Sony hinting at a next-generation PlayStation 4 console and has just reported a $3.1 billion annual loss, with factors ranging from the Japan earthquake to the $170 million loss from the PlayStation Network attack. The PS4 is in the pipeline and this news could be used to counter Nintendo’s confirmation of its upcoming gaming console known as Project Cafe that will be revealed at E3 2011 in June.
Sony is working on a PlayStation 4 video game console even as Nintendo prepares to announce the Wii 2 at the E3 trade show on June 7. The PlayStation 3, which debuted in 2006, still has a lot of life left in it. But Sony has begun incurring increases in research and development costs. That means that we’re getting closer to the introduction of new game systems for the Big Three of video games — a transition time when billions of dollars are at stake and big market share shifts can happen. Sony chief financial officer Masaru Kato said on the company’s earnings call, “For the home equipment the PS3 still has a product life, but this is a platform business, so for the future platform — when we’ll be introducing what product I cannot discuss that — but our development work is already underway, so the costs are incurred there.” Sony has said it foresess a 10-year life span for the PS 3, and the company is not expected to say much about the PS 4 at its press conference at E3 on June 6. Nintendo, on the other hand, has said it plans to introduce a next-generation game console in 2012. Microsoft, whose Xbox 360 was introduced in 2005, hasn’t said if it will launch a new console or is working on one. All of the console makers want to postpone the introduction of a new console as long as possible so they can amortize the huge development costs over a longer period and reap more sales from games in each generation, but they generally introduce a new console when the older models start to see declining sales.
In some respects, a new console is always in development. But the important difference here is that Sony is incurring rising R&D costs. That means it may be in development on some chips, which are difficult to design and prototype and often carry big price tags during the R&D and early manufacturing stage. For the fiscal year, the overall Sony Corp. reported sales at 7.18 trillion yen, or $86.5 billion, down slightly from $88.7 billion a year earlier. Operating income was $2.4 billion, up five-fold from $390 million a year ago. But net losses were $3.1 billion, compared to a loss of $501.3 million a year ago, mainly because of Japan quake-related impacts and accounting changes. Sony’s Networked Products & Services division, which includes the PlayStation game business, saw an improvement. Sales were $19 billion, up 0.4 percent from a year ago. But profit was $429 million, compared with a loss of $1.02 billion a year earlier. Sony credited the game business for the turnaround. Sony expects to sell 15 million units of the PS 3 in the new fiscal year. It plans on selling 6 million PSPs and 4 million PS 2s. Sony made no forecast for sales of its upcoming portable NGP gaming system. The PSN hacker attack is expected to take a toll on earnings in some way. Total sales are expected to be $92.1 billion for the coming year.
Redbox, America’s movie rental destination announced it will offer video game rentals at more than 21,000 redbox locations nationwide beginning June 17, 2011. Top video games will join new release movies for only $2 a day complementing $1 DVD and $1.50 Blu-ray daily rental prices. The announcement follows a test of video game rentals in select U.S. markets that began in August 2009.“Redbox will increase consumers’ access to video game rentals by leveraging our incredible technology and business model to keep rental prices low for consumers,” said Mitch Lowe, president, redbox. “With more than 21,000 redbox locations slated to feature video game rentals alongside movies this June, redbox will be the one-stop shop for entertainment.”Redbox, a Coinstar Inc. brand has tested video game rentals alongside movies at 5,000 redbox locations. “Redbox has rented more than one million video games in less than two years at these locations, underscoring the popularity of video game play in America,” added Lowe.Nearly 64 percent of people in the United States own a game console. Upon launch, redbox will feature games across the three major console platforms: PLAYSTATION 3, Nintendo Wii and Xbox 360. Video game titles will range from top releases to popular family and kids titles.“Redbox will make discovering the latest games as easy as a trip to the local grocery, convenience or drug store,” said Joel Resnik, vice president, games, redbox.
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