A breakdown of gaming profits for the last 3 years.

[Bodhesatva]

dallas said:
First of all, Nintendo has done very very well for themselves and they deserve the recognition that they are getting.

Microsoft on the other hand, couldn't be doing worse. For a highly profitable company, they are doing pretty bad with their console-based gaming. I don't think that they will even put out another console after the 360 is over and done with (in 4-5 years).

Of course, this reduced amount of competition will add to the amount of profits that both nintendo and sony will bring in, but will probably end up helping Sony more, simply because the 360 vs the PS3 are more of a substitute and seek to go after gamers more similar than in a PS3 vs Wii comparison.

It's interesting you should say this, because as I've noted (I went back and added a few comments) Microsoft and Sony have lost a very similar amount of money over the last year and a half -- and Microsoft would be quite a bit ahead, if they had not been forced to eat a 1.1 billion dollar write off for the extended warranty. I think it's quite likely that Sony will post another loss next quarter, while Microsoft will either post a profoundly lower loss or an actual profit for the first time in two years for their gaming division.

In short, while Sony did appear to make reasonably healthy profits at one time, they've effectively fallen to Microsoft-level losses over the last 1.5 years, and with the poor PS3 sales and recent price cut, there isn't a great deal of evidence that those losses are going to go away soon.

Simple point: ignoring Microsoft's extended warranty for a moment (and I agree, that's not entirely fair -- but we're trying to look at normal operating losses from development, production, and sales of games and game hardware) Sony has lost more money than Microsoft every quarter for the last year, and I think that trend is likely to continue for at least another quarter, and likely more.