Current Events > Microsoft Insider: Xbox has never been profitable

(+) Yeah! (+)

Gaming is “growing profitably”? Wait. What?

One of the dirty little secrets of Microsoft’s Xbox/gaming business is that it has never actually turned a profit. So I was curious to hear Mr. Nadella utter these contorted words last night: “Our gaming business is now more than $9 billion, and growing profitably.” So. $9 billion is revenues, not profits. So growing means that revenues are growing. And growing profitably means … what? That the business is “becoming profitable”? Or is it just growing revenues positively? Was this a misstatement? What does that mean? Here’s my guess. He means usage and engagement are growing. Because I can state this with certainty: Microsoft’s gaming business is not profitable. In fact, it’s undergoing a digital transformation of its own.

“Analyst predicts an Xbox One X failure in the near future”

Just one?

It really does feel like investment into Xbox has downscaled a lot after the Xbox One launch so I wonder what the future is for them. I'm guessing we're mainly going to see games as a service sorta stuff from Microsoft with only a few major releases each year.
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Not surprising

So why do people make games?
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LittleRoyal posted...

So why do people make games?

i'd assume they make the real money off of live subscriptions, paraphernalia, etc
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Maybe with the original Xbox and Xbox One, but surely the 360 must have been profitable.
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Lvaneede posted...

Maybe with the original Xbox and Xbox One, but surely the 360 must have been profitable.

Possibly not after the mass RROD failure that seemed to happen to everyone
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PC and Nintendo master race.
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Don't we know this already?
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Lvaneede posted...

Maybe with the original Xbox and Xbox One, but surely the 360 must have been profitable.

Darmik posted...

Microsoft’s Xbox/gaming business is that it has never actually turned a profit

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Coca-Cola posted...

Lvaneede posted...

Maybe with the original Xbox and Xbox One, but surely the 360 must have been profitable.

Possibly not after the mass RROD failure that seemed to happen to everyone

This. That fault cost MS over a billion.
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How does that work out?

Microdone
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Why would they keep making new systems?
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Even without the RROD Microsoft would still be in the red.
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Shadowplay posted...

Even without the RROD Microsoft would still be in the red.

Hmm I dunno. I think their Xbox Live and first party games like Halo 3 and Gears would have carried them to a profit. 360 was overall very good for them outside of RROD.

creativerealms posted...

Why would they keep making new systems?

They don't want to lose the living room. But honestly it sounds like they invest less and less into Xbox as time goes on so who knows.
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I feel like this is true for any recent game console, barring like, the Wii
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NightMarishPie posted...

I feel like this is true for any recent game console, barring like, the Wii

Nah. Nintendo is solely a game business and has made a profit every single year outside of the Wii U gen (even then it was only like two years).

Playstation is one of the most successful divisions for Sony right now. To the point where the company would be in a dire spot if they didn't have the PS4.
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Darmik posted...

NightMarishPie posted...

I feel like this is true for any recent game console, barring like, the Wii

Nah. Nintendo is solely a game business and has made a profit every single year outside of the Wii U gen (even then it was only like two years).

Playstation is one of the most successful divisions for Sony right now. To the point where the company would be in a dire spot if they didn't have the PS4.

really? I know the PS3 was a net loss I think the entirety of its life (could be wrong, but I'm fairly certain) and I figured the PS4 was the same. Interesting nonetheless
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is this where i tout the PC like d bag?

Xbox 360 was crazy popular. everybody had one. Many considered the PS3 to be a failure
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NightMarishPie posted...

really? I know the PS3 was a net loss I think the entirety of its life (could be wrong, but I'm fairly certain) and I figured the PS4 was the same. Interesting nonetheless

Yeah PS3 was a pretty big disaster for Sony but the PS4 has been a massive success for them.
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XBox looks like it's trying to make money by siphoning off synergy with windows. "Buy XBox One and get all these extra benefits with windows!"

then they datamine the fuck out of you and that's where the real money is.
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LittleRoyal posted...

So why do people make games?

Xbox may not make profit but Nintendo is all in on games so it definitely does for them. I assume Sony is making profit too
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Y'all should look up the market cap and yearly profits for Microsoft and the same for Sony and you'll see why the Xbox brand could outlive the PlayStation brand easily.
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Smashingpmkns posted...

Y'all should look up the market cap and yearly profits for Microsoft and the same for Sony and you'll see why the Xbox brand could outlive the PlayStation brand easily.

Microsoft could literally spend until Sony goes bankrupt and not even have their finances phased.
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I hope Microsoft exists the console business.
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Smashingpmkns posted...

Y'all should look up the market cap and yearly profits for Microsoft and the same for Sony and you'll see why the Xbox brand could outlive the PlayStation brand easily.

Only if the Xbox division is making money for Microsoft. More than once it has come up within the company that they don't need it.

I'm not saying this is happening anytime soon but I think the division is having a harder time to justify its future to the higher-ups after the Xbox One reception.
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Darmik posted...

I'm not saying this is happening anytime soon but I think the division is having a harder time to justify its future to the higher-ups after the Xbox One reception.

As a game console, you're right.

Instead what they are doing is making it more like an Apple TV or Fire TV that also plays the latest AAA video games, as well as supporting functionality for existing television subscriptions for people who can't do cord cutting. They also use it to incentivize people to use Windows.

They are going for kind of an iPhone -> MacBook type of environment but with XBox -> Windows instead.
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really? I know the PS3 was a net loss I think the entirety of its life (could be wrong, but I'm fairly certain) and I figured the PS4 was the same. Interesting nonetheless

PS3 was sold for much less than it cost to produce while the PS4 was not.
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ChromaticAngel posted...

Darmik posted...

I'm not saying this is happening anytime soon but I think the division is having a harder time to justify its future to the higher-ups after the Xbox One reception.

As a game console, you're right.

Instead what they are doing is making it more like an Apple TV or Fire TV that also plays the latest AAA video games, as well as supporting functionality for existing television subscriptions for people who can't do cord cutting. They also use it to incentivize people to use Windows.

They are going for kind of an iPhone -> MacBook type of environment but with XBox -> Windows instead.

I agree. I think what the Xbox will eventually shift to something that's not a traditional video game console eventually. Could even just be an ecosystem within a Windows PC.

I think the only reason Microsoft keep it around is for Xbox Live subscriptions. So they'll try to leverage that to other devices I'm sure.

I don't think they'll ever be a company that invests money into opening new development studios and invest a lot of money into developing new games though. Which is sad and makes me less interested.
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Darmik posted...

I think the only reason Microsoft keep it around is for Xbox Live subscriptions. So they'll try to leverage that to other devices I'm sure.

I anticipate they will copy Amazon's model, where you pay for Amazon Prime, get a bunch of shit for free (prime shipping, prime music, prime video, Kindle lender library) then you can at that point buy channels al-a-carte through Amazon Prime for $4.99/month, prime music unlimited, and kindle unlimited.

Microsoft already has much of this in place.

You've got the XBLGold, as well as Games With Gold. Then on top of that they also have Groove (Microsoft's Spotify), they offer video rentals straight from their console so presumably they'll ramp that up with channels as well, etc.

That's just where I think XBox is headed since... well honestly everything seems to be headed in that direction except for Nintendo.

In the future, I expect Sony will bundle actual Playstations into TVs kind of like All in one PCs:

(the other side of this PC is a monitor)

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Darmik posted...

Smashingpmkns posted...

Y'all should look up the market cap and yearly profits for Microsoft and the same for Sony and you'll see why the Xbox brand could outlive the PlayStation brand easily.

Only if the Xbox division is making money for Microsoft. More than once it has come up within the company that they don't need it.

I'm not saying this is happening anytime soon but I think the division is having a harder time to justify its future to the higher-ups after the Xbox One reception.

Nah they've invaded a good portion of American living rooms and they've basically built a one stop shop entertainment system and it all started with their venture into video games. I don't see them leaving the video game business anytime soon.
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Damage control.
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creativerealms posted...

Why would they keep making new systems?

Brand loyalty, keeps people from buying Sony products who is a competitor outside of gaming. It also shows weakness to fold and stop developing them and claiming Sony the winner, it may sound petty, but in the grand scheme of things, everything a company does is judged by overall perception of the consumers.

MS doesn't need to profit off of it, because their consoles are such a tiny part of their overall business. Microsoft won't go bankrupt or be hurt by not profiting off of Xbox.
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This is no secret.
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I remember hearing this sometime during last gen, and there were rumors going around that 360 would be the last Microsoft console because of it.
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Bill Gates said he would literally keep the Xbox going until the end of time even if it loses them money. Just because he wants to be in the video game business so bad.
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Syko_Darksyde posted...

Bill Gates said he would literally keep the Xbox going until the end of time even if it loses them money. Just because he wants to be in the video game business so bad.

Does he even have any say of what goes in at MS? Last I heard he left years ago
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Syko_Darksyde posted...

Bill Gates said he would literally keep the Xbox going until the end of time even if it loses them money. Just because he wants to be in the video game business so bad.

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:/
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microdone
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360 was awesome despite the RROD. Truly the PS2 of its day.
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You make your money being independent these days than working for a big company.

Just as long you know what you're doing, and being smart about it.
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