I've been hearing that companys and developers arn't really making money form the gaming industry.

So why make games and consoles then ?

Not enough people fall for the shovelwares that push out and call them games.

Why make war in Israel if no oil?

I've been hearing that people kill each other and get no money in exchange because there's no oil to sell.

Why make war then?

Answer: Things aren't just what you see.

Hope is what makes us strong, it's what we make games with if nothing else is left!

Speculation and poor planning.

The big, expensive game released for the HD consoles today was planned for 4-5 years ago; back when all the analysts said the HD consoles would sell 100 million units by this point.

They've committed so much money to HD console development that they cannot change course now.   And most never predicted development costs to increase as high as they did.  A really big game last generation would cost $10-15 million last generation (a few were even higher) but the average HD console game cost $15-20 million (with several overtwice that much).

Well businesses that are poorly run don't make money.

But as for games as a medium for art and entertainment, when a person is creative you often feel pretty compelled to do projects even if the money isn't there.

I work in film and sure my day job gives me money, but that doesn't stop me from making short films for artistic reasons.

Some companies are making money. Some are losing money. Its not that companies are not trying. Its more of a combination of bad investments and poor planning.

Some companies went into this gen not understanding what they were getting into and as a result, invested in everything, from the HD consoles to the Wii and the DS. EA is a famous example of this, but investing in everything means that some ideas are going to fail. And in the case of EA, they had a large number of lower quality games on all the platforms that didn't sell well, meaning the majority of their games fizzled.

Other developers just put all their eggs into one basket (like just the 360 or just the DS) and some made off like bandits and others lost millions.

As it stands right now, companies are all trying to bet on different horses. Some companies are trying to spread out and work on all the systems, while others are focusing on just one or two. Either way, this gen has been a craps shoot and many have had troubles mostly because of their own mis-management and thinking one console would 'overtake' all the others like PS2 did last gen.

i reckon theres more to this like ea and sony posting these huge losing and seeming optimistic they must have some kind of other bank accounts or trusts the moneys going into just doesnt sound right

Well sony does obviously as videogames is not the whole company or even close to it. It's a significant portion. on the other hand, I have no Idea about EA.

Simple, because some of the game designers actually care about the game they make.