7 ms·

Isn't this how the console market works? You lose money on console units, but make it back in licensing? Or are you saying that, taking licensing into account

Isn't this how the console market works? You lose money on console units, but make it back in licensing? Or are you saying that, taking licensing into account, the Xbox still lost money for Microsoft? 2005 and 2007 were a long time ago. Do you know of more recent numbers?

ghjm 14y ago
The overall division really did lose $4 billion that year. In 2011 they made $1.3 billion. Overall, I think they're about at break-even for the program since inception.
- jussij 14y ago
  But in the years that followed that same division has made over $3 billion just in Halo game sales alone.
  - ghjm 14y ago
    They also lost more money in years prior. I think they're in the black since inception, but not by much.
clobber 14y ago
I'm saying they're still losing money. The "lose money on units, make some back on software" model doesn't make economic sense anymore. The second link has recent numbers.
- chc 14y ago
  > I'm saying they're still losing money. In what world? The Xbox has been turning a profit for most of its life. AFAIK it lost money its first couple of years (primarily due to the fact it was rushed to market), and since then it has been largely propping up Microsoft's entertainment division, which otherwise would be bleeding like mad. (The division lost money last year not because the Xbox was unprofitable, but because it wasn't profitable enough to cover Windows Phone's tab as well as its own.)
  - rhizome 14y ago
    AFAIK it lost money its first couple of years (primarily due to the fact it was rushed to market), That, and the fact that nobody in Japan wanted to buy one.
    - chc 14y ago
      That too, but it wouldn't have been as much of a problem if they hadn't needed to spend billions cleaning up their mess. They were already taking a loss on the system, then they had to take yet another loss because the systems didn't work.
      - rhizome 14y ago
        RROD was much less of a problem than .jp sales, and much more easily fixed.
        sk5t 14y ago
        Y'know, it always seemed intuitively obvious to me that Japanese consumers would not be very receptive to any non-Japan-designed console unless it absolutely smashed the domestic offerings. One needn't chalk this up to xenophobia, but consider the advantage enjoyed by US domestic pickup truck manufacturers...
        snogglethorpe 14y ago
        > it always seemed intuitively obvious to me that Japanese consumers would not be very receptive to any non-Japan-designed console unless You hear people say this a lot, but based on my experience, it's basically bullshit. Japanese people love non-Japanese stuff, and indeed, being foreign gives a product cachet. However, they're also fairly different than American consumers. In particular, they're (1) super picky (in a way that Americans really aren't), about quality, but also style, reputation, etc, (2) not so price-conscious, and (3) maybe a bit more reluctant to take a risk on something unknown. In the case of the PS2/3 vs. the xbox/360, the PS series had a huge name-recognition / familiarity advantage, and better support by Japanese game makers offering popular series. MS tried to prime the pump by pushing some "Japanese style" games heavily (and paid through the nose for prime placement in shops), but if you're a Japanese gamer who experienced the sheer massive volume of domestic content for the PS series, sticking with it seems pretty sure bet. Moreover, the high price of the PS3 was a bit less of an issue than with very price-conscious Americans.
- InclinedPlane 14y ago
  They aren't still losing money. MS makes a profit on console sales now and has for the last few years, and their markup on games and especially on digital goods like xbox live and DLC is quite high.
muyuu 14y ago
It's the way it works now, definitely. In almost any other market this would be considered dumping and anticompetitive practices, it sets an incredibly high barrier of entry to any potential newcomer.

ghjm 14y ago

The overall division really did lose $4 billion that year. In 2011 they made $1.3 billion. Overall, I think they're about at break-even for the program since inception.

jussij 14y ago
But in the years that followed that same division has made over $3 billion just in Halo game sales alone.
- ghjm 14y ago
  They also lost more money in years prior. I think they're in the black since inception, but not by much.

clobber 14y ago

I'm saying they're still losing money. The "lose money on units, make some back on software" model doesn't make economic sense anymore. The second link has recent numbers.

chc 14y ago
> I'm saying they're still losing money. In what world? The Xbox has been turning a profit for most of its life. AFAIK it lost money its first couple of years (primarily due to the fact it was rushed to market), and since then it has been largely propping up Microsoft's entertainment division, which otherwise would be bleeding like mad. (The division lost money last year not because the Xbox was unprofitable, but because it wasn't profitable enough to cover Windows Phone's tab as well as its own.)
- rhizome 14y ago
  AFAIK it lost money its first couple of years (primarily due to the fact it was rushed to market), That, and the fact that nobody in Japan wanted to buy one.
  - chc 14y ago
    That too, but it wouldn't have been as much of a problem if they hadn't needed to spend billions cleaning up their mess. They were already taking a loss on the system, then they had to take yet another loss because the systems didn't work.
    - rhizome 14y ago
      RROD was much less of a problem than .jp sales, and much more easily fixed.
      - sk5t 14y ago
        Y'know, it always seemed intuitively obvious to me that Japanese consumers would not be very receptive to any non-Japan-designed console unless it absolutely smashed the domestic offerings. One needn't chalk this up to xenophobia, but consider the advantage enjoyed by US domestic pickup truck manufacturers...
        snogglethorpe 14y ago
        > it always seemed intuitively obvious to me that Japanese consumers would not be very receptive to any non-Japan-designed console unless You hear people say this a lot, but based on my experience, it's basically bullshit. Japanese people love non-Japanese stuff, and indeed, being foreign gives a product cachet. However, they're also fairly different than American consumers. In particular, they're (1) super picky (in a way that Americans really aren't), about quality, but also style, reputation, etc, (2) not so price-conscious, and (3) maybe a bit more reluctant to take a risk on something unknown. In the case of the PS2/3 vs. the xbox/360, the PS series had a huge name-recognition / familiarity advantage, and better support by Japanese game makers offering popular series. MS tried to prime the pump by pushing some "Japanese style" games heavily (and paid through the nose for prime placement in shops), but if you're a Japanese gamer who experienced the sheer massive volume of domestic content for the PS series, sticking with it seems pretty sure bet. Moreover, the high price of the PS3 was a bit less of an issue than with very price-conscious Americans.
InclinedPlane 14y ago
They aren't still losing money. MS makes a profit on console sales now and has for the last few years, and their markup on games and especially on digital goods like xbox live and DLC is quite high.

muyuu 14y ago

It's the way it works now, definitely. In almost any other market this would be considered dumping and anticompetitive practices, it sets an incredibly high barrier of entry to any potential newcomer.