When will Sony's PlayStation Network stop bleeding money?

Posted by Mike Luttrell

The PS3's online service is completely free. So how does it make money? It doesn't. But now, thanks to some new decisions from Sony, it may actually be able to start turning a profit.

Microsoft is easily able to make its online service profitable because it charges everyone who wants to play online games a hefty fee of $60 per year. PS3 players get the same feature for free.

But Sony needs to pay for those servers somehow. That's why it charges only for premium content, like game downloads, movie rentals, and add-on content. It also recently launched a "PlayStation Plus" subscription service, giving players a constant stream of deals and free content in exchange for a monthly or annual cost.

It took a while for these kinds of sales to cover the cost of running hundreds of online games for free, but it looks like it's finally working.

Customer payments through the PlayStation Network reached $434.3 million in the 2009 fiscal year, but Sony Computer Entertainment president Kaz Hirai said in a Reuters interview that by FY2012, that will be $3.6 billion. And, "We’re aiming to enter the black during the 2011 fiscal year."

This would mean that Sony can continue offering its online service free to the millions of PS3 owners. It will continue to be a competitive advantage for the system, which is poised to have its best year yet in 2011.

Xbox Live users never seem to balk at the $60 annual fee, but if price conscious people start to finally look at the next-gen consoles soon, they'll easily realize the PS3 is actually a better decision in the long run.