The PlayStation 3 was on life-support for a while, with a "mildly catastrophic" profitability curve according to Sony Chairman Howard Stringer.
Stringer made the comments during the Wall Street Journal's D6 Technology and Media Conference.
When asked about the failures of the company's digital music player and interactive television ventures, Stringer said that Sony is now running about 5 per cent profit margins.
"If we have any more success, we'll be bankrupt," he said.
Talking specifically about the PlayStation 3's rough start, Stringer said it was now in good shape with prices coming down and the game titles generating profits. He said that upcoming titles will use the "full capacity" of the console and will be "spectacular."
Stringer also noted that the console was becoming a platform for more than just games - as a PSP hub, for example - and specifically noted its movie playing capability which he says helped Sony's Blu-ray win the HD format battle against HD-DVD.
He specifically denied that Blu-ray's success had anything to do with Sony paying movie studios for their support.
"We were not in the check-writing competition," he said.
Despite the rise of digital distribution, Stringer thinks that the current format will last for ten years or more because of the long lead time before downloads can reach the quality of Blu-ray.
"Had I lost that war, the headline would have been, not that HD-DVD won, but that [Blu-ray] was Betamax 2," Stringer said. "That would have been on my tombstone."