Sony definitely won't sell SCE, like I said vefore it has been very successfull in the past and has a lot of potential still.

The problem Sony has is that not only is it losing money, but their first party software doesn't have a very big userbase to sell to. And because PS3 does get a lot of games that are 360 multiplat the competition is killing. Resistance 2, Motorstorm 2 and LBP aren't the massive successes they need to be.

The overhead Sony has is enormous, they own more game studio's than Nintendo. I think it's inevitable that they have to sell some of those if SCE remains unprofitable.

I think sony will close it just like the Ensemble

Let's say they sold off some studios. That would mean the PS3 and any future platforms would lose more of their appeal with customers.. Then you have lower hardware sales, which in turn means even less revenue for their lucky remaining studios, and lower licensing payouts from 3rd parties. How to get out of this downward spiral without an extremely strong PS4?

If Sony keeps SCE (which I'm not as sure of as you; I still think it's likely, but their odds are getting worse lately), it must keep most of it, otherwise their products will start circling the drain.

NJ, if Sony were to get rid of their gaming division, when do you think it would happen?

I don't think it makes sense to get rid of it very late in the generation, unless the company is truly in dire straits at some point.

If they need to get out, they should do it while they can benefit from it, which means before continuing the painful situation they're in. Anything later than 2010 would be strange. If they get to that point alive and well with SCE on board, why not just give the PS4 a try?

What must really be boggling their mind is that all of their divisions are having the exact same problem. The strong yen doesn't discriminate between divisions. Therefore it would make sense to try getting a general solution such as heavy cost cutting amongst all divisions. Whether that's possible and enough is a matter which I don't have a clue about . I don't recall a situation where a company had to change so fast.

What I do know is that they can't continue the situation they're in. If I may add another prediction, I foresee an internetz meltdown when they release their next earnings (because most people aren't paying enough attention and their minds are still working in pre-crisis economics). Either that or my jaw will be on the floor, since I really don't see how they can get out of this hole in the short term.

I was agreeing with FishyJoe.  Here's another site:

http://www.outtastock.com/wii/

 You got it all wrong, a better idea still would be to have Nintendo and Microsoft get out of the hardware market and have thier software devs develop for Sony's "well-designed" PS3.... that would be the best thing for gamers, and Sony did not kill Sega, Sega killed Sega, and the only thing Microsoft is killing is the original Xbox.

Agreed, except I think Nintendo is doing great with their hardware, especially controllers. If Microsoft and Sony got together and Sony did the hardware, there should be someone there to stop them from choosing stupid architectures which developers hate. Other than that, Sony can make great hardware.

Aside from strong yen, none of their division present a cash cow they could milk, they are losers on every market they've jumped in. And their margins are sooo pathetic.

Neither I do see how they can sustain other than their executives pray for bailout.  Or, they might find a second job, this is brilliant idea, actually :)

Video games are the fastest growing entertainment market, surpassing movies and music. I see more people wanting to enter the market, not less.