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It’s a currency game.
Sony may be winning the race for positive buzz and consumer goodwill over its rival Microsoft in the months leading to the release of PS4 and Xbox One, but interesting choices the company made in recent years may hinder the company from making heavy profits once the console’s out the door.
As we reported last week, Sony turned a very modest profit in the last fiscal quarter. However, Bloomberg reports that the U.S. dollar’s rise against the Japanese yen may end up hurting Sony’s PlayStation division’s ability to deliver a strong performance on the balance sheet.
“Those currency related losses [from the quarterly report] are poised to deepen as analysts project a further 10 percent rise in the dollar by the end of Sony’s year in March, based on 74 analysts’ estimates compiled by Bloomberg,” the news agency notes, stating later that, “While the weaker yen will lift the value of sales abroad for the new PlayStation 4, margins will be crimped as parts and production are paid for in dollars.”
Sony originally “agreed to pay suppliers in U.S. currency to reduce costs as it made plans to challenge Microsoft in the U.S. video-market.” This was a move designed “to shield its PlayStation game unit from a strengthening yen,” but now that the dollar is on the rise, the move is “backfiring.”
Sony has good news to look at, though, even apart from its exceptionally strong pre-order numbers. 70 percent of Sony’s revenue comes from markets outside of Japan, meaning the company is only partially reliant on sales measured in a weakened yen.
And, as Bloomberg notes, the PlayStation 4 will cost £349 in the UK and €399 in the rest of Europe. That also spells good news for the company, considering £349 is equivalent to $541, and €399 is equivalent to $532. The PS4 will only cost $399 in the US.
Finally, Bloomberg confirms that while the PlayStation 3 contributed to Sony’s monumental losses directly after the launch of the console – amounting to somewhere in the region of $3.5 billion – the company doesn’t anticipate anything similar to happen to PS4, primarily because “the amount of investment” in the console “is much, much smaller,” according to Sony’s Masaru Kato.
While PlayStation 3 didn’t turn profitable until nearly five years after it launched, Sony’s Andrew House stated that the company “will not generate anything like the losses [Sony] did for the PlayStation 3.”
Sony may be winning the race for positive buzz and consumer goodwill over its rival Microsoft in the months leading to the release of PS4 and Xbox One, but interesting choices the company made in recent years may hinder the company from making heavy profits once the console’s out the door.
As we reported last week, Sony turned a very modest profit in the last fiscal quarter. However, Bloomberg reports that the U.S. dollar’s rise against the Japanese yen may end up hurting Sony’s PlayStation division’s ability to deliver a strong performance on the balance sheet.
“Those currency related losses [from the quarterly report] are poised to deepen as analysts project a further 10 percent rise in the dollar by the end of Sony’s year in March, based on 74 analysts’ estimates compiled by Bloomberg,” the news agency notes, stating later that, “While the weaker yen will lift the value of sales abroad for the new PlayStation 4, margins will be crimped as parts and production are paid for in dollars.”
Sony originally “agreed to pay suppliers in U.S. currency to reduce costs as it made plans to challenge Microsoft in the U.S. video-market.” This was a move designed “to shield its PlayStation game unit from a strengthening yen,” but now that the dollar is on the rise, the move is “backfiring.”
Sony has good news to look at, though, even apart from its exceptionally strong pre-order numbers. 70 percent of Sony’s revenue comes from markets outside of Japan, meaning the company is only partially reliant on sales measured in a weakened yen.
And, as Bloomberg notes, the PlayStation 4 will cost £349 in the UK and €399 in the rest of Europe. That also spells good news for the company, considering £349 is equivalent to $541, and €399 is equivalent to $532. The PS4 will only cost $399 in the US.
Finally, Bloomberg confirms that while the PlayStation 3 contributed to Sony’s monumental losses directly after the launch of the console – amounting to somewhere in the region of $3.5 billion – the company doesn’t anticipate anything similar to happen to PS4, primarily because “the amount of investment” in the console “is much, much smaller,” according to Sony’s Masaru Kato.
While PlayStation 3 didn’t turn profitable until nearly five years after it launched, Sony’s Andrew House stated that the company “will not generate anything like the losses [Sony] did for the PlayStation 3.”
