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do consoles really cost more to make than they cost to buy?





EanofAthenasPrime
Like my friend said that consoles cost for to make than they do to sell. He says the game industry makes all of its money on the games. This means that (for example) it would cost Microsoft 500$ to make an XBOX 360. yet they only sell it for 400$. Is this true.
vonboy
for mocrosoft and sony, yes. when they first release thier console, they take a huge loss in the begginning in hopse to make it back and more. right now, sony is taking a loss on thier console, but i think microsoft is making a profit now. now they just have to get out of the 2 billion or so hole they dug Laughing .

nintendo's stragety is to make money to start off, so the wii costs them like $180 to make, and they sell it for $250.
Patriot Players
No. While they have to go into debt while developing console, as the post above me details, what you seem to be asking about is the actual manufacturing cost of the unit.

It would be a very very very untenable business model to have something cost more to make than you sell it for. Especially since Sony and Microsoft do not do in house publishing for the majority of their games, meaning most of the money from game sales do not go to them. I wouldnt be surprised to see that there was a very large profit margin on the consoles.
spinout
As far as microsoft n the xbox - I used to work at the company that made the circuit boards for the first xbox - the margin was bad then - or a loss actually... so it's a risky biz... but Microsoft had that part cheaper then...

Atari did not so well on the 2600, remember that...
EanofAthenasPrime
Intriguing.
mynameis
Yep this is true, just think how much it would cost to build a pc with the same-ish specs. the fact is that you can... ok its still not a console but yeah just price it up. It won't however come to anything under 280 which is the going retail price for an Xbox 360 today. In Sony's perspective as their ps3 comes with a blue ray dvd player. their losing hundreds of per unit... you can't even get a standalone blueray dvd player for under 500. They are however making big money on games, both Microsoft and Sony publish games and if you think how many game sales any Microsoft published game gets... In the end its all just value for money aslong as the gamble pays off.
tekanubis
It's true, they sell consoles at a loss, and they almost always LOSE MONEY! You know where they make money? On the games they release ie nintendo makes money on the nintendo releases like mario, zelda, etc. Microsoft has halo and such. That's where all the profit is actually made.
vonboy
but nintendo is making a profit on there wiis, and i think ds's too, though your right. the game disc with packaging and booklet and stuff probably only costs a few dollors each to make, and then they sell them for anywhere from $20-$60.
Packfan104L4
vonboy wrote:
but nintendo is making a profit on there wiis, and i think ds's too, though your right. the game disc with packaging and booklet and stuff probably only costs a few dollors each to make, and then they sell them for anywhere from $20-$60.


You forget about the 10s of millions of dollars it takes to you know, research, write, program, and produce the game. It's not like *poof* GAME DISC YAY!
LostOverThere
vonboy wrote:
but nintendo is making a profit on there wiis, and i think ds's too, though your right. the game disc with packaging and booklet and stuff probably only costs a few dollors each to make, and then they sell them for anywhere from $20-$60.


Very true.

I know for a fact sony loses $100USD per PS3 they make. I'm almost 100% sure Nintendo makes Wii's for about $180USD (Right?).
vonboy
ya i now about the cost to design the games, but the company that owns the consoles charges a bunch of licensing fees and junk to 3rd party games too i think. they also charge for the dev kits. i think the wii's dev kits cost $1000, and the ps3's are like $10000 or something.
reddishblue
LostOverThere wrote:
Very true.
I know for a fact sony loses $100USD per PS3 they make. I'm almost 100% sure Nintendo makes Wii's for about $180USD (Right?).

Care to source either of these facts? I am quite sure it will be a facinating article.
I personally don't believe this rumor, no company would create something that would lose them money, even if they can recoup the costs later, it's simple economics, sure, they may take risks, but major companies like Sony will never knowingly lose money on an important product. Don't forget this is a very large part of Sony they would be gambling with if this was true, maybe about 25% of it, worth billions.
I doubt Sony would reveal this anyway, even if it was true, they have stockholders to please you know.
Reddish
vonboy
well there was a tech tv show or something that took a ps3 apart, looked at all it's components and how much they cost, and estimated what it cost to make the console. it's not exact, but it's probably kinda close to the real answer.

though they said it cost them like $900 Shocked . i think what sony did with the pd3 was stupid, but even i don't think they would perposly lose 300 bucks on each console. mayby like 50 or 100, but not that 300.
m-productions
OMG... people.. plan and simple NO THEY DONT.

where did you hear this about them taken apart a ps3 and it being 900??? bull, back before the ps3 came out, in PSM they had an article interview people of the design team and listed the parts with the specs, and said the cost. they are not losing money on each sell people..... *sigh*
LostOverThere
Quote:
The initial production cost has been estimated to be USD 805.85 for the 20 GB model and USD 840.35 for the 60 GB model. The high manufacturing costs mean that every unit is sold at a loss, leading to Sony's games division posting an operating loss of 232.3 billion ($1.97 billion US) in the fiscal year ended March 2007.


The full article is here:
http://au.ps3.ign.com/articles/746/746482p1.html

And Here's the article which states Sony and Microsoft both lose money for each console sold. Nintendo Makes money.

http://arstechnica.com/news.ars/post/20060915-7752.html

Here's a snip from the above URL:
Quote:
As expensive as the Xbox 360 is and PS3 will be, the manufacturers take a loss on each unit sold. Not so with Nintendo. In an interview, Nintendo chief marketing officer Reggie Fils-Aime said that the company's next-generation console will be a money-maker from the get go.
Packfan104L4
LostOverThere wrote:
Quote:
The initial production cost has been estimated to be USD 805.85 for the 20 GB model and USD 840.35 for the 60 GB model. The high manufacturing costs mean that every unit is sold at a loss, leading to Sony's games division posting an operating loss of 232.3 billion ($1.97 billion US) in the fiscal year ended March 2007.


The full article is here:
http://au.ps3.ign.com/articles/746/746482p1.html

And Here's the article which states Sony and Microsoft both lose money for each console sold. Nintendo Makes money.

http://arstechnica.com/news.ars/post/20060915-7752.html

Here's a snip from the above URL:
Quote:
As expensive as the Xbox 360 is and PS3 will be, the manufacturers take a loss on each unit sold. Not so with Nintendo. In an interview, Nintendo chief marketing officer Reggie Fils-Aime said that the company's next-generation console will be a money-maker from the get go.


Thank you for actual article posting, since vonboy and his 10 year old spelling were never going to post anything real. Come on, anyone who watches Tech TV is a wee one.
nolag
obviouly not. Depends where they make them.Theres no point making something thats not going to get you profit is there? Unlesss the do it just to get there name bigger
vonboy
i think the main reason for the ps3 is to promote blue-ray discs. they don't care if the lose money on the console, because if that format wins, then they will make TONS of money.
Packfan104L4
vonboy wrote:
i think the main reason for the ps3 is to promote blue-ray discs. they don't care if the lose money on the console, because if that format wins, then they will make TONS of money.


More false info. Yes they do promote the Blu-Ray format, but it's not the reason to produce PS3s. If someone wanted a Blu-Ray, they're drop the 250-300 bucks on a player instead of an overpriced gaming system.
reddishblue
Packfan104L4 wrote:
vonboy wrote:
i think the main reason for the ps3 is to promote blue-ray discs. they don't care if the lose money on the console, because if that format wins, then they will make TONS of money.


More false info. Yes they do promote the Blu-Ray format, but it's not the reason to produce PS3s. If someone wanted a Blu-Ray, they're drop the 250-300 bucks on a player instead of an overpriced gaming system.


The players can cost as much a 1500 dollars.
Example:

Wikipedia wrote:
On December 4, 2006, Sony launched their first standalone Blu-ray Disc player, the BDP-S1, to the U.S. market for $1000 USD.


The PS3 is actually CHEAPER then this Blu-Ray Disk player, so it's more of an incentive to buy the games console then a stand alone player, and it's a Sony console, so they NEED Blu-Ray, I mean, who wants another Betamax, look here for details of that huge blunder http://en.wikipedia.org/wiki/Betamax

If Blu-Ray is successful then this will be all worth it, and if HD-DVD takes off http://en.wikipedia.org/wiki/HD_DVD then future Xbox 360s will probably have a player inbuilt, it's all about video formats this generation, and Sony is doing a better job of promotion, choose your side now people, this is going to be an epic battle.
Reddish
blk3
Even if these companys lose or make a profit on the consoles they sell, it is still too pricey for me. Hope that they lower their prices altogether and just make profits in games. That way consumers wins !
Satori
reddishblue wrote:
The players can cost as much a 1500 dollars.
Example:

Wikipedia wrote:
On December 4, 2006, Sony launched their first standalone Blu-ray Disc player, the BDP-S1, to the U.S. market for $1000 USD.


The PS3 is actually CHEAPER then this Blu-Ray Disk player, so it's more of an incentive to buy the games console then a stand alone player, and it's a Sony console, so they NEED Blu-Ray, I mean, who wants another Betamax, look here for details of that huge blunder http://en.wikipedia.org/wiki/Betamax

If Blu-Ray is successful then this will be all worth it, and if HD-DVD takes off http://en.wikipedia.org/wiki/HD_DVD then future Xbox 360s will probably have a player inbuilt, it's all about video formats this generation, and Sony is doing a better job of promotion, choose your side now people, this is going to be an epic battle.
Reddish


There certainly is a huge format war going on. Though I can't really predict which will win, I do hope that Blu-Ray wins in the end. The biggest mistake I see from Blu-Ray is their decision to exclude porn videos from their production. The Porn industry is a HUGE market with a lot of weight to throw around. HD-DVD has embraced the industry while Blu-Ray has scorned it. I can just see it now...HD-DVD winning the war because they make "debbie does dallas 10" and Blu-Ray refuses...hahaha!
blk3
You may be right there, Sony is heavily promoting their Blu Ray thru PS3 (it has capability to play both games and movies). Whoever wins the format war, consoles have to adapt it. Like if blu ray wins then maybe XBOX 360 and Wii will have that drive add on in order to play blue ray movies.
LostOverThere
I think it will be a while before movies/games are actually standardly sold on Blu-Ray/HD-DVD.

DVD is all we need at the moment. Anyway, im putting my money on HD-DVD - last time Sony went in something like this they lost out big time (Cough, BETA)
blk3
But Blu ray has more capacity than HD-DVD right? I mean if before Sony lost their Betamax format to VHS (its because VHS quality is much more superior that Betamax) I mean with the Blu Rays capacity they'll be able to put in more content (as in much finer grphics resolutions, more sound channels etc.)
srujanlive
Microsoft has yet to start making profit from its XBOX. This is considered to be the bleeding business for Microsoft. But it has been reported that it would soon be over and profits would start thanks to its XBOX live and sales in newer markets. But PS3 s woes are far from over. Sony is expected to announce a price cut soon inspite of it already selling it for a loss. sony cannot be expected to make profit out of its PS3s anytime soon but it is betting on the Blu-Ray HD DVD war to turn things around. PS3s have boosted sales of Blu Ray discs and have given it an edge over Toshiba's HD DVD.
Packfan104L4
The PS3 price cut was just announced. The current PS3 with HD is being cut to $499 while they're introducing an 80 GB HD PS3 for $599.

Still lame. I'll buy an XBOX 360 still.
SlowWalkere
Something else to consider while gauging how much a unit costs to produce versus how much the manufacturer gets back. If you pay $599 for a PS3, Sony doesn't get $599.

These items are sold at retail stores, and like all retail items they are sold to retailers at wholesale prices. Although video game systems may have special pricing systems, retail items are generally purchased by retailers at about a 50% discount. So, that PS3 would only net Sony about $300. The actual amount may vary (a common range for retail items would be 40-60% of retail price), but one thing is for sure - Sony doesn't get the whole sticker price.

So, for Sony to make a profit on their units, it would have to cost far less than $599 to produce - more in the neighborhood of $300.

- Walkere
votd
It's always like that. If they want to make cash from their consoles, they must wait some years for technology and parts to become cheaper. I believe that Microsoft was giving 200$ to each Xbox when it was released. But after that, there's only cash cash cash :]. But still - consoles aren't cheap... because it's newer technology than you can have in your PC (well maybe today it's not...).
reddishblue
blk3 wrote:
You may be right there, Sony is heavily promoting their Blu Ray thru PS3 (it has capability to play both games and movies). Whoever wins the format war, consoles have to adapt it. Like if blu ray wins then maybe XBOX 360 and Wii will have that drive add on in order to play blue ray movies.

Microsoft is supporting HD-DVD, they will not stop fighting for it to win until the very end, so you can't expect a Blu-Ray disk player in any Xbox for some time, maybe never if it doesn't take off in gaming.

Nintendo will take a very long time to catch on with this new tech, they are above all trying to keep their consoles cheap, only after Blu-Ray is nearly obsolete will they finally catch on Wink

I have doubts that Blu-Ray will ever have a place in gaming, developers are going to have a hard time filling 50 gigs with actual content, I think DVD is as far as they need to go, then again, people thought cartrages and CDs were the last stage, so I am probably wrong, it all depends on the video format war, and if the PS3 is successful, which it may or may not be.

Reddish
MJMX
That may be true. They get lost money back by selling games, more customers buy a console when the price is lower... more customers buy games after buying a console. I'm sure they wouldn't run the whole project if they haven't get money from it Idea
LostOverThere
blk3 wrote:
But Blu ray has more capacity than HD-DVD right? I mean if before Sony lost their Betamax format to VHS (its because VHS quality is much more superior that Betamax) I mean with the Blu Rays capacity they'll be able to put in more content (as in much finer grphics resolutions, more sound channels etc.)


No, BETA was actually much much higher quality and picture. Just much more expensive then VHS.

VHS was cheaper, and although it may have been worse, BETA was far to expensive for the average family. Until very recently news studios still recorded on BETA, they now use DVDs.
Guelila
But I thought games were made by other individual companies like Capcom..? Question
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