Sony Hurting

PS2, PS3, PSP

On industry site, gameindustry.biz, it has been annnounced that Sony has a 68% drop in operating profits for the last financial year. This translates to a 71.8 billion yen (~$AUD718 million) profit for Sony for the year, compared to a profit of 226.42 billion yen (~$AUD2.26 billion) last year. According to the announcement "In the Game segment, there was a significant operating loss as a result of the sale of PS3 at strategic price points lower than its production cost during the introductory period," said the company in its annual report.

The games devision recorded a 232.3 billion yen (~$AUD2.32 billion) loss, primarily due to selling the PS3 at lower than manufacturing cost, as well as the cost of the launch across the globe.

In positive news, sales were up 10.5% and net profit up 2.2%.

Not all was bad news however - "A significant reduction in operating loss is expected due to rapid reductions in hardware production costs and an enhanced line-up of software titles in the PS3 business," Sony stated. Sony expects operating profits of 440 billion yen for the current financial year ending March 2008.

Previously, Sony's games division has been one of the most profitable out of the company. 

Sliced Comments: This is not totally unexpected, as the initial PS3 launch would cost more than it would make to start with, and the PS2 revenue would drop as it ends the end of it's life. Over the next 12-24 months the games division should become more profitable as it has in the past with the PS2.  

According to speculation, Microsoft's Games Division may not be faring much better - however they do not publish seperate profit figures for their games division.