Sony, which forecast a six-fold surge in group profit this year, expects its PlayStation game unit to remain in the red as it faces tough competition from Nintendo and Microsoft.
Sony estimates its game segment will post an operating loss of about 50 billion yen ($413.9 million) in the business year to next March, Senior VP Takao Yuhara told a group of reporters in Tokyo on Thursday.
But the forecast is an improvement from the 232 billion yen loss the game unit had in 2006/7 due to huge costs to launch its PlayStation 3 machine, which made a weak showing against Microsoft's Xbox 360 and Nintendo's Wii console last year.
Sony expects a sharp rise in PS3 hardware shipments to 11 million units this year. In 2006/7, it shipped 5.5 million PS3s, which fell below the company's initial target, and of those, about 3.6 million units were actually sold.
While Yuhara has said its strategy for PS3 is to expand its game titles, overall software shipments are expected to fall this year to 250 million units due to shrinking demand for games used for its older PlayStation 2 consoles. In 2006/7, Sony shipped 261.3 million software, including 13.2 million for PS3.
The Japanese electronics and entertainment giant also said it expects sales at its main electronics unit to rise 4% to 6% in 2007/8 from 6.05 trillion yen a year earlier, led by strong demand for its flat-screen TVs and digital cameras.
Sony on Wednesday posted a wider quarterly loss due to deficits in its PlayStation game unit, but forecast a sharp rise in profit this year as it sees a fast recovery in its core electronics business led by strong flat-panel TV sales.
The company forecast an operating profit of 440 billion yen for the year to March 2008.
The estimate beats the consensus of 377.8 billion yen in a poll of 20 analysts by Reuters Estimates, though it includes a 59 billion yen profit from a sale of land not likely reflected in the consensus.
Shares of Sony traded up 3% at 6.660 yen as of 4:35am GMT, largely outperforming a 0.1% gain in the Nikkei.
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