Sony have been losing money for a couple years now however the losses have decreased in the gaming division. Sony is not going to suddenly make a billion profit but they are going in the correct directio with the Playstation family once again.

Sony are expecting to lost money again even though the losses have decreased significantly in the gaming division.........it screams price cut as I see no reason they would not break even with the PS3 remanining at the same price.

$163 would account for about 3 games for every new console owner, give me reasons on why that will not happen. A console owner purchasing 3 games in their lifetime sounds about right to me if not on the lower side.

@RPG: $163 is not 3 games unless you think that retailers, distributors, tax offices, Blu-Ray disc manufacturing etc. doesn't take a cut. It would be more like 6 1st-party games at least (not counting bundled ones).

By the way this was a conservative estimate, I think the price cut will have to come sooner than halfway through the fiscal year if there's any chance for the PS3 to sell 13 million. So the $650 million loss from hardware could easily be much closer to $1 billion, or $250 extra needed per user if we assume 4 million people buy the PS3 because of the price cut.

Gaming division had losses of $612 million which is a little less than half for the last year so gaming division has improved dramitically. If the trend continued with the PS3 at the same price the gaming division would have broken even next fiscal year.........does it not seem a little off to you that they expect losses again? PS2 drop off is already bad so that cannot be the reason for a huge loss again.

Reducing a $400 to $300 would be a "panic measure" when the competitor's console is how much? WOW. Big companies think long term and my guess is that Sony think the price cut will be made up by an increase in software sales over time. The production costs of the console will probably also be down by years end so the $100 price cut losing Sony $100 is not clear cut.

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@kowenicki why?

@NJ5 you seem to have facts for most things so do you have a link to the info which made you believe companies get around $27 for each first party game sole? Also sorry as I am a little brain dead today (not slept yet) why would a $100 price cut mean $163 would have to be made up? Where did that $63 come from? I would have thought Sony would want to make up for that $100 which could/should be done with accessories and software.

Once again sorry long night.

@RPG: What we're doing here is a cost/benefit analysis. You take the cost of the price cut ($100 times the number of consoles sold after the price cut), and the benefit (increased software sales only from those people who buy the PS3 due to the price cut). That's why I only count the 4 million on that part (the assumption is the price cut takes PS3 sales from 9 million to the 13 million predicted by Sony).

I don't think there's any solid proof of the $27 per first party game... There have been many estimates, including some Forbes article, and I think it's probably not very far from $30 per game (probably even less, since I've heard that retailers alone usually take half from retail price; yeah, it's quite a lot if you think about it that way).

Anyway, we could be discussing this for a very long time... but if price cuts were such an easy way of increasing long-term profits, companies would do them much quicker and more often. I think most (but not all) price cuts are a costly way of increasing market share.

Even though they have said 13 million that does not mean they will do anything to get it.

They may be aware that it will be tough to make there goal but it wont be for at least 9 months before a revision would be made giving them some breathing space. [more like 7 months]

Oh so we are just guessing then, well that is good to know. Will do it as well; by the time the price of the console decreases by year's end manufacturing costs will have also decreased so Sony will not be losing a further $100 due to a $100 price cut.............yeah.

Companies think long term, after bleeding money for so many years I am sure Sony are willing to lose money again so that they get a larger return in the future. For such a large increase in console sales something has to be happening, your guess is as good as mine to what that is.

@kowenicki good to see you have adopted the "what I say is right" rule.....cutting the price of the console after two years is not a panic measure.....

The latest financial report says it all...Sony is in ALOT of trouble, and while people won't want to admit it, it is because they over reached on the PS3...they should have scaled back, and launch something to fill in lock step with the ps2. They instead shot for the moon, and you know what happens when you launch something in space and get it going at high speed, if you miss your target...you're in deep shit to correct your path.

@RPG: When I say the cost of the price cut is $100 per console sold, that doesn't depend on the manufacturing cost. With a $100 price cut, Sony gets $100 less in revenue per buyer, period.

simple price cut won't do anything - sony would have to cut ps3 price at least by 25-30% to make the difference. 50$ won't do anything - especially when microsoft now will cut the price again probably(i think MS will cut the price by 50$ on each system).