Lets make an assumption that 10% of all Blu-Ray revenue ends up being absorbed as licencing fees, and Sony makes 25% of that (which are both amazingly optimistic numbers); this means that when Blu-Ray has generated $200 Billion in revenue then Sony will have broken even on the PS3 ... How likely is it that the format will sell over 500 Million players (at their current cost) or 6 Billion movies (at their current cost)?

25% is not optimistic at all, I'd imagine Sony would have 30%.

Anyways, I'm not getting your math here. You're saying that:

200b - 20b = 180 * .25 = 45billion = not enough to brake even on the PS3?

If things go good for BluRay, many studios predict 30billion dollars of revenue by 2010. A good chunk of those movie sales will come from Sony/Columbia pictures. And SCEI would be getting money their own way by reducing hardware costs and sales royalties. That would equate to around 6-7 billion dollars to Sony (if I went by your formula) without adding anything but BluRay players and disks (discluding videos games). Also, 2010 isn't even expected to be near the apex of the format's life.

No, your math is screwed ...

$200 Billion = Gross Revenue
$20 Billion = Licencing Revenue
$5 Billion = Sony's cut of licencing revenue

Now ... The 10% is amazingly optimistic because most formats (in particular new formats) have very large margins at retail to encourage stores to stock the discs (we're talking in the 100% mark up range), and companies eventually can find a way to sell movies and make a profit at a very low price ($5).

The 25% take home off of licencing fees is amazingly optimistic because as a licencee you gain the rights to use all of the technologies that are licenced by the Blu-Ray consortium to make the Blu-Ray format. If you look at the Blu-Ray specifications there are hundreds of patents that are owned by various companies who each get a cut of the Blu-Ray licencing fee. On top of that there are dozens of companies who are also heavily involved with promoting the Blu-Ray format who are (likely) going to get a cut of the fees.

lol @ happy

Sony is fine blu-ray will make billions
lol@ anyone who thinks other wise lol.

Remeber M$ lost 4 billion on the 1st xbox and ps3 has only lost 3 billion and its safe to say ps3 will sell more games and systems then the 1st xbox so everyone is fine.

they may make up the losses on the blu ray thing

Please explain HOW Sony will make $5+ Billion from Blu-Ray!

Don't forget that retailers need to make money, movie studios need to make money, hardware manufacturers need to make money, the partners on the Blu-Ray formate need to make money, and the firms that Blu-Ray licenced technology from need to make money.

the only post in the three pages that I agree with.  it doesn't matter if the ps3 doesn't make back the money it lost (though Sony would love it if it did).  If the division makes money from continuing sales of the ps2, psp, and games from all three systems, that is what matters.  Obviously Sony is looking at the billions Nintendo is making by selling two systems at a profit and will want to copy that.  Especially when it doesn't take much more than they have right now to easily have all games in 720p and a good number of games in 1080p.  And think of the billions Sony would make if they fix the piracy problem on the psp2, sell it at a profit along with its games, sell the ps3 at a profit at the end of its life plus its games, and decide to follow Nintendo's path and sell the ps4 at a profit along with its games.

Thats not correct MS dosent have a gaming division its an entertainment division and it includes more the the Xbox it includes Zune so we dont know exactly what the MS loss on the Xbox is.  I will agree though its significant

But for them its an investment they new they would lose money being a new entry into the gaming sector and its starting to pay off as they finally make money. 

Sony made tons on PS1 and PS2 then took a bath on the PS3 they are heading in the wrong direction.

What we should be talking about is both MS and Sony are or were losing money and Nintendo has been making money day one.  I think next console we may see a shift stratergy as the console may no longer be a loss leader and they may want to at worse break even on console sales.  Stinks for me personally but it may happen

first post in this silly little argument,
sony will make it's money back
the ps3 was strategically designed to win the HD movement.
It has done that, and eventually it will be accepted as the dominant format>dvd.
step one: success
step two( make the console profitable): in progress
in war there are primary objectives, and secondary objectives.
Now while, to gamers, it was a little bit of a slap in the face that the primary objective hampered our own desire for sony-era style games, a lot of us are happy to have cutting edge tech and be on the ground level of it all.
the secondary objective is just like it sounds, but as of 10 months ago, primary objective was complete and they have been putting everything they can into the console development.
From the game releases and announcements, and updates and SKU upgrades, things appear to be looking up.
they will continue to upgrade and make the entire package better until the time comes when they feel the console has ripened.