The Playstation 3 has been a milestone in gaming and home theater. Helping drive Blu-ray and now giving users the option of 3D movies and games, the PS3 is the most powerful game console to date. However, with all of this might behind it, the PS3 needed to compete with everyday gaming systems that didn’t offer HD or came with only DVD players and this meant pricing it at a level that would sell. What Sony considered a low launch price, one of $600, was still higher then what gamers wanted to pay Therefore, with each console sold, Sony was losing hundreds of dollars. Finally, 4 years into the cycle and now with a starting price of $299, depending on who you talk with, Sony is either breaking even or make a few dollars on each console. During the years, as Sony tried to balance its supply and demand and lower its production costs on the PS3, the company’s gaming division would go deeper into the red, losing billions of dollars. With each quarterly loss and movement further into the red, this made it harder for Sony to put money into advertising and other areas that would need funding in order to sell more PS3s and help the company lessen its gap with Microsoft and Sony. Thus, the catch 22 had started.

Finally, 4 years into the cycle, Sony is looking at the PS3 and Playstation Move to make a profit from. When the Sony Worldwide Studios boss, Shuhei Yoshida, went on record about the Playstation Move, he said “We are pricing Move as if we are launching a new platform.” He went on, “So because the install base of Move will help third party studios create games for it, we benefit by helping those third-parties. But we are not losing money with each one we sell.”

This shift in Sony’s capability to launch the Move and make money on it will hopefully be the halo effect that the company needs. With each PS3 and Move unit now sold, Sony can bring in a higher profit level to their game division, thus allowing them to invest more into future R&D and current system features like the recently added native Hulu app for the Playstation 3. But the positives are not only for Sony; they are for the consumer as well. The more Sony can invest in their product and give users more compelling content and bring them under the Playstation umbrella, the more units they can sell. With a higher sales volume, Sony can make a shift in their supply and demand strategy and offer the Playstation 3 at a lower price, thus bringing in even more users in. That is a cycle that Sony is looking to Move towards. I love puns…

[Via Develop-Online]