtesy spsarge on Flickr