They get their money back on games sold and further hardware revisions bring the manufacturing costs down.
There are two things wrong with this statement. Primarilly that the most financial successful consoles (PS1 and 2), have also been the most easilly and heavilly pirated, so even at the horrific rates I'm sure Sony take, I doubt they would be able to recover from dumping. Secondly, yes manufacturing price goes down. So does the price of the console. It's called a competitive advantage. Poor old microsoft
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