It’s always interesting to find out whether new consoles are selling at a loss, or even making any money at all (games included) in their first year on the market. Though slim, All Things D is reporting that the PlayStation 4 does in fact squeak by with profit margins above zero, netting about $18 in the green per system sold. Of course, this doesn’t include shipping and other costs involved with getting a system to market, but still – manufacturing cost falling below MSRP is generally a good thing for a product to achieve.
The info comes via research firm IHS — who have since released their findings publicly — and despite the perceived net profit that results when you subtract $381 from $399, there’s more to the story according to IHS’s Andrew Rassweiler.
If your cost is within $10 to $20 of the retail prices, there’s very little chance you’re making a profit on the console. It looks like once again, when it comes to profits, it’s all about the game titles.
Despite this, the loss Sony may be incurring with each PlayStation 4 sale is still a massive improvement from the situation surrounding the PlayStation 3 when it launched back in 2006. A system selling for $599 that cost $805 to build (again, before shipping and other non-manufacturing costs), the PlayStation 3 required substantial game sales in order to be profitable. Even by 2009, despite the build cost of the PS3 dipping all the way down to $336, Sony slashed the MSRP to $299 to encourage sales. I guess this stuff is all more difficult than it sounds.
Whether the PlayStation 4 is profitable now is probably somewhat irrelevant – the mere $18 deficit suggests that a PS4 may reach profitability with as little as one game sale to accompany it. Either way, if the PS3 is any indicator, the system should be able to reach desirable margins far sooner that its predecessor.