makes you wonder why xboxlive cost 50 dollars a year if sony can do it for free. we have way past the live service is better for the money. i think the services is about equal now. cross game chat, does that cost 50 dollars a year?

I don't think they lose money... they just don't make all the potential money they could get by not charging their users.

I guess we'll find out when Sony starts their subscription service that includes that capability.

yes ofcourse they wont make as much money on the PSN cards, but they end up selling like hundreds of them per store, and there are like thousands of stores that stock PSN card in the U.S alone, so they end up making millions on the PSN cards alone. Also they make money off 3rd party software, and they also make money off 1st party ip like FF VII which is published by SONY in the americas on PS1, as was the re release.

Considering the fact that Sony is looking into adding fee based services I would say they are less than pleased with the cost vs revenue of the PSN currently. I do remember they charge publishers a small fee for demo that get downloaded a lot. I'd say it probably turns a small profit or small loss with a handful of spikes here or there depending on PSN releases.

MS stated increasing xbox live costs actually off set some of their gains in the last quarter so costs must be fairly high to even bother mentioning, at least for MS

Sony charges for bandwith therefore developers who upload free demos pay sony when ever someone downloads it. I think PSN is likely the most profitable aspect of the ps3.

Nobody here really knows, unless you're an exec at Sony. Anyway my best guess is that it might be turning a small profit, independent of taxes.

-Home has transactions all the time
-Games, movies, music videos and music are sold on PSN. Sony makes all four while MS makes only one of these so it has to pay others to become a vendor while sony pays nobody.
-premium services are about to come out so the PSN is clearly in a state of growth

But really, the online services can run a loss because the real reason that they are there is to facillitate more game sales. Having online gaming makes you want to get that FPS or whatever and this is why the big 3 have online services in the first place. All of the stuff that they sell online can certainly help but i'm not sure if that really matters so much but it will help.

As a guess, I go with this too. It makes sense.

Microsoft decided to profit with XBL hence the $50/year charge. Sony is obviously looking at ways at turning a better (or any?) profit off of PSN. At worst, whatever it costs them to run it I'm sure it is beneficial as it convinced people like me to go PS3 instead of X360.

I think you are misunderstanding something.  Sony takes a LOSS on PSN cards.  They sell a $20 card to retail at probably $14/15.  So if each store is selling 100 cards, Sony is losing $500-600 per store on cards alone.  They make no money on cards regardless.  The only way they make profit with this venture is if that $20 spent by the user racks up more than $5-6 in profit.

For example:  Lets say you buy 2 $10 arcade games where Sony's profit margin is 30%.  If you use the Sony card you purchased, that means Sony only got $6 profit, which means they only broke even by having to sell that $20 card for a loss to begin with.