Sony Playstation going Downhill

Sony PS Going Down Hill
Sony slump sinks game stocks


Japan's electronics colossus announces 91 percent drop in game division's operating profits, sending U.S. publishers' and sellers' shares sliding.

Sony Corp. surprised the game industry this morning when it announced a 25 percent drop in its second-quarter profit. The electronics colossus also reduced its yearly operating profit forecast by 23 percent to 100 billion yen ($918 million) with a net profit forecast of 50 billion yen ($459 million).


Even more surprising was that Sony's games subsidiary, Sony Computer Entertainment, was one of the biggest reasons behind its stunted income.

SCE's sales fell 35.6 percent in Q2 2003, slashing the unit's profits 91 percent. The company cited research and development costs for their next-generation microprocessors as the main culprit, but also blamed sluggish PlayStation 2 sales in America. The one bright spot for the PS2 was Europe, where sales increased due to a competitive price drop, perhaps foreshadowing a similar move in the U.S. market.

Sony's Q2 report can be read via a PDF on Sony's investor-relations site. In Japan, Sony's stock closed down 5.04 percent to 3,960 yen ($36.13), ahead of the profit announcement, and fell further in after-hours trading.

Word of the reduced PS2 sales sent U.S. game publisher and sellers' stocks sliding as well. GameStop and EBgames' shares fell 2.17 and 4.83 percent, respectively, while Atari and Take Two dropped 3.2 and 4.24 percent, also respectively. THQ sunk 3.2 percent when Sony first announced the news, but had mostly recovered by press time.

However, it was Electronic Arts' parade that the Sony announcement really rained on. Late yesterday, the company had announced a both 53 percent increase in its quarterly profits and a forthcoming stock split. However, the Sony announcement pushed EA's stock down 3.72 percent to $98.05.

Ironically, EA's announcement contained further ill omens for Sony. The company slashed its PS2 software growth forecast to a range of 15 to 20 percent, a reduction of 10 percentage points. The company also reduced its estimates of 2003 North American PS2 console sales by 1 million, to 8 to 9 million units.

 

I don't know if it's going downhill so much as it has nearly saturated the market. I don't have a PS2, and I'm not planning on getting one, but out of all the possible purchasers of the system, most people probably already have one.

Have you noticed that when you get a new gaming console you play it non-stop, but after a year passes, you rarely pick up the controller? As more and more time passes, you play it less and less. This scenario has probably begun to afflict many of the PS2 owners out there. It sold so many consoles so early in the game that the people who played them initially have grown older and grown bored. So they stopped buying games.

In a year or two when the PS3 comes out everything will be happy again for Sony. But until then, they're probably going to have a tough time turning much of a profit on their gaming division.

 

X-Box is the best, even tough i have a PS2.
I am saying this because when i got the PS2 modem i had to buy all this extra stuff.
On the other hand with a X-Box you only need the special Router(made for x-box) and of course, a internet connection.

 

Well, in quality of hardware, PS2>Xbox hands down, IMO.

I still have my original PS2 from the night before launch (I stood in line like a tool), and am on my SECOND Xbox.

The first Xbox didnt have half the time logged on it as my PS2 before it croaked.

 

I know the very early Xbox systems had some serious problems. But later versions have shown to be pretty tough.

I think the biggest problem with the PS2 is that they are still charging a premium for an older game console with inferior graphics. Why pay $200 for a PS2 when you can get an Xbox for less, get better graphics, and still play all the latest games. Nearly all the games come out for both now.

 

Ditto! No other console comes standard with a hard drive and built in ethernet adapter. I know I'm never buying a memory card for my x-box unless I want to take a saved game to a friend.