They are really losing money (keep in mind that Nintendo actually profited this Q3, they do expect though to lose again considerably Q4).

Also, in before "but Sony are doing well in the gaming division", see article (6) below:

"Consumer Products & Services

Operating loss of 85.7 billion yen (1,099 million U.S. dollars) was recorded, compared to operating income of 63.5 billion yen in the same quarter of the previous fiscal year. This was primarily due to

(1) deterioration in equity in net income (loss) of affiliated companies,

(2) as well as a decrease in gross profit due to lower sales and deterioration in the cost of sales ratio, partially offset by a decrease in selling, general and administrative expenses.

(3) In the current quarter, Sony recorded an impairment loss of 63.4 billion yen (813 million U.S. dollars) on its shares of S-LCD to equity in net loss of affiliated companies, which is included in the CPS segment operating loss. In January 2012, Sony sold all of its shares of S-LCD to Samsung Electronics Co., Ltd. for a sale price of 1.07 trillion
Korean Won (72.3 billion yen as of the sale date).

(4) Restructuring charges of 1.0 billion yen (13 million U.S. dollars) were recorded in the current quarter, compared to 3.6 billion yen in the same quarter of the previous fiscal
year.

Categories contributing to the deterioration in operating results (excluding restructuring charges and the impairment loss related to S-LCD mentioned above) include

(5) LCD televisions, reflecting a decline in unit selling prices that exceeded cost and expense reductions,

(6) and the game business, reflecting higher marketing costs to promote network service platforms and lower sales of PlayStation®3 hardware due to a strategic price reduction.

(7) Operating loss includes additional LCD panel related expenses resulting from low capacity utilization of S-LCD

(8) as well as the above-mentioned asset impairment of 2.1 billion yen (27 million U.S. dollars) associated with LCD television assets."