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Businesses PlayStation (Games) Entertainment Games

Sony's Credit Rating Downgraded 33

Gamasutra has the news that electronics giant Sony has had their credit rating downgraded from A+ to A by credit ratings firm Standard and Poor's. The move is seen primarily as a result of the PSP's impending launch. From the article: "Although Sony's PlayStation Portable (PSP) was not mentioned by name, many consider the unexpectedly low Japanese launch price of the console, 19,800 yen (USD$186), to be one of the major causes for concern. With some suggesting that Sony will lose significant amounts of money on every PSP sold, the company will be looking at a loss of tens of millions of dollars in the first year of the format."
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Sony's Credit Rating Downgraded

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  • If a company wants more games released for their platform, they should release an SDK with it so everyone in the world could make games for it. Of course the company would hold final say if you're homebrew game can be published.

    I don't know why they don't open source development for these game platforms, I know I'd love to develop games for new consoles.
    • by hab136 ( 30884 ) on Wednesday November 24, 2004 @12:55PM (#10909853) Journal
      I don't know why they don't open source development for these game platforms, I know I'd love to develop games for new consoles.

      Because they make money off every game sold, by licensing access to the SDKs and whatnot.

      That's why they want more games - they get more revenue. Homebrew games normally don't make them money.

      • Not only that, but they really don't make much if any money off of hardware sales. How much has Xbox lost MS sofar? Not shure but it was sold considerably BELOW cost at first.
        As the parent suggests they make thier money off of licensing out the right to make games for thier consol and the SDK's and special developer versions of the hardware and so on.
        I wouldn't mind if they swapped thier Plan to making money off the hardware and selling thier official seal of aproval on games they felt deserved it.
  • An 'A' credit rating will have very little impact on Sony's bottom line. This still puts it firmly into the credit worthy companies. My only question is why Sony would release a game console that is expected to generate a loss. Is Sony expecting manufacturing costs to drop a lot if they get enough of their product out there quickly? Additional info would be nice.
    • In the past, most other systems are sold at a loss when they first debut. The manufacturer makes most of its money off of the games and peripherals that it sells during this period.

      Of course, when manufacturing costs drop then profits will increase also.

      some general info here [] and here []
      • In the past, most other systems are sold at a loss when they first debut.

        IANAL, but I though anti-dumping laws were supposed to prevent a company to sell something at a loss to undermine competition... isn't that exactly what Sony is trying to do to the NintendoDS?

        • Problem is when ALL the console makers are selling thier main consol under cost.
          Nintendo crying "but sony is selling at a loss to drive us out of bussiness" won't go far when it's discoverd they are also selling at a loss.
          Now they might get somewhere if sony was also giving away the sdk's and selling periphereals so cheap that they obviously were taking a loss across the board from undercutting.
          Basically the consols are just ONE part of the whole bussines for consol game systems and the practice
    • How come the price is much lower than previously estimated?

      Sony was quoted as saying this is due to the fact that they recently built production facilities for 90 nanometer (very small) processors for use in other projects, such as the PS2, PS3 and the VAIO line. With these facilities already built, Sony did not need to build new ones for the PSP.

      Also, more than 50% of the PSPs components are manufactured internally. This means Sony is not buying from as many companies who each mark up the price

      Is So

  • this shouldn't come as a surprise really.. MS has done this for years with the XBOX... it's a good business move though since all the money is made off the games anyway, so pushing the console out, at even a loss, will get people to buy the real money makers.. the games.

    What Sony really needs to do is make sure that there are a large number of QUALITY launch titles... sure, sell the PSP at a loss but you'll make it up VERY fast if each person also buys 2-3 games with the system. However, there have alre
    • The system is only slightly lacking in launch titles for japan. The system is not due in the US for another 4 months, and when it comes out in the US it should have a bunch of great launch titles, too bad it got beat though by Nintendo DS as far as launch time goes. Hopefully when it comes out to the US, they will also figure out a way to beef up the battery life on that sucker, I mean it takes me over an hour just to set up my car in GT3! thats like 1/4 of the battery gone in the current PSP revision!
    • MS may, and I stress may, make a profit from their Xbox division this financial quarter due to the Halo 2 release. This would be the first profitable quarter for the Xbox EVER. This includes software licensing and game sales.

      Microsoft is dumping money they recieve from their Windows and Office monopolies. It was previously reported [] that 86% of the price you pay for Windows and 79% of the price you pay for Office is profit for MS. This is how they can keep the Xbox afloat. This is a business practice only a
  • Simple.. if they are going to saturate the market with PSPs - which is what they need to do to beat Nintendo on their turf.

    It's a new market for Sony and they need to get their foot in the door. I'm sure they look at it as an investment not a loss - the loss part comes if noone buys it and they can't recoup their inital loss on game/accessory sales over the next 4 years.

  • WIth a downgrading of credit rating what could happen Sony if the PSP is *not* a success - the battery life issue could kill it although they probably have cash to push it along meaninglessly for years like Minidisc.

    If it doesn't work, surely that would mean *another* adjustment of credit status in a year or so with sales to look at. Then I suppose it's PS3 time but what if...oh my god.....Sony got fucked and we were left with only Microsoft.


  • Doesn't sound like a big deal to me, it's probably not even 0,1% of what they have in total. I would also believe that they have their money in Yen, so that the low dollar price would affect them even *less*.
  • by Eil ( 82413 ) on Wednesday November 24, 2004 @01:46PM (#10910417) Homepage Journal

    Er, companies have always sold consoles at a loss, especially during launch. I just played a Gameboy DS yesterday and I have to say that Sony has a long road ahead of them if they want to top it.
    • Please site proof otherwise stop propergating this urban myth.

      I would like to say I have proof either way on your theory but my best efforts (ok 5 mins with google) turned up nothing.

      Popular belief is that the dreamcast was 1st console to be sold at a loss, and now the xbox.
      Other than that they are sold at no less than cost.

      This said though the companies are pretty tight on telling anyone margins hence the lack of proof.
  • I don't really think that the launch perse is what is going to hurt them, it's the fact that the dollar is at a 3 year low versus the yen(about 103), before Bush's re-election, it had been around 105-110 yen on the dollar, but Snow seems to be sending signals that the administration is not about to curb it's deficit spending any time soon, and thus that means the dollar will not improve significantly in the near future. Although the psp launch price in the US is $199, so that should make up for it, but Son
  • somehow Standard and Poor is an amusing name for a ratings firm.

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