Europe being the second biggest area for gaming is really getting treated like the worst area for gaming...I dont understand the economics in this at all.

Unfortunately I think its a case of Japan and the US being home to the console manufacturers, so they give their home crowd some nice deals and then give the others home market special treatment to try and win some low blows. Europe is seen as the neutral battleground where they can ease off and compete without added implications.

That coupled with they probably see Europe not as "Europe", but as "the UK", "France", etc. The individual countries arent that important. But I agree with you, the sum of the parts is greater than the whole (or some clever expression like that..), so really they should treat Europe in the same calibre.