Sony posts record $5.74 bil annual loss, PlayStation division reports $2.8 bil loss

sony posts record 5 74 bil annual loss playstation division reports 2 8

2011 was not kind to Sony. The company has been preparing its investors for just how bad for over a month. Sony finally reported its earnings for its fiscal year that ended in March, and it was not a pretty sight. The company reported a $5.74 billion loss for the year, less than the $6.4 billion loss it was previously expecting but still a record. The Consumer Products and Services division that includes the PlayStation business in particular was struck an absolutely crushing blow, a $2.8 billion loss for the year, down from a $135 million profit in fiscal 2011.

What happened? For the PlayStation brand, falling hardware sales were a plague. The PlayStation 3 saw only a slight dip, falling to 13.9 million consoles sold last year compared to 14.3 the year previous. Sony’s other surviving devices continued a steady decline into market irrelevance. PSP sales totaled 6.8 million handhelds, down from 8 million the year before, and the PlayStation 2 continued to slowly bow out of the electronics race it came to define for a decade, selling just 4.1 million consoles after moving 6.4 million the year before.

Software sales suffered as well. Even as the PlayStation 2 ceased being a hardware presence, it still moved games, but PS2 game sales were more than halved last year, falling to 7.9 million games from 16.4 million the year before. PSP game sales plummeted as well, down to 32.2 million from 46.6 million in fiscal 2011.

PlayStation 3 software was a bright spot though, growing to 156.6 million sold from 147.9 million the year before.

Sony is dead set on profitability for 2013, but its goals for the PlayStation line are modest to say the least. Expectations for the next year are 16 million combined PlayStation 3 and PlayStation 2 sales over the year, and 16 million combined PSP and PlayStation Vita sales. Software is expected to 196.7 million sales, fueled by upcoming titles like The Last of Us, God of War: Ascension, and The Last Guardian.

Sony’s future is bleak. The company’s empire, built across the ‘80s and ‘90s, was founded on the sales of physical media. Sony lived and died by the sales of devices like the Walkman, the PlayStation 2, and the cassettes, CDs, and DVDs that ran on those devices. The digital nature of media in 2012 means that, barring a profound transformation of its business, Sony will never reclaim its former dominance.