Sony, manufacturers of the legendary PlayStation range of consoles, forecasts a loss of over US$413 million, in Sony’s console game division this year.
Their recovery from these huge losses are not expected any time soon. More specifically, the profits will start coming in for Sony only after the PlayStation3 is put into widespread use and games are sold in large numbers.
Earlier this week, Sony had reported operating losses for the first quarter of 2007. Bulk of this loss was caused by PS3.
Sony’s other businesses, mainly its flat-panel TVs and their iconic Vaio range of laptops, meanwhile, are basking in the glory of record profit forecasts.
Insight
Sony and Microsoft launched PS3 and Xbox360 respectively at low prices, which would make losses for them. It was a calculated risk. They expect to recover these losses from selling games in large numbers.
Sony is rumoured to be recurring costs of over $800 per console, and sells it for just $500 for the base model and $600 for the premium model.
They say that it will take considerable time to offset these huge losses.
Sony is banking on PS3 to promote Blu-Ray disc consortium, which Sony heads. PS3 sports out-of-box support for BD discs, which according to Sony, will help boost the popularity of BDs.