Huge development costs hurt Sony.

Poor Sony. I mean, what’s wrong with wanting to dominate the gaming world? That’s effectively what Sony tried to do by pouring huge sums of money into the PS3. It looks like their plans may have backfired…just a little. Figures just released show losses of £1.09 billion (I bet Bill is chuckling to himself right now).

Typically, consumer electronics companies sell at a loss when a new product is released. They then rely on subsequent high-volume sales to make up for the initial losses. The problem for Sony lies with the huge R&D costs associated with the PS3 development.

In all, it looks like there’s no way the PS3 will ever be as profitable as version 1 and 2.

But there is hope. Every PS3 sold effectively seeds homes with Blu-ray players. This means Sony can then sell Blu-ray DVD movie titles at much higher margins. Cunning plan or just lucky?

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