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My take:

1. Hardware cost reductions must be fully in effect if they are projecting a positive operating income in the game division - maybe for both PS3 and PSP (if PSP is sold at a loss).

For the year ending March 31, 2008 - they lost USD 1.245 Billion Dollars

That would be a dramatic turnaround

2. I wonder what they mean by "non-game content" - movies and music on PS3? Any ideas?