Sony Nears Breakeven Point on PlayStation 4 Hardware Costs
This article explains the Playstation 4's quality and economic balance. Currently, the PS4 is losing money per console sold. This is because of the expensive BOM, or Bill of Materials. The BOM is basically a pricelist for each component that goes in a PS4. The author compared the PS3's BOM and noted that comparatively, the PS3's BOM was higher much higher compared to the retail price of it as opposed to the much closer BOM and retail price of the PS4. Much of the PS4's BOM comes from the core processor and the RAM. The PS3's RAM and processor only came to around 29% of the BOM cost, while the PS4's is about 50%. Sony is hoping to make money from the software for the console in the long term as opposed to direct hardware sales.
I'm not entirely sure if other companies have had the same mentality when it comes to game consoles, but I believe it's a good one. Attempting to make money off of consoles by either making them very expensive (look up the PS3's launch price) or by having inferior products in them is bad business. It makes sense that the money made would come from game sales. Certainly, console sales can go into the millions, but there are thousands of games that have the potential to sell as many copies as consoles. The larger revenue will come from this. Sony is currently at a loss, but like the article stated, the breakeven point and eventually profit will come from this long term decision.
So they develop a console that is expensive to make, but risk that in hopes that games for the console will sell enough to put them over the break-even point? I'm trying to get clarification on this.
ReplyDeleteRight, the console is not expected to make a profit at all. Their main revenue is expected to come from games and online services.
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