Microsoft Confirms It Never Earns A Profit On Xbox Console Sales

I thought they made money from console sales when it becomes cheaper down the line for them to make the parts? At first it's most expensive.

No wonder we don’t any in stock in the UK 😂
Just for fun, the same goes for PS5 as well.

Always been the way.

It's no doubt easier to swallow in more modern times with the rise in digital sales. I've been all digital since about 2015/2016 and many others are too, this takes up a lot of slack, digital buyers don't buy used games, every sale has that sweet 30%.

@Snake_V5 very rare for Sony and MS to make pure profit from hardware now. Not until at least mid to late through the gen. That said pandemic will factor in.

Subscriptions and Services are the big earner these days.

@snake_V5 I am confused by it too. The wording lawyer used about ever making profit on sale of "an Xbox console" means Xbox360 never made a dime on hardware sales till the end of its life.

Perhaps what this means is that MS accrues enough loss in the initial sales that even when the console becomes cheaper to manufacture, they do not manage to sell enough to recoup their initial loss before the console generation ends.

Is this not an industry standard? Pretty sure Sony is taking massive losses as well. It's all about the software and accessories and always has been no?

MS Game Hardware Division - “It’s not about the money, it’s about sending a message....”

@Dm9982 it’s both companies. The only one of the big three that makes money on their hardware is Nintendo. People criticize them for the lower end specs but it keeps the price of the system down to where people will purchase it and Nintendo makes a profits.

@Krzzystuff Not for Nintendo. Ever since the Wii, they've been interested solely in piecing together garbage from decade-old tech they can nab on the cheap and duct tape, then slapping hardware together and selling it at a huge markup versus what the components actually cost them. Its one of the advantages when you target casuals and families/young kids - they're too ignorant about tech. They don't care about how future proofed this thing is. They just wanna know if it plays Mario, Mario Kart, Smash and Pokemon.

For everyone else though? As long as putting out hardware that's on the bleeding edge is important, than yeah that's how it works pretty much.

@Snake_V5 Hardware becomes cheaper down the line but so do consoles. MS & Sony keep cutting their consoles' price and put them on massive sales (especially in autumn holidays). So I guess whenever it is cheaper for them to manufacture consoles, they just lower the price rather than profiting.

I wonder if it's really that open and shut?

If manufacturing costs fell, systems could be briefly profitable.

But then they usually course correct and then do a price drop.

Maybe the reason they say they never made money ever was the RRD.

That cost them Billions, so when you factor that in, they alway lost on hardware.

@Vinsanity Nintendo actually did take a loss on WiiU, same as Sony and Microsoft. It's the only time that we know of they've ever done so. I believe the number Reggie threw around is that with one game sale it became a small profit, though. Miracast streaming was bleeding edge when they introduced it and cost far too much for the system's good.

Ironic that the one time Nintendo actually offered subsidized value on their hardware is the one time they crashed and burned.

Nothing new here, its known as the razor blade model, sell em the razor cheap and make money on the blades