PlayStation 3 drags heavily on Sony profits

16th May 2007 | 23:00

PlayStation 3 drags heavily on Sony profits

Games arm to net £200m loss this year

Sony is celebrating this morning after it was announced overnight that its share price has hit a five-year high. But while the Japanese company tries to put a rosy spin on the news, do not be fooled.

Because while the launch of the PlayStation 3 has seen some much needed revenue flood into the Sony coffers, its game unit is still operating at a £900m loss. And the reason Sony is celebrating is because it's predicting that by this time next year, that loss will be down to 'just' £200m.

When losing £200m a year is a significant improvement, it doesn't really bode very well. In the last year, Sony shipped 5.5 million PS3 consoles, which was well below its target. But as it turns out, that didn't matter because it only managed to shift 3.6 million of them anyway.

So what is Sony's strategy to pull its gaming arm out of the mire? Games apparently. It aims to flog lots more games this year than ever before, in an attempt to bring in a lot more revenue. The PlayStation 3 console has been blighted thus far by a significant drought of decent games.

Lack of games

And yet despite the renewed emphasis on games, Sony says it expects software shipments to fall below the 250 million mark. This is thanks largely to a falling interest in its PlayStation 2 console - which incidentally is still selling more units than the newer PS3.

So while the PlayStation 3 has been a real drag on Sony's otherwise good year, its other home entertainment products such as its LCD Bravia TV range have made a good profit.

Sony is predicting a £1.8bn operating profit for the next year. Providing the company doesn't have to recall another 10 million laptop batteries, this would be a real victory. We'll just have to wait and see.

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