PS3 Launch and Pricing

I think we already had a big long talk about companies not legally being able to sell something below its production cost a while back...
Click to expand...

again, still don't know how they do it since it is most definitely illegal
Click to expand...
yes we did have the discussion, and as I explained it to you back then it is totally legal because they are not just selling the consoles but the right to royalties on the software (games). I explained back in this thread
http://computerforum.com/showthread.php?t=37554&highlight=npv

i'm going to explain it to you in some numbers (all made up)

cost incurred by sony to make 1 ps3 = $1000
cost incurred by sony to make 1 game = $0 (developer pay the costs)

Revenue made by sony on 1 ps3 = $500 ( selling price, a $500 loss on the console)
Revenue made by sony on 1 game = $20 ( they make royalties, even through the developers make the games and bear the costs)

so if the average user buys 26 games in the life of the machine (now remember we are making up numbers here).
You when calculating the profit/loss for sony you get

Revenue on Sales of 1 ps3 = $500
Revenue on Sales of 26 games = $525

Cost incurred by Sony = ($1000)

Profit = $25

you see you need to consider the fact then when you sell the console you are selling the obligation and right to the revenue for the games.
I explained this perfectly well in
http://computerforum.com/showpost.php?p=267960&postcount=23

Trust me, they are doing business as normal.

I cant see how i can explain it any clearer
 
Last edited:
apj101 said:
yes we did have the discussion, and as I explained it to you back then it is totally legal because they are not just selling the consoles but the right to royalties on the software (games). I explained back in this thread
http://computerforum.com/showthread.php?t=37554&highlight=npv

i'm going to explain it to you in some numbers (all made up)

cost incurred by sony to make 1 ps3 = $1000
cost incurred by sony to make 1 game = $0 (developer pay the costs)

Revenue made by sony on 1 ps3 = $500 ( selling price, a $500 loss on the console)
Revenue made by sony on 1 game = $20 ( they make royalties, even through the developers make the games and bear the costs)

so if the average user buys 26 games in the life of the machine (now remember we are making up numbers here).
You when calculating the profit/loss for sony you get

Revenue on Sales of 1 ps3 = $500
Revenue on Sales of 26 games = $525

Cost incurred by Sony = ($500)

Profit = $25

you see you need to consider the fact then when you sell the console you are selling the obligation and right to the revenue for the games.
I explained this perfectly well in
http://computerforum.com/showpost.php?p=267960&postcount=23

Trust me, they are doing business as normal.

I cant see how i can explain it any clearer
Click to expand...

Thanks apj101, that's exactly what I tried to explain earlier as well...

(BTW everybody, it has been done on the PS2, XBOX, PS1, XBOX360...)
 
Well I sure wont be buying it....500 bucks for the console + 70 bucks or so for each game.
Sorry but im not rich bit to pricey for me I would rather just upgrade my system for that kinda $$$.
Least with computer games I can play demos before I spend the cash...make sure I don't get a sucky game lol.
 
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