[rescue] OT: FeeCee rescue

N.Miller vraptor at promessage.com
Fri Oct 3 23:21:11 CDT 2003

On Wednesday, October 1, 2003, at 04:29 PM, Devin L. Ganger wrote:

> campus, I can say pretty squarely that the "Microsoft loses money on
> every Xbox sale" meme is wishful thinking at best and outright 
> deception
> at worst.

Knowing Bill Gates, I'd agree with that.

> I also have a good friend who works across the way at Nintendo; 
> companies
> that lose money on consoles and attempt to make it up in game sales go
> out of business.  Now, console companies may only make *pennies* on 
> each
> console, but the successful ones *do* make money on them.  They are by 
> no
> means the bulk of their profit.

I can't say for sure that Sony makes money on the PS2.  I do
know that the employees paid $100 for them in the company store;
if they wanted to order from distro, they got them for $75.

The cost of the PS2 is more than hardware dev, low-level software
dev, and the other costs associated with manufacturing a product
(distro, advertising, physical cost of components, etc.)  In the
case of Sony (may/may not apply to other console manuf), you also
have to take into account:

* licensing costs--b/c PS2 is DVD-based, games are region-encoded
     for a game produced in the US to be released in the UK or
     Europe, there is the overhead of managing the licensing
* 1st party QA--for any game to get the PS2 logo on it, it must
     first be vetted by Sony QA, e.g. "1st party QA"; ditto for
     hardware accessories to be "official".  This included building
     infrastructure for testing new network-based games.
* add-on software/hardware R&D--in-house R&D working on ways to
     stretch the envelope of what's possible on the existing
     hardware.  The group that I worked for was focussed on the
     network (broad- and narrow-band) adaptor.  A license for a new
     TCP/IP stack was purchased from Cisco (not cheap); the developers
     in my group had been working over a year on streaming media
     client, email client, "ticker" client, irc client.  All of this
     source was to be given away free to 3rd party developers to use.
     Other groups were doing things to develop other ways to control
     a game (think image acquisition).  These groups all had separate
     support teams (not really an IT function--more lab support).
* 3rd party support--there was a group that supported 3rd party
     dev efforts, feeding them assistance, stamping out bugs in the
     developers' tools, etc.

There's a lot more overhead in there than you might think.

The reality is, the profit is in the games ($50 ea, and they
sell a lot more of them than PC games).  Sony came to realize
after the success of EverQuest (or EverCrack, if you prefer),
that the real profit was in hooking people for a monthly pay-
ment (i.e. *services*).  You'll see a lot more of this in
the future as broadband becomes easier to get.  There are
people like us that have a computer + a console; there are
a lot more folks out there in the universe who will only ever
have a console--that's the market that they want to tap...


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