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PS5 loss making at launch (official)

KungFucius

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Jul 16, 2008
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This was always the case besides nintendo. I wonder if it's still a good idea when scalpers have no problems selling it for almost twice the cost now.
I am not sure what you really mean by that. Ebay shows a maybe a 100-200 units sold each day. There are some bundles that hit 2x the price, but only the digital seems to hit that alone. 200 units is nothing compared to the total sold.

It's not like anyone can just list one and sell it instantly either. Even lower priced Buy It nows often sit for several hours. If more scalpers jump in, the price drops and they go from making 200-300 bucks to 100-200 bucks. It is just a weird thing that only a small number of impatient people participate in. FFS people bid up auctions higher than available Buy it now prices for the same system on the same platform. Scalped systems are numbered in the 10s of thousands, probably a few hundreds of thousands now. Sony has probably sold through more than 5 million at this point. I could easily see 10 million people in the US wanting a PS5 from launch to now and nowhere near most of them have gotten one so far. The only thing scalping is doing is making a small fraction of impatient PS5 seekers pay a few people, and ebay/stock a few hundred more for one, it is not something Sony could really exploit because it would cause outrage and it would only really satisfy a tiny fraction of the market.

This scalper myth is beyond ridiculous. I keep seeing stories promoting the idea that all stock goes to scalpers yet I cannot back this up with ebay data. Ebay is the largest scalper platform. It would need to have several thousand PS5s sold each day to represent a significant number of the PS5s being shipped to retailers. FFS some moron posted an article claiming it had to be scalpers making Antonline sell out fast last week. They are a fucking nothing retailer who tweeted they would have PS5s. Of course their site crashed and of course they sold out fast because millions are looking for PS5s.
 

Hezekiah

Member
Jul 16, 2020
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Apple and Amazon are kicking MS a$$. So what?
Is that why Windows Phone was such a big success? Or Bing search?
Luna and Stadia are the real winners in gaming, because their parent companies are worth more lol.

There's a reason Microsoft wanted to double Live prices. The Xbox division needs to be able to stand on its own feet.
 
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Malakhov

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Jun 6, 2004
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I am not sure what you really mean by that. Ebay shows a maybe a 100-200 units sold each day. There are some bundles that hit 2x the price, but only the digital seems to hit that alone. 200 units is nothing compared to the total sold.

It's not like anyone can just list one and sell it instantly either. Even lower priced Buy It nows often sit for several hours. If more scalpers jump in, the price drops and they go from making 200-300 bucks to 100-200 bucks. It is just a weird thing that only a small number of impatient people participate in. FFS people bid up auctions higher than available Buy it now prices for the same system on the same platform. Scalped systems are numbered in the 10s of thousands, probably a few hundreds of thousands now. Sony has probably sold through more than 5 million at this point. I could easily see 10 million people in the US wanting a PS5 from launch to now and nowhere near most of them have gotten one so far. The only thing scalping is doing is making a small fraction of impatient PS5 seekers pay a few people, and ebay/stock a few hundred more for one, it is not something Sony could really exploit because it would cause outrage and it would only really satisfy a tiny fraction of the market.

This scalper myth is beyond ridiculous. I keep seeing stories promoting the idea that all stock goes to scalpers yet I cannot back this up with ebay data. Ebay is the largest scalper platform. It would need to have several thousand PS5s sold each day to represent a significant number of the PS5s being shipped to retailers. FFS some moron posted an article claiming it had to be scalpers making Antonline sell out fast last week. They are a fucking nothing retailer who tweeted they would have PS5s. Of course their site crashed and of course they sold out fast because millions are looking for PS5s.
Ps5s sells for 730$ cad including taxes here for the disc edition

It sells within minutes on facebook marketplace at 1100$

Ebay is not the definitive source for console reselling, it is much easier to sell locally without hassle and the risk of getting screwed
 
Apr 6, 2015
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This was a given, it's how much of a loss that's the question.

IIRC, the PS4 was also sold at a loss for at least the first year.
Exactly. Consoles are almost always sold at a loss especially nowadays. Even with manufacturing deals you aren't getting a 10TF/Ryzen/SSD device made under $500. The DE is almost guaranteed to be sold at an even higher loss.

Hell even the Series S is most likely sold at a loss as well. Console makers make that money back from their 30% cuts, subscriptions, peripherals, etc.
 
Apr 6, 2015
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With the Switch eraticating the PS5 & Playstation in Japan, I wonder if Sony & Playstation will be ok...
Lol. In 2021 Japan is not super important for Sony profit wise. PlayStation makes their money in the US and Europe. The Nintendo situation in Japan makes perfect sense. Nintendo is a cultural mainstay, and the Switch is the perfect console for Japan because it's small and works as both a handheld and a home console. I love Japanese games, and I think the PlayStation brand is founded on those Japanese games but even if once the PS5 stock situation in Japan eases up and they still only sell like 25K a week they will be perfectly fine because they have the US/Europe market on lock.
 

jroc74

Phone reception is more important to me than human rights
Jun 1, 2013
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Apple and Amazon are kicking MS a$$. So what?
Is that why Windows Phone was such a big success? Or Bing search?
Thank you.

Some ppl just cant help themselves. lol

I also think some ppl are forgetting one of the big debates was who took the bigger loss between MS and Sony. Not that there would be no loss at all for Sony.
 
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Genx3

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Jun 23, 2019
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It's amazing that there are people buying PS5s at $700+ from scalpers and Sony decided to sell at $399 at a loss just to avoid pissing people off.
Yup
Sony could have stuck a 2GB SSD in the PS5DE and sold it for $700 without taking a loss.
 

megreotsugua

Member
Dec 3, 2019
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This was always the case besides nintendo. I wonder if it's still a good idea when scalpers have no problems selling it for almost twice the cost now.
Still a good idea even if they can price them at higher prices for the news headlines alone and perception of mass product right off the bat.

It has to build momentum in its first years. But I'd imagine pricing it higher at launch and then lowering the price after a few months to a year would be met with backlash from early adopters.
 

FranXico

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Dec 7, 2010
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Links?... I also can get links wiseass.


Even the Switch wasn't sold at a loss when released.

Console manufacturers will only sell at a loss if they absolutely have to. Sony was "forced" to decrease the PS5 price at launch and sell it at a loss.
You can say the same about MS. Both were playing chicken before announcing prices to know how much people were willing to pay and to minimize losses.

Maybe you should also thank Sony for the $300 Series S. MS were "forced" too.

:pie_roffles:
 
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yurinka

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Jan 19, 2007
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Most consoles always have been sold at loss during its first years. Companies compensate that with software sales that traditionally are more profitable, and over time the hardware manufacturing costs get reduced to the point these consoles end being sold at profit. But again, they don't give a fuck because the consoles are just a tool, a channel, to what really gives them money: the software.

In fact, in this case during the transition from PS4 to PS5 instead of showing the traditional temporary loses during this transition, Sony posted record numbers for a console manufacturer in the money side.
 
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RevenantX

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Mar 15, 2018
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Everyone knows Both MS and Sony selling nextgen consoles at loss. SX and PS5 pack lot of expensive hardware and there is no way, they can break even at 500$ right now.
 
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iamvin22

Industry Verified
Jan 22, 2010
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To bad no numbers specifically, but great to hear the statement at least
what do you mean "no" numbers? everything is sold out. you cant go to any store right now across the planet and purchase a unit. whatever they shipped is gone. hell, even the units being manufactured right now are already sold out. they don't need to report numbers until march.
 
Dec 10, 2020
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what do you mean "no" numbers? everything is sold out. you cant go to any store right now across the planet and purchase a unit. whatever they shipped is gone. hell, even the units being manufactured right now are already sold out. they don't need to report numbers until march.

Loss numbers.
 

phil_t98

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Oct 10, 2014
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it looks like Sony had to under cut the price they wanted with the digital edition just to fend off the Series s price point. sensible decision tbh
 

John Day

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Jan 12, 2018
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Every console cycle news like this pop up, and it always baffles me how every time people think like this is huge.

is this a sign that i’m getting old?
 

iamvin22

Industry Verified
Jan 22, 2010
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PS5 loss i hard to guess since every category in PS business is included for profit. They've just said that PS5 is selling at loss
you are wrong. when they speak about their hardware division they are talking about it specifically. they don't include the entire division. investors ask specific questions per console launch. that is the totallity of the answer given to all investors.
 
Dec 10, 2020
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you are wrong. when they speak about their hardware division they are talking about it specifically. they don't include the entire division. investors ask specific questions per console launch. that is the totallity of the answer given to all investors.

So, if i'm wrong what are the loss numbers? Thanks
 
Dec 10, 2020
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you do realize that you have to be invested to obtain those numbers right? a company can disclose their earnings when they want to the public.

Of course it is on company will they announce loss numbers or not, but like i've said in previous post

"To bad no numbers specifically, but great to hear the statement at least"
 

iamvin22

Industry Verified
Jan 22, 2010
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Of course it is on company will they announce loss numbers or not, but like i've said in previous post

"To bad no numbers specifically, but great to hear the statement at least"
they have already reported the numbers they shipped (which is sold, obviously) MS hasn't reported any numbers so wheres your energy on that front?
 
Dec 10, 2020
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they have already reported the numbers they shipped (which is sold, obviously) MS hasn't reported any numbers so wheres your energy on that front?

I've asked before in other thread where is the MS statement about revenue/profits numbers about XSX/S sales, so, i've been accused for console warrioring
 

iamvin22

Industry Verified
Jan 22, 2010
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I've asked before in other thread where is the MS statement about revenue/profits numbers about XSX/S sales, so, i've been accused for console warrioring
They no longer report sales but their executives had stated that their consoles are sold at a loss
 

iHaunter

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Sep 6, 2015
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Still in the big picture of net income this last quarter:

Apple - $28 billion
MSFT - $15.5 billion
GOOG - $15.2 billion
Sony - $3.5 billion

Even though Sony is kicking MS a$$ in gaming, Microsoft is kicking Sony's a$$ period for the last 15 years.
Good thing this is a gaming Forum huh?
 
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JerryinSoCal

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Apr 11, 2020
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It is probably losing a lot with PS5 DE.
The normal model is probably breaking even.

PS5 DE should be near $100 per unit.
If they sold 1m then it is $100m loses.

They need a lot of game sales to recover it.
I'm sure most of that was offset by software sales being over 60% digital.
 

JerryinSoCal

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Apr 11, 2020
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With the Switch eraticating the PS5 & Playstation in Japan, I wonder if Sony & Playstation will be ok...
Sony has sold every PS5 they've put out in Japan they just don't have a lot to sell there right now, why do people keep leaving that part out of the story? Switch is in it's prime and PS5 is in it's infancy and severely supply constrained
 

Woggleman

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Consoles usually sell at a loss. They want a large install base so they can sell games, PS Plus and other things that are the real money makers.
 

Cleared_Hot

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Feb 25, 2018
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at this point, with the availability being totally nonexistent, and ps4 games still playing and looking awesome... i'm content for waiting until the slim PS5 is released- and the size reduction might actually be my biggest selling point for when that is released.
 

BlitzerRadic

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Still in the big picture of net income this last quarter:

Apple - $28 billion
MSFT - $15.5 billion
GOOG - $15.2 billion
Sony - $3.5 billion

Even though Sony is kicking MS a$$ in gaming, Microsoft is kicking Sony's a$$ period for the last 15 years.
MS is propped up by it's legacy OS monopoly and de facto office business. Pretty much every market that that MS has tried to compete with an already established competitor MS has gotten its ass kicked.
 

John Wick

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Jul 23, 2015
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I'm sure most of that was offset by software sales being over 60% digital.
It's a good thing they're not making that many PS5 DE and the disc version is the biggest seller. They should just manufacture the normal PS5 while they can't meet demand. Well that's what I would do
 
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Sethbacca

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Jun 20, 2013
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Sony and Microsoft historically sell new consoles at a loss for at least 6-12 months after launch. Nintendo doesn't, they always want to hit the market selling the hardware at a profit.


The issue with scalping is that when it happens the console is already out of Sony's hands. A store doesn't care if their entire PS5 stock is being bought by a scalper, they have to sell it as the price Sony told them, so whoever buys it works for them (actually, selling to a scalper has a much higher chance of removing in practice your obligations in terms of warranty fulfilment, so they probably prefer it this way).

The only way for Sony to get rid of scalpers is to outbid them, either flooding the market with so many PS5s that it's impossible for all the scalpers combined to hold them for ransom for an initial fee with the purpose of reselling them at an inflated price, or to increase the RRP to begin with to a point where most people won't be willing to pay much more than that, and the revenue share for scalping gets so thin it's not worth it anymore. The former is impossible in practice, the latter would have other consequences in terms of market adoption (you can't keep selling at $600-700 forever, and you can't slash the price by $100-200 mere months or one year after launch, or early adopters will feel cheated).

In practice, the only way out of this situation (which is hitting mid-to-high end PC parts as well, BTW) is for demand to shrink back to normal levels, which won't happen until we are past Covid.

I don't disagree with your assessment, my only point is that there are 2 scenarios here in my mind :

Scalper buys a console - They're only buying the console and looking to turn a profit on the console to sell to an end user at a markup, I can't imagine someone spending $800 on a scalped system is buying as many games and accessories.
Individual buys a console - They're likely going to buy a few games, maybe a controller, and a controller dock or other accessories.

I've got to think more consoles getting directly into the hands of end users, especially at launch window, would directly impact the profitability of games and accessories sold at launch over them getting into the hands of scalpers. I would think that should be enough incentive for these companies to want to make at least a superficial attempt at preventing scalping.
 

Jibran#one

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I have a series x and I hate console war bs , but I think the momentum they had with the ps4 they could've easily gone 550 and it would've not made any dent in the sales and momentum we are almost 5 months in and its impossible to find a ps5 without paying huge premium
 

HarryKS

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Jan 24, 2010
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No profit. Price of everything has gone up. Premiums being paid at factories and foundries.
 

jdforge

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I wouldn’t be surprised if the current stock shortages are due to Sony trying to re-tool, re-negotiate or push/force for any/other obtainable cost savings in the manufacturing process.
 
Oct 26, 2018
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Still in the big picture of net income this last quarter:

Apple - $28 billion
MSFT - $15.5 billion
GOOG - $15.2 billion
Sony - $3.5 billion

Even though Sony is kicking MS a$$ in gaming, Microsoft is kicking Sony's a$$ period for the last 15 years.
Yup. And with profits like that, that's how MS scooped up Zenimax. Drop in the bucket.

MS has so much money about 10-15 years ago, they gave away a special $3 dividend to all 10 billion shares. They gave away $30 billion cash because they had too much on them.
 
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yazenov

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Dec 12, 2020
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Yup. And with profits like that, that's how MS scooped up Zenimax. Drop in the bucket.

MS has so much money about 10-15 years ago, they gave away a special $3 dividend to all 10 billion shares. They gave away $30 billion cash because they had too much on them.
They got so much money yet they got their ass kicked by Sony and Nintendo in the console market. They should be ashamed really, especially considering how their competition cant even compete with Microsoft cash wise.

Its the equivalent of a grown man being bullied by a kid.
 
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JackMcGunns

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The beauty of competition, gamers win, otherwise we'd have another FIVE HUNDRED AND NINETY NINE!! US DOLLARS!! RIDGE RACER!!!
 

Gamerguy84

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They take losses on hardware, which is obviously good for us consumers. The tech in these are worth more than $399 and $499.

It's usually the case. PS4 was something like $50 give or take, PS3 was sold at a $240 loss.

I don't think they profit until they make revisions like slim versions or cost of components come down. Of course it's all made up in services and software.
 
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