Sony will be launching an effort to improve the margins in its video game division by 5% before March 31st, according to reports. The efforts to improve margins will come as the company is expected to lose $1.4 billion for this fiscal year.
Sony has embarked on an effort to shrink the PS3 design in an attempt to reduce the overall cost of the console. According to sources, Sony has already been able to trim the cost of the PlayStation 3 from $800 to $400.
Sony is also engaging in an aggressive plan to shrink or integrate select chips in a further attempt to reduce cost. Sony also believes that Warner Brothers move to the Blu-ray camp firms up the PS3, making it a better choice for consumers, as it is not predicting the end of the HD format war.
If Sony is correct and the defection of Warner to the Blu-ray camp is a signal of the end of the HD format war, Sony could also benefit from additional cost reductions in the Blu-ray drive that is used in the PS3.
In addition, Sony has lowered royalty fees that it is charging game developers to help it better compete with Microsoft Xbox 360, which has attracted the majority of the high profile exclusive titles. Sony hopes by lowering royalties, developers will return to the PlayStation fold and give Sony more exclusive titles to crow about.
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