nice insight Hornet :)

Way better than people guessing that Sony is making profit / a loss and then going on to saying they have some 10 percent of 450.000 servers, making 6 dollars profit, having 80% sales when it's on a spike and 20% when it's on the low....

Why guess when no one knows and you have basically no basis to make those statements on? :s

Doesn't Sony charge developer/publisher to pay for bandwidth cost? For Sony to pull a move like that it must be extremely expensive.

I'm sure it profitable. But I wouldn't be surprised if Sony goes the route of Xbox Live down the road.

If you are assuming that Sony gets $16 per $20 card, then selling 5 cards gets them $80.  If only 4 out of every 5 are redeemed, then 4 * $20 = $80 is redeemed, which means they break even compared to direct sales. 

Do people really lose that many cards?

And I guess there is another benefit.  You do get more PSN store purchases from people who do not have credit cards...

Yeah they do lose that many cards. It was a reliable source but I forgot from where, sorry. Its probably because people don't input them asap and they get lost in the shuffle so to speak.

They also don't have to pay the X % in small credit card payment fees.

I think I heard a Sony spokesman say they lose like 40-60 mil a year due to PSN being free..

I can believe that the stores get very little (if any) profit on the cards, if the store doesn't carry cards, people will go to another store that does and while there, maybe they will pick up a game or 2..

In convenience stores, you can usually buy milk cheaper than at grocery stores, why? Well the convenience stores usually sell the milk cheaper as they put the milk in the back, so you have to walk past the chips, pop, magazines, etc and they count on people making impulse buys

Yeah, but keep in mind - practicly every time, when someone is downloading something from PSN, he is paying for it.

Steam is a good example - they are making profit. Even google making money on their adverts. Online services are prophitable without anual fee - there are ton of examples for it.

The only area where Sony may lose money here is investing money into expanding PSN. Installbase is growing, and they are creating new services like Vidzone.

significantly less than XBOX Live..thats pretty much a fact

Sonys decision to make PSN free was simply a means to an end = profit

Just like microsoft & 90% of profit driven companies, there is no such thing as a charitable, consumer caring mega firms in the world, their main intentions/motives is profit maximisation The differences between them however is that they all have different means to maximise profit.

-One of Sonys model for profit for online services = 'make psn free' = add value = profit
-Microsoft's model for profit = 'enhance LIVE' = subscription = profit

It is clear which model has achieve higher profit, which is why I think Sony's subscription service is imminent

They lose money imo, obviously however much isn't an issue for Sony as there is no sign of a subscription service.

Im pretty sure its making some sort of profit. Regular Server hosting isnt the most exspensive thing out there for the average person. Even if u maximize that on a grand scale for a huge service like PSN and XBLive, its merely chump change for those sorts of companies. If PSN was completely non profit then it would kill itself.

PSN makes money from Advertising Games, Demos, Trailers,Movies,TVShows, etc. As well as getting portions for all those items when purchased on PSN, which has a higher profit margin cuz its all digital(most of the time sold at retail price). HOME is a gold mine for them as well as all these useless articles of clothing and accessories ppl are eating them up.