Company continues to lose money due to pricing imbalance

UPDATE: GameSpot’s Brendan Sinclair wrote an intelligent blog post on this story suggesting that it may not be as big of a news piece as it seems. He notes that the numbers are from Sony’s fiscal 2006 and 2007 years, not 2007 and 2008. Moreover, the $3 billion in total losses is actually culled from a couple of previous stories that have been public knowledge for some time. In other words, the number isn’t actually new at all.

ORIGINAL STORY: Sony has struggled with the PlayStation 3’s price point for some time now. When the console dropped in 2006, it was at a price that some regarded as too high compared to the Xbox 360 or especially the budget-minded Wii. But even with the PS3 now readily available at $399, Sony’s pricing woes haven’t gotten any better.

Sony’s fiscal 2008 annual report (via Kotaku) revealed that pricing the PS3 below production cost has thus far lost the company $2.16 billion in 2007, and $1.16 billion in 2008. Although they chalked it up to the "significant negative impact" that introducing a platform can cause at first, Sony gave fair warning to investors that the "large-scale investment required during the development and introductory period of a new gaming platform may not be fully recovered."

"In the past, large-scale investment relating to capital expenditures and research and development for the manufacture of key components, including semiconductors supplied for PlayStation 3 was also recorded within the electronics segment," Sony said in its report Monday.

Sony also reported that a great deal of capital went into research and development. This could mean that even a highly successful run for the PlayStation 3 would take a while to recoup the initial investment, which appears to give further impetus to Sony’s ten-year plan for the system. With Microsoft having recently said that they would be selling Xbox 360s for a long time and Nintendo still seeing booming sales from the Wii, it may be quite a wait before we see the next generation of consoles.