Picture this: one of gaming's most-desired properties, the PlayStation, almost faded from existence. While today the console industry is generally accepted to be dominated by PlayStation, the road was not always smooth. The PlayStation 3 era really did pack a financial punch for Sony, who almost sunk the entire PlayStation ship in that time.
Recently, Shuhei Yoshida shared an interesting tidbit regarding his experience at Sony since the very beginning: while PlayStation 3 would eventually go on to sell a fairly respectable 87 million units, it was so deep in red ink that the entire idea of Sony's console business was at stake.
A Billion Dollar Loss Unbelievable
Yoshida recalls checking the finances during those somewhat dark days of the PS3. The numbers were horrible. "We lost a billion dollars," he recalled. Picture for a second: a billion dollars lost. For many companies, that could mean a nail in the coffin. Even Yoshida says he himself feared it was the end of the PlayStation.
It is astounding to think that a console generation, which ultimately outsold its chief competitor in the Xbox 360, was also one of the greatest financial burdens. If the PS2 was a sales monolith, the PS3 opened to a market already confused by its exorbitant pricing and elaborate technology.
The Unlikely Savior Flat-Screen TVs
Now, how did PlayStation manage to survive this near-fatal blow? The remedy was as unexpected as it was incredible: flat-screen TVs. Yep, you read that right. While the PlayStation 3 was tumbling over cash with losses, Sony`s TV division was thriving. The selling of flat-screen televisions profited enough to counterbalance the vast losses in the gaming division.
Yoshida directly stated, "Fortunately, Sony flat TVs were very popular at that time. The TV unit earned enough to cover PS3 losses, so we survived." This is a fantastic story of corporate synergy, where one division's success literally saves another division in dire straits.
Lessons Learned and Future Success
The PlayStation 3 story reminds us that even the greats of the industry can face life-and-death problems. It also sounds a clarion call against the hazards of high-risk technological investments, as ex-PlayStation head Sean Layden had earlier flagged the expensive and intricate design of the PS3's Cell processor as a significant contributor in its financial troubles.
Today, PlayStation is thriving. The PlayStation 5 is now a hit, although a different market landscape. But worth remembering is that the way to this dominance was paved with almost disasters and an unlikely rescue with an entirely different corner of the Sony empire. It's a story of survival, and a testament to varied strengths within Sony which enabled the PlayStation brand not just to exist, but prosper.
