Nope they make money off of the hardware it self, Make it for lets just say 199$ sell it for 249$ BOOM!!!profit.

Being big companies, it was right to put so much money into those consoles. Otherwise there wouldn't be such a significant difference between smartphone/tablet games and console games. It's a huge entertainment pack with games so big and complex they can't be done on small devices.
But even if this will fail in the future because (almost) everybody goes for mobile, there will be consoles. There always were consoles that weren't successful but survived and they had great games.

In the end, why should consoles die when this generation was sold so much? The companies just need to go on and will eventually get rid of the red numbers because it's all set up.

Yeah so it's likely even including R&D costs for the next consoles.

What we know:
Xbox made huge losses
PS2 made some profits
Wii made huge profits
360 made huge losses at first but was profitable rather quickly
PS3 made even bigger losses at first and became profitable a few years ago.

I'd say that's the general consesus.
If 360 or PS3 made enough money to recoup the first few years of losses is a whole different story, that can only be answered by Sony or Microsoft as we can't see it in their financials.

People know the losses for the PS3 are misleading but that they still continue to quote them is kind of annoying. The PS3 shouldered the responsibility and cost of pushing Blu-Ray for Sony's other entertainment and manufacturing divisions without being credited with any of the profits that generated. Much of the original cost of the PS3, from a real-world perspective, should be differed to the company at large. I'm sure that's how it's viewed at Sony.

With Microsoft, they were perfectly willing to eat losses in order to acquire market share, we've known that from the start. The only thing that likely makes them cringe are the billions lost to the RRoD, but even with that, they'd likely take their current position in a heartbeat.

Sometimes these articles that seek to isolate events and present them in a vacuum really come across as childish.

Overall the 360 is a profitable business for MS.
The PS3 is not a profitable business for Sony and probably never will be.
The Wii is (or was) a very profitable business for Nintendo.

Next gen is a new game for all of them.

Steam and Nvidia would not join this industry if they didn't see the massive potential in it.

Im seeing a lot of users over on NeoGaf calling bullshit on this article.

What reasons do they give? I'm quite interested.

why are they all bothering with the 8th gen if consoles are dead,surely the R & D costs already hurt these companies but i think people underestimate the online services MS,Nintendo & sony can provide via their devices not to mention the vast backlog of games and indie games

a lot of us basically pay monthly subs to sony,ms & nintendo via cards,plus,live,renting movies etc i'd rather pay these companies for my entertainment services rather than the big tv/cable/telephone companies of course i have to pay my internet provider,i guess i am in the minority because i don't pay for satellite/cable TV

I have seen this been tossed around a few times:  https://docs.google.com/spreadsheet/ccc?key=0AmSmlk-Wo4uhdEhXMy1GcmFERGQ2TGtkdll2OVBXNGc#gid=0