Microsoft's (MSFT) Halo 3 launch to put final nail in Sony's (SNE) gaming coffin?

Posted Sep 21st 2007 10:00AM by Brian White
Filed under: Competitive Strategy, Microsoft (MSFT), Sony Corp ADR (SNE)

Microsoft Corp. (NASDAQ: MSFT)'s release of the gaming title Halo 3 is what I consider to be the last stand for the software company to make just a single penny of profit on its billion dollar-losing Xbox gaming division. For years now, we're heard from J. Allard and other Microsoft execs that the software sales would make money for the division while the company continued to sell Xbox hardware at a loss just to get it into the hands of customers. Ditto for Sony Corp. (NYSE: SNE), which reportedly takes a large hit on each PlayStation 3 sale. So far, Microsoft hasn't made anything from the sale of Xbox machines.

Microsoft even cinched up its position to make the profit in video game sales by purchasing Bungie Studios years ago, makers of the Halo game franchise. The Halo games have been crucial to Microsoft's Xbox success in sales (reportedly over 8 million consoles), because without it, the company would have to seriously be thinking about exiting that piece of the entertainment biz.

This time around, though, Microsoft is carefully marketing the last episode on the Halo trilogy while not watering down or diluting the brand and killing it with ardent fans. These fans are the single reason Microsoft has stayed in the Xbox business, and they do have billion-dollar worth if you think about it. Halo 3, though, will only work on the newer Xbox 360 (not the older "Xbox"), which will help drive hardware sales. Or so Microsoft thinks. Are most Halo 3 fans already Xbox 360 owners? We'll see soon.

But, with Halo 3's release comes a possible death knell for Sony. PlayStation 3 sales have been lackluster (due to the high price; seems pretty obvious), and there have arguably been no breakout franchises for Sony like Halo has been for Microsoft. So, after December of this year, Sony will have a pretty good picture on just how long it's going to stick its neck out with the PlayStation 3 as the company continues losing money on each one sold. Sir Howard Stringer, who has been viewed as somewhat ineffective so far in his role as Sony CEO, may have some hard decisions in 2008.

Tags: featured, gaming, Halo 3, Halo3, Microsoft, MSFT, Playstation 3, Playstation3, Sir Howard Stringer, SirHowardStringer, SNE, Sony, Xbox 360, Xbox360

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Reader Comments (Page 1 of 1)

9-21-2007 @ 3:19PM

Informed Consumer said...

This headline is a provocative joke.

I loved both Halo and Halo 2, but will not spend money on anything with a 30% failure rate.

There are 120 million PS2 owners to convert, which is still selling surprisingly strongly, compared to a small fraction of that as xbox market share.

The PS3 is at the beginning of it's life cycle, which developers are only beginning to tap. Sony has not dropped the price because it's not worried. The 360 has already peaked as a High Def gaming platform (regarding technical capabilities).

Also regarding console price, ff you intend to game and play high definition movies, do the math and you'll find the PS3 is cheaper than any any bolt-on scenario with the 360.

9-21-2007 @ 8:53PM

jay said...

I hear the PS3 gonna get rumble soon ..thats so next gen :) Also I cant wait for next year when Sony home releases I can dress my Ken doll and go to the shopping mall for a little Online :) Sony has lost the mainstreem, sure they have the core fanboy...but no coolness at all

9-21-2007 @ 11:07PM

dumbass23 said...

Go to Hell Informed consumer the wii is also kicking ass

9-21-2007 @ 9:39PM

2OLD 2PWN said...

Sony put their own nail in their coffin with the lack of titles and multiplayer online support. I actually have a 360 and a PS3 and all I use it for is to watch Blu-Ray movies.

But even the blu-ray player has some glitches. Everytime I watch a movie the controller sends a signal out to the unit to bring up the on screen menu...and it does this at least 7 times during the entire movie!

That is Re-donk-ulous! If anyone wants to team up with me & my clan on Halo launch night just contact me through our blog: http://2old2pwn.blogspot.com/

Happy Gaming Everyone!

9-24-2007 @ 7:22PM

Jack said...

Howard Stringer viewed as ineffective? The stock has gone up about 70% since he was named CEO. You clearly do not have the foggiest idea what you are talking about.