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Analyst: Xbox "generates" $2 billion in losses for MS. Hides it with patent royalties
- Thread starter ekim
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2.5 billion for EDD. 2 million attributed to Xbox. Read his quote in the OP
That exclusive DLC doesn't come for free. They've spent all this time on "You've got to spend money" but they haven't quite made it to "make money" yet.
Lagspike_exe
Member
I think Bing and Xbox could realistically be spun-off or sold. They're not strategic sectors anymore and are losing money. I don't believe that 360 lost much in later years. With Live and good sales, it was probably a decent profit maker, but Xbone is going to sink all that when it launches and I don't think that it will have as long term vigorous sales as its predecessor had so it can pay back the intitial investment.
Wouldn't be surprised. They spent $400m on an NFL deal. Boasted about spending $100m on a controller tweak. And those third party exclusives aren't cheap. Who know how much securing TitanFall cost them. The XBO will be a huge money sink for them for the next few years, especially now that MS can't count on having a huge advantage in terms of 3rd party multi-plat sales that they enjoyed this generation.
Metalmurphy
Member
Read the bolded
maquiladora
Member
Mr_Pooriya
Member
I read somewhere that MS get 5$ for each sold Android device, in patent royalties.
They spend a lot of money on marketing, R&D, RROD, moneyhatting and so on.
And they keep buying companies for crazy money! They bought Skype,next year they are buying Nokias phone division and they recently bought Yammer for 1 billion!
They spend a lot of money on marketing, R&D, RROD, moneyhatting and so on.
And they keep buying companies for crazy money! They bought Skype,next year they are buying Nokias phone division and they recently bought Yammer for 1 billion!
SwiftDeath
Member
Pretty sure the analyst actually says 2.5 billion from EDD, of which 2 billion is xbox
iamshadowlark
Banned
Ah.
Well then. That's early PS3 level losses. How accurate is this exactly because MS can't be this bad, can the?
Well then. That's early PS3 level losses. How accurate is this exactly because MS can't be this bad, can the?
It's about the whole device division. Not only Xbox.
No, 2 billion is just Xbox. 2.5 billion for entire division. Read the OP.
That's assuming $50 for Microsoft, but it doesn't work like that.
For instance if I go to Amazon I can purchase one for $47, this likely has a profit margin for the seller so we're likely on $40, then there is distribution, maybe down to $39, manufacturing of the cards $38.
I've been generous towards MS there and they're already down to $38 so for 20 million subs it's: 760 million for 12 months for 20 million subs.
After that they need to pay for the infrastructure, they need to pay for the games for gold, they need to pay the XBL customer support.
I'd guess they get between 250 million and 500 million in profit on XBLG, probably closer to 250million?
Check the Bolded in the OP.
Chance Hale
Member
Is this the new Bioshock Infinite cost 1 trillion dollars to make?
And the "probably" and "can be"s in the op quote don't seem particularly detailed.
And the "probably" and "can be"s in the op quote don't seem particularly detailed.
They built a whole silicon lab for the Kinect sensor and several other chips - I guess these things are expensive.
SwiftDeath
Member
Assuming they pick up where the 360 left off (2008-2012, 2013 has been a down year) the XB1 is a no-brainer. Without that assumption, yes it looks like a big risk.
ShogunDarius
Member
if Microsoft keeps losing that much money I guess everyone will see a Titan Fall.
Ok, terrible joke, but it isn't a good situation
NemesisPrime
Banned
This has been laughed at by many other analysts.
Nightengale
Member
Mildly skeptical, but I wouldn't be surprised.
From a business point of view, the original XB1 design approach ( prior to all the 180s ) had the design focused entirely to 'maximising profit margin.'
My colleagues and I recently had a fun workshop brainstorm session looking at all the avenues of monetisation built inside the XB1... and it was kinda insane how much monetisation potential the thing holds.
From a business point of view, the original XB1 design approach ( prior to all the 180s ) had the design focused entirely to 'maximising profit margin.'
My colleagues and I recently had a fun workshop brainstorm session looking at all the avenues of monetisation built inside the XB1... and it was kinda insane how much monetisation potential the thing holds.
iamshadowlark
Banned
Links?
LiquidSolid
Member
What. Is this fantasy console wars?
Really interesting article about it:
http://www.engadget.com/2013/05/21/building-xbox-one-an-inside-look/
ThisWreckage
Banned
I totally agree. Microsoft's solution has been to throw money at every single problem and hope for the best and that strategy may play a part in their exit. It's simply not sustainable.
SwiftDeath
Member
Doesn't suprise me a bit but it always helps to post links
I'm far too lazy to go a-searching myself for such things
Aquamarine
Member
It does.
According to Janney Capital Markets:
July 1st, 2012 - June 30th, 2013
Xbox revenue: $2.391 billion
Xbox LIVE revenue: $1.346 billion
Xbox Royalty + Accessories + Software revenue: $3.346 billion
Total Xbox Revenue: $7.083 billion
Non-Xbox ED&D revenue (Windows Phone + Royalties + Skype): $3.081 billion
Total ED&D division revenue: $10.164 billion
% of ED&D revenue attributed to Xbox: 70%
Historical % of ED&D revenue attributed to Xbox:
FY 2006 - 48%
FY 2007 - 67%
FY 2008 - 69%
FY 2009 - 68%
FY 2010 - 89%
FY 2011 - 92%
FY 2012 - 84%
FY 2013 - 70%
In which regards? I know that it probably doesn't matter where the money comes from but it's interesting to see the actual costs the Xbox brand causes.
Acheteedo
Member
Is it possible that he's referring to the running total of the Xbox gaming devision as per this graph? It's plausible that this is now at negative 2 billion. It is completely implausible that it's losing 2bn per year.
Google was asked to join the group, they didn't.
soundscream
Member
Oh god this again.
This chart isn't how businesses operate, everything is based off each fiscal year.
They've done a LOT of investing in all kinds of areas with the Xbox One. Securing partnerships, exclusives, funding of all 1st party game, R&D for the hardware, marketing and media events, manufacturing for the hardware, etc etc.
All of this is loss until they can actually sell the damn thing.
iamshadowlark
Banned
It is FY?
I presume he has worked out that they are making $10 per android device from Samsung and HTC via patent licenses - they sell millions and millions. That makes a billion, so taking that out of the division's profits, leaves them a miserly amount for xbox.
They make more money on Android than they do on windows phones. Huh! Funny old world. MS sure knows how to make money.
They make more money on Android than they do on windows phones. Huh! Funny old world. MS sure knows how to make money.
ThoughtsOfSpeaking
Banned
Why this nonsense
Microsofts financials are availble for every investor to see. They are not losing 2 billion a year on EAS full stop.
However. There seems to be increasingly loud rumblings that if the Xbox one is as big a success as the 360, if not bigger, the division may be trouble.
I dont think Microsoft is content with beating Sony, they want that Apple money.
I honestly think even if the Xbox one is tracking even with the PS4 world wide it will be seen as a failure (unless both are selling insane numbers)
Microsofts financials are availble for every investor to see. They are not losing 2 billion a year on EAS full stop.
However. There seems to be increasingly loud rumblings that if the Xbox one is as big a success as the 360, if not bigger, the division may be trouble.
I dont think Microsoft is content with beating Sony, they want that Apple money.
I honestly think even if the Xbox one is tracking even with the PS4 world wide it will be seen as a failure (unless both are selling insane numbers)
Holy crap. I didn't think a patent as general as that actually held up legally. I can see why B&N wants to file against that.
soundscream
Member
Not that total part, which is why the chart is pointless.
Well is that the E+D division? if so he's saying that chart is better reflected if you take 2 billion off every year to account for the Android patents.
the article is ridicolous, where M$ is supposed to lose all that money?
they should sell xbox 360 far below its cost to do that.
Their Windows, Business and Server divisions took care of all their Xbox losses. Even during its peak years the division Xbox belongs to was eclipsed by those other three.
Acheteedo
Member
No that's the gaming division. Didn't the gaming division only get bundled with the E+D division recently?
T
thepotatoman
Unconfirmed Member
I agree. There was one quarter where Surface alone caused MS to lose 900 million dollars. And I don't think the other non-xbox devices are making up for that failure.
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