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The Financial Risk to Launching a New Console

PLAVETATION Ф SONY THE FINANCIAL AISH TO LAUNCHING A NEW cons OLE P 54 P AODUCTION c OSTING S 24 Estimated initial cost of production: $1000 Cost of Production ($ per unit) 1000 800 PlayStation 4: $1000 (est) PlayStation 3: $805.85 600 Xbox 360: $715 Sony PSP: $230 400 Nintendo Wii: $160 Nintendo 3DS: $100 200 PS4 PS3 360 PSP Wii 3DS The biggest risk with launching a new console lies in the huge production costs HOW MANY UNITS mus T sonY SELL TO ST AND A CHANC E OF SUCCE SS? 150° Nintendo DS: 139,000,000 global sales 120 PlayStation 2: 138,000,000 global sales Nintendo Wii: 80,000,000 global sales PlayStation 4: Estimated predicted sales 90 of 60,000,000 Sony PSP: 59,000,000 global sales 60 Xbox 360: 51,000,000 global sales PlayStation 3: 48,000,000 global sales 30 *Left axis refers to unit sales in millions DS PS2 Wii PS4 PSP 360 PS3 To stand any chance of being successful, Sony must sell a minimum of 120 million units BATTU E OF THE C ansOLES SONY'S playstationy ( VS MİcrosoFt xbox20 Leaked Specifications: AMD A8-3850 APU UNNAMED 16 CORE CPU CPU RADEON HD 7670 RADEON HD 6670 GPU 2GB RAM 2GB BLU-RAY OPTICAL DRIVE BLU-RAY HARD-DRIVE STORAGE HARD-DRIVE Previous consoles have benefited from strong USP's, this time it's looking like components are going to be very similar. How will Sony reduce the risk? P 54 IMPAOVE MENTS Entertainment: Blu-Ray CPU Memory: 16 Core 6.4Ghz 2GB XDR2 PLAVSTRTIons Format: Online Only? GPU: Radeon HD 7670 Connections: 4 x USB 3.0 Networking: Ethernet / Wi-Fi IS 3D GAMING VIABLE? Sony has been a pioneer in the home 3D experience developing 3D cameras, 3D TV's and the world's first head mounted 3D display. 50% 2012 2013 25% The 3D share of the LCD TV market is expected to be 25% by the end of 2012, and 50% by the end of 2013, just in time for the PS4. It's highly likely that 3D gaming will play a big part in the PS4 experience. To fully enjoy a 3D PS4 experience, you'll need: HQ 3D glasses $40 42" 3D HD TV $600 PS4 $700 Likely total cost: $1,340 WILL THE P54+ TAY To HILL THE US ED GAMES MARH ET? Q4 2011 - the UK used games market was 10% of the entire spend on boxed games. Gamers spent £90m on pre- owned games during the Christmas period. If recent rumours are correct, then PS4 owners are likely to be locked to a Sony Entertainment account, meaning games will have no resale value. DIABLO Diablo 3 proved that connecting to games via the publshers servers is harder than it sounds. Following the highest ever pre-order sales figures on Amazon, Blizzard's servers simply couldn't copy with demand. Thousands of gamers were left not being able to play the game they'd spent money on. Other considerations include piracy and cracks - the problems are much larger than just the used Piracy costs the industry approx $1 billion per year with at least one pirated version donwloaded for each copy sold. games market. nEW GAMES V5. uSE D GAMES New Games: Publisher Wins SONY Are paid a 10% licence fee ($6) 12:78:88 New games sells for $60.00 Retail store paid only 20% ($12.00) Publisher and distributor paid 70% ($42.00) Used Games: Store Wins Seller is paid 20% ($10) Used games sells for $50.00 Retail store is paid 90% ($40.00) Publisher is paid 0% ($0.00) THE BI GGEST GAMING HITS GUARII HeRoil CALLEDUTY Wii Fit ROCKEAND MODER ARFARE LEGENDSROCK BLACK O PS W6'DEBS S787.4m AGGIVISION/BUZZARD 5736.6m S713.6m S670.7m Viacom/MGVV AGGIVISION Ucendo AGTIVISION/byzzaRd Infographic powered by Ladbrokes ST:ETBE:ST8 Ed:da:S88 BY NC SA Sources: eXO STETBeSTa Edrda:588 ET:580:00 STETSEST8 Eddd:S88

The Financial Risk to Launching a New Console

shared by JonQuinton on Jul 18
A look into the financial risk behind launching a new gaming console. What production costs are involved and how many units must be sold for success? In addition to this - how do manufacturers invest ...


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