Can Sony actually pull this off?

I’ll admit that at first glance, Sony looks like it’s taking this platform generation by storm. A cheaper price point, more powerful hardware and no restrictions on used gaming sounds awesome. The question is can they really afford to do so.

The price point they’re entering the market with is killer but, with Sony as a whole reporting loss after loss each quarter, one has to wonder if they can actually pull this off. At some point, Sony has to right the ship and get back to profitability and their entertainment division has been abysmal. Investors are calling for the company to spin off the division because it’s dragging the rest of the company down. With their current balance sheet being what it is, I don’t know how they can afford to take such heavy losses initially on this console. I don’t think the pricing they announced was a corporate decision put in place well before E3. I do think the game plan was to undercut MS by 20 percent no matter what they announced. They probably had multiple slides prepared for exactly that. Announce the pricing, worry about the logistics later. And with the Yen gaining strength against the dollar…..what happens after 2-3 more quarters of straight losses?

And this whole DRM issue. I’m not a DRM fan but publishing companies most definitely are and this leaves them in a tough position. Developing for the One means being able to profit from used game sales. No one knows exact numbers but we’ll say it’s anywhere between 15-25% in additional revenue for their game sales. That’s a significant amount. An amount they won’t see on Sony’s platform. So where is the incentive to develop for Sony? Especially if you’re a developer that’s just barely skating by with every game launched. It’s more about survivability than anything else and one of the reasons why DLC has taken off so well.

I’m willing to bet that this was a promise both companies made to developers going into this generation but Sony had no intention of keeping. Mostly because they couldn’t afford to. If developers refuse to develop AAA titles for Sony, where does that leave them 2-3 years into this new generation?

Thoughts?