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Sony’s 2013 Fiscal Year Saw The Gaming Division Drop 94.1% In Profit, Yet There Is No Reason For Alarm
Sony came out with the results of FY2013 and when you glance at the numbers you may start to worry a tad. The company’s entire gaming division went from 29.3 billion in profit during FY2012 to only 1.7 billion in FY2013. That is a 94.1% drop over one year.
Normally, that would raise a billion questions and put some serious doubts in the minds of people but there is no reason to be concerned for Sony and/or the PlayStation brand. The percentage dropped is huge but when you see the great numbers that the PS3 put up and hear that the Vita kicked up a tad towards the end of the fiscal year, you may ask yourself what happened that made them lose so much?
Yes, the gaming division saw a huge drop in profits but there is one thing you blame it all on: the PlayStation 4.
We have all been waiting for the next series of consoles to come out and there are plenty of gamers looking forward to the upcoming PS4. This happens with profits during every generation change. The costs of research and development, production, marketing, software design, operating design, and creating and producing accessories like controllers takes a lot out of a company. It is also very rare to ever dump a ton of money on a new, high tech piece of hardware and see a return right away. That means we’re going to see similar fiscal years for a while, as well.
It is easy to see numbers and immediately freak out – in either a negative or positive way – however the truth of the decline is simple. Sony is pumping out a metric ton of money into the PS4 and so far with all of the reveals, info dumps, and words from developers, they seem to be taking a good risk.
We won’t know how well the return on this money will be until we see how the PS4 does after release, however, the initial scare of a 94.2% profit drop is an easy thing to explain. Sony lost a ton of profit during the PS2 and PS3’s development that made the previous year to each system’s release look iffy, as well.
However, there is something to note here. The decline Sony saw right before the PS2 came out was around ~18%. The PS3 took out more and left Sony with a drop of ~38%. The PS4 took 94.1% out of Sony’s profits which shows how much they are investing into their next gen offering. It is clear that Sony has done a lot of researching to make the PS4 a highly functional system and with the way developers are talking about it there seems to be some well spent money there. Partnerships with studios and other companies can also be the reason for at least a chunk of the lost profits. Gaikai itself ate up a chunk. You can also attribute some of the decline to the fact that the gaming division means a lot more to Sony’s profits than they did back when the PS2 and PS3 came out.
Another interesting thing to note is that the PS3 itself actually profited in Sony’s 2013 fiscal year.
So while the numbers can be scary at first, it is easy to see where a lot of it went. The PS4 is shaping up to be a huge release and everyone is gearing up to hear more at E3 2013. Sony’s 2013 fiscal year report may look like a downer but it may prove to have been a necessary risk if the PS4 releases to a craze and the retail shelves empty. The hype is there and Sony is hoping consumers’ wallets will be there, as well.
You can see the full report here on Sony’s website.