Sony sees an end to red ink in video game business in coming year

Venture Beat — Wed, 14 May 2008 11:51:02 -0700

Sony, once the undisputed leader in game consoles, has suffered several billion dollars in losses in recent years.

But Sony predicted the game group would be profitable in the fiscal year that ends March 31, 2009.

Overall, the electronics company is healthy. Sony released its overall earnings today for its fiscal year ended March 31, showing a 192 percent increase in earnings and a 6 percent increase in revenue.

The game division, however, is still losing money. The division saw its sales grow 26 percent to 1.284 trillion yen, or $12.3 billion, but its operating loss was 124.5 billion yen, or about $1.2 billion. The loss was down from 232.3 billion yen, or about $2.2 billion, a year earlier. The improvement is due to smaller production costs for the PS 3.

It’s about time for Sony to recover. Microsoft, after seven years of game-related losses, is expected to turn a profit in the Entertainment & Devices group that includes the Xbox 360 and PC game business in the year that ends June 30. It’s almost as if the two have traded places, with Sony bleeding as Microsoft gains. But it could be a very powerful thing if Sony’s movie, game, electronics and other businesses all kick into high gear at the same time.

Things are looking better for Sony’s upcoming games. I’ll see Konami’s “Metal Gear Solid 4,” the big exclusive for the PS 3, tonight in a preview. And Sony reported it got a boost in console sales (as did Microsoft) from the release of Grand Theft Auto IV. Other big titles include “LittleBigPlanet,” “Resistance 2,” and “Gran Turismo 5 Prologue.” The last game is already out and Sony said sales of that franchise have topped 50 million.

Sony sold 9.24 million PS 3s during the fiscal year, up from 3.61 million a year earlier. PS3 software sales leapt were 57.9 million units, up four-fold from 13.3 million a year earlier. The company expects PS3 sales to top 10 million units this fiscal year.

PlayStation Portable sales were 13.4 million units, up from 9.5 million a year earlier. PSP software sales were up 1 percent to 55.5 million units. The company expects to ship 15 million PSPs during the year ending March 2009.

PlayStation 2 hardware sales fell 7 percent to 13.7 million. PS 2 software was down 20 percent to 154 million units, from 193.5 million a year earlier. Sony expects to sell 9 million PS 2s this year.

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Sony sees an end to red ink in video game business in coming year