Not to compare too much, but if Xbox had a profit margin around what they had reported in the leaked documents (12%), then they would have exceeded playstations average quarterly profit of the last year. Next quarter they are likely to more than double Playstations profits.
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thats a good comparison
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I donât think Microsoft is interested in selling too much consoles as the merits of their ecosystem outweighs the latter. They would not be able to use the competition thing with regulators if they were selling consoles too well and the loses will also be quite substantial. They will keep selling consoles but will leave the bulk to other companies like those making handhelds to handle the hardware problem for them, Gamepass and their store are basically what their gaming is going to be about and any platform that can support it. In some ways I would say Microsoft is pushing for a one system like we have with movies.
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Itâs over $200 on average per console sold. As per Philâs leaked email.
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All I know is as per twitter this is Xbox downfall where they will now drop Xbox and just become a 3rd partyPublisher as clearly it is more profitable.
Sometimes I hate the internet.
But yeah got to get those hardware sales up to grow console gamepass lol
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They are not. That is just bonkers might as well just sell you a PC at that point. I think this figure is coming from the billions used in subsidizing the cost at launch which would have been higher as I would think the chip shortage would have had an effect also there was that news that Microsoft had to pay a premium over Sony to be put ahead of Sony in getting chips. I donât think itâs that bad anymore also probably why the diverted the series X to the cloud. I would think they arenât subsidizing at that high of a cost anymore. It just wouldnât be feasible. Spencer also said 100 to 200 per console which probably would at most have been 150 for now with the price increase that would be 100 or less. Iâd probably say that with the series S digital they about even or better and the series X digital would probably alleviate those costs even more. I donât see them losing more than 50 per console for now.
In his leaked email Spencer said the average loss per console is $230. He said they had to thread the needle between selling some consoles for long term revenue but not too many so as to miss their P&L targets.
That was an email to Nadella iirc. Itâs a huge loss on hardware.
That was end of 2021. We also know that itâs unlikely hardware and production costs have substantially reduced.
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The reduction might come next year with the new model.
I do think itâs important that Xbox increase console sales. They need an improvement. Negative growth year after year is worrisome. Iâm someone who predicted that they would match Xbox One sales this gen, now that is starting to look doubtful.
Itâs the easiest way to increase gamepass subs, if nothing else.
No, that email was from December 2000, he never mentions the $230 figure youâre talking about (only that theyâd lose $1.5B shipping however many consoles they planned to ship). It was at the height of the chip crisis and when the 7nm node manufacturing was immature. The cost would have gone down by quite some margin since then.
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As I said that I believe was because of the premium they had to pay on chips. Phil Spencer himself said in 2022 that they were subsidizing between 100 to 200 per console. That is not the case anymore as I believe that initial subsidy was for 3years. The console does not cost that much to make just google it. I believe it was Xbox era that reported on Microsoft paying for chip priority over other companies. I just donât think itâs feasible they ended the OG Xbox quickly and decided not to go with Nvidia cos they had a loss of about 100 to 150 per console just donât see them doing it again except for reasons such as chip shortage where everyone is vying with big bucks for priority.
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Until I see Xbox BC on PC (locally) Iâm never going to be happy (or even accepting of) seeing hardware on decline.
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The whole argument about Microsoft leaving console business should be dead. People just have to think to themselves why would Microsoft surrender the 30% cut they get from digital sales. Lets say one of the be big games like Fifa or NBA 2k sells 1million copies digitally theyâll get 30% cut of that which would equal around $20million. That just includes the base price of the game. Now factor in the whales that spend $1000+/year with these releases, which equals to $300. Now multiply that by how many active users are in these games, and theyâre most likely making at least $35million just off one third party game based on base price of the game and MTX.
So again, why would Microsoft sacrifice that to become a third party and lose that revenue?
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They are losing a big chunk on every piece of hardware sold. Making that back is long term as Phil put it.
Yes they would lose the third party cut - and as you say that isnât necessarily replaceable.
Which is probably why they still stick with a platform. But the equation is simpleâŚas they own more and more studios and IP the value of a 30% revenue share on 3rd party on their platform diminishes anyway in relative terms and as they are losing console market share it also reduces in real terms.
The other end of that equation or see-saw is the revenue and higher profit margins sans hardware subsidies they could gain from making everything for all systems and platformsâŚâŚ
I checked how much money MS made during the ABK deal approval period.
FY22Q3 Net Income - 16.7 B (January - March 2022)
FY22Q4 Net Income - 16.7 B (April - June 2022)
FY23Q1 Net Income - 17.6 B (July - September 2022)
FY23Q2 Net Income - 16.4 B (October - December 2022)
FY23Q3 Net Income - 18.4 B (January - March 2023)
FY23Q4 Net Income - 20.1 B (April - June 2023)
FY24Q1 Net Income - 22.3 B (July - September 2023)
Total: 128.2 Billion
Thatâs almost twice the amount of ABK. Absolute insanity.
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They are a 3B company.
Fact is they have to spend their money, especially in recession where the value of money decreases unlike the assets.
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Is that profit or revenue?
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Their revenue is 50+ billion a quarter
So yeah, MS is probably looking to make more purchases in the future.
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gaming is one and the investors still donât care lol
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