Sony has lost over $3 billion on the PS3

Think you paid too much for your Playstation 3? Don't expect any sympathy from Sony.

In the company's fiscal 2008 annual report, Sony revealed that they've now lost roughly $3.3 billion (that's billion with a B) on the Playstation 3 since its launch. That breaks down to $2.16 billion in 2007, followed by a notably smaller but equally daunting $1.16 billion loss in 2008.

The reason? Pricing the console below its production cost. That's right - that hefty $599 you paid for the PS3 back when it first launched was significantly cheaper than the cost of producing it in the first place, and while the retail price has come down some, the losses keep piling up.

Investors have reason to sweat. In a statement, Sony claimed "the large-scale investment required during the development and introductory period of a new gaming platform may not be fully recovered." They went on to note that they've invested a great deal of money into R&D for the console, a sum they might not be able to recoup if the PS3 "fails to achieve such favorable market penetration."

Sony fanboys should take heart, however. Losing money on hardware is relatively common in the video game biz, as companies routinely lower prices to sell more units and thus stimulate software sales. Sony's game division saw a 26% sales spike last quarter, a trend they expect will continue on the strength of strong exclusives like the recently released Metal Gear Solid 4 and the upcoming sequel Resistance 2.

But will it be enough?

Source

MS may've lost more for all I know, but it's still a fair chunk of money

That they don't earn money with the hardware itself, is something that doesn't surprise me at all (since that is happening with any console). Though a loss of 3.3 "gigadollar" is a bit too much in my view, since I can imagine that a few millions can be earned back with the games (devs have to to pay console manufacturers). But several billions seems to be a different story to me.

Yeah, MS lost over 6 billion (funny enough I have some shares in them). Atleast Sony has a small chance in hell of getting their money back, MS can forget about it. Nintendo seem to be the only one making a profit on new hardware (thats not counting the PSP and PS2 of Sony as they are not exactly new)

From what I have gathered the PS3 currently costs about 335 to produce. After taxes however they still make a hefty loss on each PS3. New shrinks are on the way and should keep manufacturing prices down, PSP and PS2 sales will somewhat compensate for those losses though. Shares of both Sony and Nintendo did go up after releasing their numbers as long term prospects look great.

Anyway, thank you Sony for paying the bigger part of my PS3 for me then. I cant really feel sorry for a company that rules the console market to this day (PS2 is still around after all), and sold a shitload of their Bravia televisions to all hd customers. Blu ray ,which made up the bigger part of the costsin terms of r&d for Sony eventually made them win the hd war and they will benefit from that for ages. Digital distribution, the follow up to blu ray as a hd format simply wont take off till enough people have at the very least a 40mb connection to stream 25GB movies in real time. Till then blu ray will bring in billions for Sony and will profit the PS3 greatly.