Things look like they are improving year of year, so perhaps it will be much better in 2009-2010. We shall see.......

whats so bad about it? the trend shows that they're improving. so they should be making a profit by now. and im sure M$ game division was just as bad if not worse when the 360 launched

The ouch is needed. the graph only shows HALF the game losses for 08.  Since they are stilling selling at a loss, and they sold more in 08 than 07, I would expect the FULL year 08 loss in gaming to be equal or LARGER than the full year loss in 07. They are not 'trending' in the right direction. They are trending to a dead end. 

Sony makes more money by dropping PS3 entirely.

No matter what the trends seem to show when looking at the graph, the environment isn't good for Sony or even the gaming division. PS2 sales are declining fast, the Yen is still much stronger than in previous quarters. The only thing which is improving are PS3 software sales and a smaller PS3 hardware loss. This cannot cover a 10-20% decrease in revenue due to the strong Yen, much less the declining PS2 sales. For Sony as a whole, we have the Yen issue again and a considerable drop in electronics sales.

Regarding the "Ouch": The press is going to keep pounding Sony for the foreseeable future. Sony hasn't even posted their financial results yet, which are poised to be ugly according to reasonable calculations backed by Sony's information given to investors and recent analyst sentiment. I mean ugly as in a multi-billion dollar loss.

Come January 31 (Q3 financial results day), all hell will break loose. January will see a few of these "doom" articles, especially if Sony announces more layoffs/cost cutting, but nothing compared to February. If you're a sensitive Sony fan, hunker down and brace for impact.

@Kyros&Jo21: Joint venture? Didn't Sony sell their LCD production to Samsung a couple of years ago to cut down their lossed from TV:s, Sony focusing on smaller screens and computer monitors.

@NJ5: You forgot PSP from your numbers. Sony propably profits more from it that it did a year ago (i didn't compare HW and SW numbers, so i may be a little off).

PSP software and hardware is also down year-on-year during the holiday season, although not as severely as PS2:

http://vgchartz.com/weekly.php?date=39439

http://vgchartz.com/weekly.php?date=39803

Look closely at the last bar... 1st half of 08...

If bluray had not won the format war then yes it would have been the death of Sony. Fortunately for them it did win and that means PS3 will be a viable product for years to come.

the bravia are selling still, production != technology used.

the new bravia come with a bravia engine 2 by sony.

in comparison try check out a samsung vs a sony at the same price, Series 4 VS M4000

m4000 quality its better, nicer colors and its only 40-30$ more expensive.

If you look at the games from 2006-2008, you can see that in 2008, their games sales have increased. Their software is likiey to see a huge increase in sales due to the fact that their huge flagship exclusie titles are expected to be released in 2009.