PS3 Finally Making a Profit for Sony

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Over at IGN, Shuhei Yoshida, president of Sony’s Worldwide Studios, let it be known that Playstation’s parent company’s finally making money on every PS3 it sells. The quote from IGN:

“This year is the first time that we are able to cover the cost of the PlayStation 3,” Yoshida said. “We aren’t making huge money from hardware, but we aren’t bleeding like we used to.”

It’s a general fact in the console business that platform holders like Sony, Microsoft and Nintendo are losing money per unit when they bring new hardware to market. The plan is almost always to make money on software. Nintendo’s generally been the exception to this rule and the company rarely brings new hardware to market that costs more to produce than they plan on selling it for.

I remember being aghast at the E3 2006 press conference when Sony announced that the baseline PS3 would be $500. Even then, estimates were that Sony was losing around $250-$300 on each PS3. Things were different then: Blu-ray was untested and locked in a format war with HD-DVD (remember those?) and the PS3 software library was lacking.

Since then, those weaknesses have matured into strengths. Look at Uncharted 2’s dominance of the 2009/2010 Video Game Award Season, for example. The big turnaround really happened last year. Sales for the PS3 have been strong, with a sharp spike and steady increase after the PS3 slim model was introduced at the $299.99 price point.  Yoshida also made comments that seem to indicate a price drop for the PS3 is unlikely. We’ll see if things hold steady once the holiday shopping frenzy starts.