With the recent announcements by Microsoft and Sony, my first thoughts were: "Wow, this is good for the Xbox and the PS," a thought which was immediately followed by: "Wow, Sony and Microsoft are losing so much money."

Which is the basis for this thread. New prediction league!

I'd like everyone to guess how much money Nintendo, Sony and Microsoft will gain or lose during the course of this generation, rounded to the closest quarter billion dollars. Since that is a LONG way away, I also recommend putting down how much money you expect each company to lose this year. I'll start:

1) Nintendo

This year: 1 billion in profits
Wii lifespan: 8.25 billion in profits

2) Sony

This year: 1.5 billion in losses
PS3 lifespan: 1.25 billion in losses

3) Microsoft

This year: 1.25 billion in losses
360 lifespan: 2 billion in losses

well, at least for microsoft, it's hard to know how much they lose on the xbox.

This type of response is not allowed. Of course we don't know for sure, that's why we're predicting! "I don't know" is not conducive to thread progression, Ling Ling :p

Say... how does Sony lose less money on PS3 during its lifespan than this year?

By making profits back in the long run. Easiest way to see this: if they lose 1.5 billion this year (net) but earn 250 million (net) over the course of the next 4 years after, then they lose 1.25 billion total. 

 Oh, I went ahead and thought that Sony/M$ would keep losing money and Nintendo would continue to earn profit, my bad.

 Yes, so my actual guess is that Sony will have lost 3.5 billion by the end of this year, but will recoup approximately 2 billion of that over the course of the next 5 years. 

I was actually thinking of making a similar thread, Bodhesatva, although asking the somewhat simpler question of whether Microsoft and Sony would ever turn a profit this generation. In light of these annoucements, I really don't see how it will be possible for either of them. The 360 is already over a billion dollars in the hole, and Microsoft is now going to outlay another billion to fix their hardware problems... wow, that's a lot of money. The 360 probably has about 3-4 more years left in its life cycle, and I can't see it turning a 2 billion dollar profit in that span. The 360 is going to produce a ton of revenue, but it won't ever turn a profit. Not with Microsoft paying 50 million just for downloadable content for one game!

Sony's PS3 looks like it's going to be priced even more aggressively; I wonder if that's the only possible strategy that they know how to use, or if Sony believes it will ensure the same kind of success enjoyed by Playstation and PS2 (which also slashed prices over and over again). Sony's gaming division has already lost something like 2 billion dollars, right? And now this price cut is sure to be several hundred million more, at the very least. With current sales trends, I can't see the PS3 ever coming even remotely close to making all that money back. Things can always change with time, yes, but the financial outlook can't be too good for SCE.

In a broader sense, I'm kind of stunned at the level of money Microsoft and Sony are willing to throw around in this fight. I usually laugh at online fans who believe that the other divisions of these companies exist only to support their gaming units, but perhaps there's some truth to that idea after all. There's a lot of prestige wrapped up in the console wars; I wonder if these companies sometimes can't back down from a fight even if it would be in their best interests to do so. (For example, look at Sega: that company clearly should not have tried to fight another console war with the Dreamcast!) I can't wait to see the next financial reports from both Microsoft and Sony to see how they spin the numbers. How much longer do they plan to eat tremendous losses to keep their gaming divisions afloat?