Support NeoGAF

[LukasTaves]

In 2010, back when Xbox Live had 25 million subscribers Ms announced that Live revenue was more than 1.2 billion for the year (subs + content sales).

Now with 48 million subscribers, and using a 50% ratio for gold users, that would mean already 1.5 billion dollars in subscription alone (Actually 1.6 if I understood the last fiscal report correctly). Then there are Ms cut on digital sales, and royalties for 3rd party games, and sales of their own games, and that's not even accounting that 360 is sold at a profit... And yet somehow they still manage to lose 2 billion a year due xbox? How?

There is no dedicated "Xbox division" in Microsoft's earnings reports, so we don't really know how profitable their whole Xbox endeavour is. That's what this analyst is saying: That they are covering up the poor overall performance of the Xbox with other, unrelated, revenue streams in the same business division.

What other profitable revenue streams does the EDD division even have? That's practically the division of the money sinkers.

 

[Tallshortman]

The interesting question is if one or the other bow out; who will buy the remnants? Could you imagine if Valve bought up the remnants of the xbox brand and joined the console wars in earnest?

Valve is worth like 3billion. They would burn through their cash before they could even launch a console with the sort of marketing and logistics it takes to even break into the console market in any meaningful way.

 

[Faustek]

Both figures are completely wrong.

Microsoft doesn't make that much from Android patent royalties yet and the Xbox division is not losing $2 billion a year. How could people here actually believe that the Xbox division loses $2B every year?

In 2010, back when Xbox Live had 25 million subscribers Ms announced that Live revenue was more than 1.2 billion for the year (subs + content sales).

Now with 48 million subscribers, and using a 50% ratio for gold users, that would mean already 1.5 billion dollars in subscription alone (Actually 1.6 if I understood the last fiscal report correctly). Then there are Ms cut on digital sales, and royalties for 3rd party games, and sales of their own games, and that's not even accounting that 360 is sold at a profit... And yet somehow they still manage to lose 2 billion a year due xbox? How?



What other profitable revenue streams does the EDD division even have? That's practically the division of the money sinkers.

Moneyhatting? Nah seriously I do believe the RROD must be counted as 2.5 in lost sales(initial sale loss + the hit of undercutting). Just putting the infrastructure of Live up must have cost a lot, all the RD, all the manpower and then maintaining everything. Yepp I do believe Microsoft is making more on royalties for Android than they are making on the box.

 

[Biker19]

One wonders what losses the Xbone will generate.

If they lower the price tag of Xbone too soon just to compete with Sony, they'll be taking a lot of losses.

 

[MutonCommander]

Valve is just dipping their toes in right now; the problem with licencing others to make your machine like the 3DO is that its guaranteed to be more expensive in comparison because the manufacturers needs to take a cut off the top; they don't get a slice of the software sales which Sony, MS, and Nintendo use to competitively price their machines.

It would be very easy for Valve to "subsidize" Steam Machines if they choose to do so. They can simply include a Steam voucher worth x amount of dollars for purchases through Steam with every Steam Machine.

 

[2MF]

Valve is worth like 3billion. They would burn through their cash before they could even launch a console with the sort of marketing and logistics it takes to even break into the console market in any meaningful way.

The net worth of a company doesn't completely dictate the resources it can spend.

Plus, Ouya managed to launch a simple console with very little resources (despite the naysayers). Valve has access to much more money, Steam, development skill, credibility etc.

 

[Chindogg]

And this is why Nintendo can't just follow Microsoft's and Sony's plans to compete directly. They just cannot afford this kinda of loss while major conglomerates like MS and Sony have other divisions to soften the blow of initial massive losses in R&D.

 

[DarkoMaledictus]

Those RROD warranties probably did not help one bit...

 

[kodecraft]

And this is why Nintendo can't just follow Microsoft's and Sony's plans to compete directly. They just cannot afford this kinda of loss while major conglomerates like MS and Sony have other divisions to soften the blow of initial massive losses in R&D.

THIS!

 

[SMZC]

And this is why Nintendo can't just follow Microsoft's and Sony's plans to compete directly. They just cannot afford this kinda of loss while major conglomerates like MS and Sony have other divisions to soften the blow of initial massive losses in R&D.

Then they should stop making consoles and start focusing on what they are good at; making games, that is.

 

[ChosenPredator]

I feel like we always have these exact same threads about every console every year but which one will become reality eventually? I really don't want any of the three gone..the competition because of it is amazing and only benefits us if the other one screws up.

 

[AniHawk]

Then they should stop making consoles and start focusing on what they are good at; making games, that is.

they're good at making games because they make consoles.

i don't see either one of these three exiting any time soon. at least give it until the end of the generation (this new one).

i think what we'll see happen is companies finally start making services. so you have the xbox live service, the playstation network service, (the) steam (service), and probably some nintendo platform as they try to keep the whole toy thing going. there will probably still be consoles, but i imagine sony could try and do things like put playstation inside of televisions, and microsoft can put xbox live inside of cable boxes or whatever.

 

[kodecraft]

Then they should stop making consoles and start focusing on what they are good at; making games, that is.

Nah. Nintendo is about giving gamers new ways to play, their like Apple. Their software and hardware are a marriage.

 

[Biker19]

For a lot of people the DVR is what owns the living room.

And Xbox One doesn't even have a DVR inside, nor does it have any DVR features, which already defeats the purpose of an "All-In-One Entertainment device" right there.

 

[Skeff]

For a lot of people the DVR is what owns the living room.

This is especially true in the UK, we have DVR's that also have on Demand TV services like BBC iPlayer, we have VOD Movies/TV series to rival Netflix all in on our DVR (Sky+HD) All in a great UI that won't work with the XB1 voice commands (well, not well.)

 

[SparkTR]

I feel like we always have these exact same threads about every console every year but which one will become reality eventually? I really don't want any of the three gone..the competition because of it is amazing and only benefits us if the other one screws up.

Microsoft will probably bow out first in my opinion, but to what extent is going to hinge on the new CEO. If anything happens it probably won't be for a while, and it certainly won't be a sudden shock.

Regardless, I wouldn't mind if someone backed out. A strong Steam Machine presence would be better for consumers than a strong Microsoft or Sony, they're devices that are specifically built to be competitive with each other, even digitally. If they dominate they'll still produce pro-consumer stuff, and because Valve is private we won't have much stupid investor shit happening.

 

[LukasTaves]

Moneyhatting? Nah seriously I do believe the RROD must be counted as 2.5 in lost sales(initial sale loss + the hit of undercutting). Just putting the infrastructure of Live up must have cost a lot, all the RD, all the manpower and then maintaining everything. Yepp I do believe Microsoft is making more on royalties for Android than they are making on the box.

RROD may affected then in the first year or so, but 8 years later? It's absurd to suggest tht right now RROD accounts for all the revenue 360 makes and then an extra 2 billion.

 

[scytheavatar]

I feel like we always have these exact same threads about every console every year but which one will become reality eventually? I really don't want any of the three gone..the competition because of it is amazing and only benefits us if the other one screws up.

Any of the three? What if all three of them quits the console making business?

 

[Captain Tuttle]

Moneyhatting? Nah seriously I do believe the RROD must be counted as 2.5 in lost sales(initial sale loss + the hit of undercutting). Just putting the infrastructure of Live up must have cost a lot, all the RD, all the manpower and then maintaining everything. Yepp I do believe Microsoft is making more on royalties for Android than they are making on the box.

RROD is done, that was paid for with that massive write down years ago.

If the 2 billion number is true then I think it's short term costs due to launch of X1.

Man, if MS sold off Xbox and Samsung picked it up that would be a game changer. Samsung have shown that they are extremely aggressive in business tactics and pricing regarding competition; I'd imagine Samsung entering the console business is considered a worst case scenario in Sony's and Nintendo'a Board Rooms.

 

[Skeff]

RROD is done, that was paid for with that massive write down years ago.

If the 2 billion number is true then I think it's short term costs due to launch of X1.

Man, if MS sold off Xbox and Samsung picked it up that would be a game changer. Samsung have shown that they are extremely aggressive in business tactics and pricing regarding competition; I'd imagine Samsung entering the console business is considered a worst case scenario in Sony's and Nintendo'a Board Rooms.

Definitely, if Sony were to dominate this generation in the home consoles, Nintendo were to dominate the handhelds so both went into next generation with big bags of cash and Samsung came in and bought the Xbox division then I'm sure we'd have an amazing generation of Samsung xbox vs. PS5 vs. Wii U2.

 

[ChosenPredator]

Any of the three? What if all three of them quits the console making business?

D-: the horror, I guess if that ever happened PC for life.

 

[Nebula]

I wonder that too. The 360 has high sales, xbox live brings in millions in subscribers alone, decent first party sales, kinect was the biggest hardware launch in history, but it's down 2 billion every year? I don't get it.

MONEY HATTING HAHAHA!

 

[andthebeatgoeson]

How?

Seriously how is it the Xbox division hemorrhaging money like that?

They pay for every game. It's an unsustainable business model. Once the competition is out, then they stop doing these things. Actually, they didn't wait for the competition to due before doing shit. It's a legitimate concern.

 

[Captain Tuttle]

They pay for every game. It's an unsustainable business model. Once the competition is out, then they stop doing these things. Actually, they didn't wait for the competition to due before doing shit. It's a legitimate concern.

Sony and Nintendo don't pay for their games? First party means free?

 

[v1oz]

They probably also moneyhat the major video games news outlets. It's been noticed on GAF that the press has not really been critical of the Xbone even though it has a fair number of issues prior to launch. By comparison the press were very critical to the point of being negative towards the PS3 and the Wii U with stories criticising all the hardware all the time. They also got through the whole RROD issue relatively unscathed.

 

[coldfoot]

Both figures are completely wrong.

Microsoft doesn't make that much from Android patent royalties yet

Microsoft is already making billions a year on Android patents. As long as Android devices keep selling they essentially have an unlimited war chest to spend on the mobile market.

Gotcha!

 

[highrider]

This seems unlikely as the 360 was profitable I thought.

Edit: I fear coldfoot. I'm out!

 

[HORRORSHØW]

This seems unlikely as the 360 was profitable I thought.

Edit: I fear coldfoot. I'm out!

I'm sure the RRoD fiasco cost them a few pennies.

 

[Angelus Errare]

Could be an average from all years for all we know (totally didn't read through reply posts) to include monies that went to R&D for XBO and XBL infrastructure.

Edit: Coldfoot is pretty much Omar from The Wire.

 

[SPDIF]

Gotcha!

You bumped this thread for that?

 

[polyh3dron]

coldfoot comin'!

 

[nib95]

Gotcha!

Damn.

 

[Reg]

hehe, damn!

 

[bj00rn_]

Gotcha!

You bumped the thread one month later for that? Wow, congratulations I guess..

 

[Zee-Row]

Thats what happens when you over spend on commercials and spend billions just to design the controller.

 

[Foghorn Leghorn]

Gotcha!

This is why I love NeoGaf, the detectives are always on the case.

 

[Tomcat]

You bumped this thread for that?

someone is trying too hard to keep his 15min of fame I guess...

 

[Graphics Horse]

I'm sure there's a perfectly rational explanation. Like.. Amnesia or something.

 

[Colonel Nasty]

Cold foot has necrobumped two straight threads

 

[TheOMan]

Gotcha!

Penguins&PolarBears


Ice cold.

 

[JaseC]

Gotcha!

You're evidently enjoying your tag, but I think you'll find it missing soon enough if you're going to make a habit of bumping old threads just to call people out on their discrepancies.

 

[Salvor.Hardin]

Gotcha!

There were legitimate reasons to keep these threads open and now they're going to be locked because you couldn't help but scratch that itch of yours.