Sony has sold over 4.5 million PlayStation 5 consoles, each one at a loss

midian182

Posts: 6,672   +59
Staff member
What just happened? Even with all the supply problems, the PlayStation 5 sold 4.5 million units in 2020, matching the PS4’s launch figures from 2013. That’s an excellent result for a console that only arrived on November 12, helping the company's gaming business to its best-ever fiscal quarter.

In Sony’s financial results for the third quarter of its fiscal year, which covers October to December, its gaming business was up 40 percent YoY to 883.2 billion yen ($8.4 billion), while operating profit jumped 50 percent to 80.2 billion yen ($763.3 million)—records for the segment.

More game sales and PlayStation Plus subscriptions helped make up that healthy profit. Interestingly, Sony says it loses money on every PlayStation 5 sold because it set price points for PS5 hardware lower than the manufacturing costs.

The number of people subscribing to PlayStation Plus increased to 47.4 million, a leap of 1.5 million over last quarter and 9.1 million YoY. Sony revealed that over 87 percent of PS5 owners are Plus members. Meanwhile, combined game sales for the PS4 and PS5 hit 103.7 million—20 million more than the previous year. Digital titles accounted for 53 percent of these sales.

Looking at the PlayStation 4, the last-gen console’s shipments continued declining, dropping to 1.4 million during the quarter, down from 6 million a year earlier.

The news wasn’t good for Sony’s camera and mobile segments, which both saw sales fall compared to the previous year. The company sold just one million smartphones during the quarter, a 23 percent YoY decline.

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poohbear

Posts: 614   +518
If there's far more demand than supply, maybe they should rethink this strategy? Sell it for a loss later on when demand subsides a bit, but the first year it makes no sense to lower prices when there's so much demand. As QuantumPhysics said, the scalpers are making all the money here.
 

terzaerian

Posts: 800   +1,132
If there's far more demand than supply, maybe they should rethink this strategy? Sell it for a loss later on when demand subsides a bit, but the first year it makes no sense to lower prices when there's so much demand. As QuantumPhysics said, the scalpers are making all the money here.
If they don't sell them at a loss then their console fanboys will lose their "console gaming is more affordable than PC gaming" canard. Not that it'll do them any good, seeing as YouTube is helping popularize PC gaming now more than ever.
 

m4a4

Posts: 2,289   +2,497
TechSpot Elite
If there's far more demand than supply, maybe they should rethink this strategy? Sell it for a loss later on when demand subsides a bit, but the first year it makes no sense to lower prices when there's so much demand. As QuantumPhysics said, the scalpers are making all the money here.
If they don't sell them at a loss then their console fanboys will lose their "console gaming is more affordable than PC gaming" canard. Not that it'll do them any good, seeing as YouTube is helping popularize PC gaming now more than ever.
I don't think they can do that anymore because of perception. Would garner a lot of hate from gamers to see Sony profit off of poor supply. Especially since everyone knows that consoles are to be sold at a loss (or close to it) so that they can profit off of the software.

That and scalpers will then drive up the costs further in this pandemic lol
 

Vulcanproject

Posts: 1,333   +2,321
If there's far more demand than supply, maybe they should rethink this strategy? Sell it for a loss later on when demand subsides a bit, but the first year it makes no sense to lower prices when there's so much demand. As QuantumPhysics said, the scalpers are making all the money here.

The laws of supply and demand suggest Sony should bung at least $50 on these machines. However they were in a difficult position.

They were unsure what Microsoft would do, unsure how many to build because of the pandemic, and in the middle of last year unsure what consumer appetite would be. It seems PS5 is already taking the lead and the scramble for these machines is so fierce Sony could have made a small profit on them. Then triumphantly lowered the price after 6 months or a year when you hit equilibrium, giving it another boost.

Hindsight is 20/20 though....
 

Uncle Al

Posts: 8,001   +6,775
As the old Yiddish merchants argued "Mort, how can we sell below cost and make a profit?" Morts reply "Volume!"
 

Lounds

Posts: 770   +683
Sony did right keeping the price as low as possible. They cannot afford to lose player base, Microsoft can, although the XSX must be even worse for margin's.
 

texasrattler

Posts: 1,125   +523
So whatever happened to those 10 million units Sony claimed to have before they even sold the PS5? Oh yea they never had them hence the shortage. Went from 14 million units to 10 million in Oct/Nov and now Sony has said they only sold 4.5 million? So half of what they said they have, have been sold. Either they lied , shocker, or they are causing their own shortage on purpose to drive demand, again shocker. If we see a surge in units(in the millions) by say March, likely would mean they had the stock all along. Time will tell the tale.
 

texasrattler

Posts: 1,125   +523
Sony did right keeping the price as low as possible. They cannot afford to lose player base, Microsoft can, although the XSX must be even worse for margin's.
MS isn't in it for units sold or the cost. They are making money in ways Sony could only dream of.