That quarter PlayStation reached an all-time high of $8.45B Revenue in a single quarter, a new record for the industry. First time any platform holder ever reached $8 Billion in a single quarter in gaming history.
PlayStation reached an all-time high of 22.74B Revenue in 2020 and set a new record for the industry for a calendar year.
PlayStation generates way more money than Nintendo, but they reinvest it in more and more expensive games, and in more expensive, cutting edge technology.
It isn't the same a brand new high end AAA than an emulated old game. So these games are less profitable. It isn't the same to sell high end hardware at a loss to have a competitive price than to sell an overpriced cheap low end hardware, it's less profitable. Sony also decides to invest in very expensive game download and streaming services, server costs and sign deals to have games there aren't cheap, it's obviously less protitable than carboard and plastic figurines. Same goes with VR, they invest in the future and these R&D costs aren't cheap.
Regarding the current year/quarter, they also released a new console. Traditionally that meant to have loses each time they released a new one due to marketing and R&D costs. This year instead they had their record operating profit, thanks to the insane digital revenue (digital games, dlc, apps, PS+, PS Now) and because PS5 had the best launch any console ever had:
FY 2020 (Sony means its gaming division):
-Sony Revenue - $22.74B
-Nintendo Revenue - $13.36B
-Sony Operating Profit- $3.33B
-Nintendo Operating Profit- $4.96B
TLDR: Sony makes way more money than Nintendo, in fact makes more money than any other platform holder ever did. But it's less profitable than Nintendo because Sony reinvests this money thinking in the long term with expensive, cutting edge technology and software.
They invest it in having more brand new games, and in more expensive and cutting edge hardware, games and services than Nintendo. And well, this quarter Sony also released a console selling it at a loss. And that console had the best selling launch quarter of any console in gaming history.