This seems to sum up the problem with the home console business. Even when you're doing really well the profits aren't exactly huge but the risks to get there certainly are. You're investing billions potentially to only make what seem like modest profits to a company like this.
The PS4 is a more important product for Sony than just gaming, it gets boxes under TVs that people interact with. The reason that Samsung and LG are going so hard into smart TV is because they have no product like the PS4 which is connected to the internet to serve consumers directly, TVs are now a conduit for other people's services rather than the profit centres they used to be, so monetising them through smart services is necessary. Smart TV has never really taken off though, those who are inclined to use advanced functionality of their TVs usually have cable or some other premium service and they are also likely to have a PS4 or XB1 as well.
Therein lies the importance of the PS4, it feeds into their media divisions and even smartphones with companion apps and off screen functionality. Once their IPTV service launches, that will increase profits not only within the game division, but also for SPE. If they do it right and bundle 6 months of IPTV with certain smartphones, it will also help their smartphones and tablets division and help differentiate their products from the myriad of competition.
The PS4 is not just about games, and also remember that the PS4 is sold at a loss, this will improve over time and once the hardware becomes profitable the division level operating profit will look a lot healthier.
