is Microsoft losing or gaining money on the xbox one?

#21Kupo_Mog_KupoPosted 5/6/2014 8:08:46 AM
dnmt posted...
Welp:

https://i.imgur.com/GnvPgxL.jpg


That shows that they profited the last 5 years...up to that point.
#22bob15xPosted 5/6/2014 8:34:22 AM
Kupo_Mog_Kupo posted...
https://i.imgur.com/GnvPgxL.jpg


ignore him. he knows absolutely nothing about business. And if people actually think people care about the cumulative profit or loss, fyi they don't all that matters is current profits and profit/loss forecasts.

but wonder why he didn't look up the huge cumulative loss by sony?
#23SabramPosted 5/6/2014 12:22:39 PM
Enclave posted...
Joey-Zaza posted...
There's no way in hell they are "selling" the X-box's to retailers for $500 you think that Walmart doesn't take a piece of the pie?

Microsoft is probably selling it to Walmart for $400 or less.


Mark up on video games and devices is usually around 10%. There's a good chance Walmart pays $450 per system. If the recent sale was mandated by Microsoft then I would probably expect them to do something like a $50 rebate for each console sold as well.


it's much less than that actually. I used to work as a manager for a game store, and ordering consoles through distributors was very skimpy on profit margins. Talking like $10 per console. My store wasnt large or anything, and usually only had like 5 of each console on hand at a time, so larger chains might get discounts higher than that for bulk buying, but the idea that retail outlets make a good bit of money on console sales is purely false. The margins on consoles are some of the slimmest for electronics, since the stores expect to make up the difference in accessory and game sales. Some game accessories like 3rd party controllers have profit margins of about 50% (pay $20, sell for $30) and games are also about at $10 profit, but that's per game with a much smaller initial buy-in So if you buy $6000 worth of games (100 new titles) the profit on that is $1000 after they sell through.

So yeah, retailers make **** all on console sales.
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#24UtterMoonPosted 5/6/2014 12:29:49 PM
Well....think of it this way...they still haven't begun to make money from the Xbox 360. It takes quite some time for a console to become profitable, because creating and building them costs a ton of money...and the consoles themselves are not the true money makers..its the software and it always has been.
#25SabramPosted 5/6/2014 1:15:49 PM
Has MS even recouped the losses from the OG Xbox? That was a huge financial disaster for the company branch, and I know the 360 had also been losing money for the first few years, and now it's pretty much established the Xbone with the bundle and month-long sale has been costing as well. This is again not factoring the newest R&D and marketing costs.

I would like to know what the entire balance looks like for the Xbox division over at MS. I don't think it's a pretty picture. Mind you i'm rather sure Sony's is worse since the huge money toilet the PS3 was for the first 3 years of its life ate up pretty much all the PS1 and PS2 profits they had, and I'm not pretending it isn't. They've been going through a lot of changes though to make the Playstation brand back into the powerhouse it used to be, while MS keeps flubbing up everything in PR to make themselves look worse.

I really, really want MS to blow me away at E3 and convince me an Xbone is a must-have item. I love videogames pure and simple, and right now i don't see the system as a worthwhile purchase, which is a real shame since not having one locks me out of things like Dead Rising 3 as well as Gears sequels, which is a series i greatly enjoyed the first 3 of. Hell the only reason I got a PS3 first last gen is cause my wife is a diehard fan of God of War ever since i bought the first one on PS2.

I do like all three big game names, but i really don't think I'll touch a Wii U until Bayonetta 2 comes out. I would love to get MH3U on it for online, since i already have it for my 3DS and my wife does as well, but i think Nintendo's only strong in the handheld market these days, and may just stick with that from them.
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I have discovered the perfect game. It is called Starbound, and shall be played forever.
PSN: Sabram
#26EnclavePosted 5/6/2014 1:35:06 PM(edited)
Sabram posted...
Enclave posted...
Joey-Zaza posted...
There's no way in hell they are "selling" the X-box's to retailers for $500 you think that Walmart doesn't take a piece of the pie?

Microsoft is probably selling it to Walmart for $400 or less.


Mark up on video games and devices is usually around 10%. There's a good chance Walmart pays $450 per system. If the recent sale was mandated by Microsoft then I would probably expect them to do something like a $50 rebate for each console sold as well.


it's much less than that actually. I used to work as a manager for a game store, and ordering consoles through distributors was very skimpy on profit margins. Talking like $10 per console. My store wasnt large or anything, and usually only had like 5 of each console on hand at a time, so larger chains might get discounts higher than that for bulk buying, but the idea that retail outlets make a good bit of money on console sales is purely false. The margins on consoles are some of the slimmest for electronics, since the stores expect to make up the difference in accessory and game sales. Some game accessories like 3rd party controllers have profit margins of about 50% (pay $20, sell for $30) and games are also about at $10 profit, but that's per game with a much smaller initial buy-in So if you buy $6000 worth of games (100 new titles) the profit on that is $1000 after they sell through.

So yeah, retailers make **** all on console sales.


Then you had a crap supplier. When I worked at a videogame store? 10% was our general mark up. Though to be fair I'm working off info from when the PS2 launched.
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#27SoulTrapperPosted 5/6/2014 1:41:24 PM
Styrof0am posted...
SoulTrapper posted...
http://venturebeat.com/2013/11/29/the-deanbeat-the-xbox-one-cost-471-to-make-the-ps4-costs-381-and-why-this-matters-in-the-long-run/


... But all this assumes MS pays retail for the parts, and sell it for $500 to retailers. AFAIK only retailers has dropped the price, as part of sales and specials. MS hasn't dropped the price permanently yet.

Aside from parts (most likely bought in bulk with a hefty discount, sans custom build SOCs), there's also the cost of production, distribution and advertising.

I have no idea what MS pays for each XB1 built, and I don't think anyone beside MS knows, and they've said ...

Microsoft's Yusuf Mehdi has revealed that each sale of an Xbox One will be a break even transaction for Microsoft at the very least, suggesting that the machine is to be sold at profit from day one ...


Source: http://www.gamesindustry.biz/articles/2013-09-05-xbox-one-will-be-break-even-or-profit-making-from-launch


Could you point out exactly where it says they're calculating those parts at retail price? Because I can't seem to find that anywhere.

Even if their estimate is off, it won't make up the difference of the $50 price drop AND the two free games.

The xbox would have been profitable at launch, but not with it's price drop and the inclusion of 2 free games.


bob15x posted...
471 cost in September when manufacturing them does not mean they are 471 in April-May.

Most likely its down to 420 or so.


That's possible (although I doubt it became that much cheaper), but that still doesn't make up for the price drop and the two free games.
#28Styrof0amPosted 5/6/2014 2:35:59 PM
SoulTrapper posted...
Could you point out exactly where it says they're calculating those parts at retail price? Because I can't seem to find that anywhere.

Could you point out exactly where it says they're calculating those parts at bulk price?

I do know that high end AMD APUs go for around $110-120 at retail.

But as I wrote previously; I have no idea what MS pays for each XB1 built, and I don't think anyone beside MS knows

I'll just take the corporate vice president of marketing and strategy for Microsoft's word for it (not that it has any bearing on my enjoyment of my XB1).

I looked through the US store, and the cheapest XB1 had a pricetag of $499 and comes with Forza 5. The 2 game bundle cost $699 but also contains a year of XBL Gold (should save buyers $50 according to the store).
I am sure other retailers have offers better than those (I didn't check), and I'm fairly sure said retailers are not selling at a loss (they might break even on the console, and make an earning on the bundled games).

http://www.microsoftstore.com/store/msusa/en_US/pdp/Xbox-One-Complete-Bundle/productID.292288600

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#29SoulTrapperPosted 5/6/2014 2:53:46 PM
Styrof0am posted...

Could you point out exactly where it says they're calculating those parts at bulk price?


Of course not, I never made that claim either.
You claimed they were using retail price, so I assume you have evidence to back that up.

That article is an estimate of what the xbox one cost in parts and to manufacture.


I do know that high end AMD APUs go for around $110-120 at retail.


They estimated the xbox GPU to cost around $110.

A 7790 (which is the closest to the xbox GPU) sells for about $150 depending on where you get it from.

So I'm fairly certain they aren't using retail prices.

But as I wrote previously; I have no idea what MS pays for each XB1 built, and I don't think anyone beside MS knows

I'll just take the corporate vice president of marketing and strategy for Microsoft's word for it (not that it has any bearing on my enjoyment of my XB1).


That's true, these are estimates.

What the MS guy said was before they had to give away a free game with the console.
Whether they're breaking even now, while giving away free games is the issue at hand.


I looked through the US store, and the cheapest XB1 had a pricetag of $499 and comes with Forza 5. The 2 game bundle cost $699 but also contains a year of XBL Gold (should save buyers $50 according to the store).
I am sure other retailers have offers better than those (I didn't check), and I'm fairly sure said retailers are not selling at a loss (they might break even on the console, and make an earning on the bundled games).

http://www.microsoftstore.com/store/msusa/en_US/pdp/Xbox-One-Complete-Bundle/productID.292288600


It was available at major retailers with the inclusion of two games at a lower price just a little while ago.
It could have been a temporary deal, I'm not certain of that, I don't live in the US.

Those retailers buy in bulk, they don't actually pay MicroSoft $500/xbox.
#30krillensPosted 5/6/2014 2:56:06 PM
im pretty sure console devs don't try to make a profit off of each individual console sale. they are more concerned with longterm profits (software, accessories maybe, subcriptions, etc).

MS doesnt segregate the xbox in their financials.
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