Quarterly financial statements on the horizon.

[Sullla]

Nintendo will post huge profits in this upcoming quarter, as usual. *Yawn* Not a whole lot to discuss there, aside from the issue of whether they will make more net income than the rest of the industry combined.

Microsoft is much more interesting. The numbers for this quarter will go a long way towards determining whether the 360 will ever be able to become consistently profitable. This holiday season certainly should have been a healthy one for Microsoft's Entertainment division, but the past track record history is not a positive one. Remember as well that the bulk of Halo sales actually counted in the previous quarter (retailer orders taking place before the game was released to the public). I think the odds are quite good that Microsoft turns a profit, but I don't expect it to be more than $100-$200m.

For Sony, the issue is just how bad the losses will be. I expect them to be substantial. In this past quarter, the PS3 saw a price cut in all regions, a new model, substantial bundled software AND hardware (remember those "buy a Sony TV, get a free PS3" deals?), and bundled Blu-Ray movies (buy a PS3, get 5 free Blu-Ray movies). Speaking from the perspective of the US here, Sony also launched a gigantic marketing campaign for the PS3 and its games; I saw 2 different television ads for the system itself, plus ads for the individual games Heavenly Sword, Uncharted, Ratchet and Clank, and PS3 tie-in ads for multiplatform games like The Simpsons and Assassin's Creed. None of that was cheap.

I actually think that Sony will lose close to or even more money in their Gaming division this quarter than they did last quarter (in other words, ~$800m). Every PS3 sold likely cost Sony roughly $200, to say nothing of costs associated with labor, distribution, advertising, and so on. I guess we'll wait and see what happens. Fortunately, the rest of Sony as a corporation probably did very well, due to strong sales of TVs and digital cameras. The open question is how long the rest of the corporation will be willing to subsidize the PS3.