I think FF7 sold 100k first week, not 1million.

You obviously have no idea what the structure is like in the large scale like it is for PSN or XBL.  What you do may service a few hundred to a few thousand people?  Sony and MS have to manage over 20 million.  And while small little consumers don't have to worry much about bandwidth with their limited usage, a large corporation does.

The cost of the servers, server maintenance, bandwidth, moderation, production staff, all the licensing for content on PSN, etc.

It adds up really quick when we are looking at literally thousands of servers and terabytes, maybe even petabytes of bandwidth each month over all the different services.

Perhaps they make enough from selling things to cover the costs, but it has been my opinion for quite some time that the Sony division with the PS3 keeps posting huge losses mostly due to PSN expenses and not from the loss leading on hardware.

I cant Imagine that it would cost too much to run PSN. If Sony are making $100k a month they are easily turning a profit - thats an uneducated guess by me, of course - I figure its not too expensive to keep a server farm running. I've bought plenty of stuff off PSN so Im sure they make more than 100k P/M worldwide. They dont have distribution costs, dont have to share profits with stores etc which means they're better off selling games online. I would say the future lies with online games.

This is just my opinion of course, im sure there are others who would be more qualified than me to comment.

Now i might go buy GT5 prologue online like i've been threatening too...

Edit:

having just read the comment above by nightsurge makes my feel a little stupid/ignorant for even commenting...

Considering all the content on the store. I would say yes.

It's not just games.

There's Qore, Add-Ons, TV episodes, Movies, Strategy Guide (maybe more coming), Soundtracks and more.

they are making money for sure..

FF VII sold 100k it's first week in the americas alone.. and that isn't the biggest debut on PSN, so I'm sure it's profitable, plus selling PSN cards to retailers really covers up the cost too

Yes , very profitable.

Personally I think it either breaks even or makes a little profit. They charge publishers data transfer fees for DLC (but not for patches, which is why you see some publishers include DLC content in a patch and then enable it with a small key file).

The make money from Home advertisements and store purchases, but for 3rd party content they pay a royalty to the content owner.

I'm fairly certain they make money from Qore (or it would have been cancelled a while ago).

I do not know if they have made back what they spent on developing Home.

I am certain they will have a paid, premium service like XBox Live, as who can resist a business model where you charge people for using their own internet bandwidth. I also think they will keep the free online gaming until the next generation, and then charge whatever MS is charging for Live.

No I don't that's why i'm asking but looking at the last few posts above this it gives a clear idea that they do make some money off they psn.

I think Sony only got a small percentage of those sales, as it's Square Enix that own FF7.

And PSN cards are a money losing operation.  If a retailer sells you a card for $20, that means Sony would have sold it to the retailer for less than $20 (no retailer would go to the trouble of receiving, unpacking, handling and selling something for free).  The only real benefit to Sony would be that they get your money before you actually buy something, so they get to earn interest on it.  With today's low rates, I do not know if this would cover the retailer's portion (unless you kept a card for a long time before using it).

Just some food for thought:

Estimates of the power required for over 450,000 servers range upwards of 20 megawatts, which cost on the order of US$2 million per month in electricity charges. I doubt Sony has anywhere near that amount of servers (maybe a tenth of that), but still it shows just how much even simple costs of servers adds up big time for corporations. The reason Sony charges developers for bandwidth now is because of the costs it was causing them.

Also, if they were being so profitable with PSN as some people seem to think, how come they have never released any figures claiming any kind of profit whatsoever? All they have released is small things about revenue which we all know revenue =/= profit in any way shape or form.