Sony has confirmed that it is paying some of the upfront cost in acquiring their latest PS5 games console by pricing it below manufacturing cost. Consoles being priced as such isn't a new move in itself; manufacturers have often sold their consoles at a loss so as to keep consoles attractive to buyers and thus increase their install base. This, in turn, equates with higher sales of software - which is often where Sony or Microsoft recoup their margin loss on hardware. Sony has also confirmed that its PS5 console has sold around 4.5 million units since launch, putting it in a similar footing with the PS4 in the corresponding period, despite the higher retail price at launch. The sales figure also puts Sony's PlayStation division results for 2020's Q3 FY as their historical best ever since the company started selling games consoles. Revenue increased 40 percent to 883.2 billion yen ($8.4 billion), partly driven by PS5 sales, whilst operating profit increased by 50 percent to 80.2 billion yen ($763.3 million) due to higher software and services sales (such as PlayStation Plus subscriptions), and better margins on PS4 hardware, which still shipped around 1.4 million units.

MS is probably doing the same with Series S and X :-)