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Retail Blog Reports ¥700 Take on New PS3

Which means Amazon is taking a loss on each system sold.


Retailers and publishers alike don't usually make much money off game hardware. The thinking is that you sell the hardware for as low a price as possible and make mega bucks off the software.

So how does the new slim PS3 fit into this model? There has been some indication, both internally and from analysts (well, one analyst at least) that Sony is still taking a hit on the hardware.

Now we have a first indication about profitability for the retail side. A representative of a shop called Game Shop Vita made a blog post recently stating that finalized paperwork from Sony indicated that if they were to sell the new PS3 at the MSRP of ¥29,980, they'd make ¥700 in profit.

I don't have any information on the retail intake for other systems, so I can't do a comparison. The thing that interests me most about this figure is that it means that Amazon.co.jp is taking a loss on the system. The online retailer is charging ¥28,380 for the system, which means a ¥900 loss, assuming Sony is selling the system to all shops at the same price.

A ¥900 loss may not be so bad if you get people to pick up a game or two with the system. Back in May, business magazine President had an article detailing margins for third party Nintendo games. The article stated that retailers take in 33% of software sales price, or about ¥1,914 for a game priced at ¥5,800. This figure was an estimate by the magazine's staff based off interviews with related parties, and it may or may not apply to Sony product, but assuming a similar pricing structure, Amazon can hope to make back its cash with just one software purchase (unless they're budget release purchases -- as you can see in the PS3 release chart, the PS3 slim launch is being backed by a flood of 2,980 yen re-releases).

Other retailers like Bic Camera and Yodobashi Camera will be selling the system at the MSRP, but they give 10% back in points to those who use cash (8% to those who use credit card). That means about ¥3,000 in points that can be used towards another purchase. I imagine most would purchase their games directly with the system, meaning the points would be used for other product. Some points-based shops also allow buyers to cut their points in half in exchange for an extended warranty.

More than the PS3 slim's profit margins, I'm interested in hearing from retailers about the PSP go. Retailers won't be able to make money off software sales for the download-only system. Furthermore, a retailer stated last month that Sony's point cards have to be sold at cost. I expect the intake on PSP go will be a lot higher than ¥700.

(as seen at My Game Flash -- fun ASCII art awaits, as usual)

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