The only way for Sony to distribute Blu-ray in large quantities was to build the technology into the PlayStation 3 and sell the games console at a discount. Sony's console division ran up a $1.97 billion deficit in the year to March 31 last year, which it followed with a $991 million loss in the first three quarters of the current year. Yet the true costs of Blu-ray are probably much greater: early research and development expenses have not been included.
Analysts believe, however, that Sony will recoup its $3billion-plus investment eventually. Richard Hooper, an analyst with Screen Digest, said: "It is hard to estimate precisely what royalties Sony will generate, but we believe that they will be able to recoup far more than $3 billion over the lifetime of Blu-ray. It's worth it."
"Only the PlayStation 3 is future- proofed; it is not clear what will happen to other players which do not have ethernet [fast internet] connections," Mr Hooper said.