Gamasutra is reporting on reporting, with financial information from some of the large gaming companies becoming available this week. Nintendo, who had already previously raised projections, saw their profits up 72% over last year. This dramatic increase was credited largely to the DS, with 10.9 million units sold in the first six months of this year alone. Sony, on the other hand, dropped profits by 94% over this time last year. The company attributes this largely to the battery recall and PS3 start-up costs. From the article:

"The company's games division reported a ¥43.5 billion ($366.6m) loss, from a ¥8.2 million ($69,000) profit in 2005, thanks to research and development, manufacturing and marketing costs related to the launch of the PlayStation 3. Sales and operating revenue were down by 20.5 percent to ¥170.3 billion ($1.43bn). A decrease in hardware sales worldwide was attributed to a drop in price for the PlayStation 2 and PSP. Software sales also decreased overall, although individual PSP sales were up on the previous year. Combined profit from the PS2 and PSP business was described as 'relatively unchanged'."

Source

wow... thats kind of bad...

No, every company has it losses. The games market is quite complex. As it states 'PS3 start up costs' its really not that bad. Sony is still making profit. Everytime sony 'investors' in a new console be it the PSP or PS3 they spend alot of cash. I bet that next year sony will be racking it in. Although they face stiff competition from the wii they should still make a lot of profit.