Microsoft STILL Losing Money on Xbox

[Lord Nepenthean]

Don't cry.  You'll still be able to buy overpriced Sony consoles so you can get them repaired five times a year, and Microsoft consoles which in one more generation will just be a PC.  It's okay.

[Mike Leon]

YAY!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

[Arrrhalomynn]

Don't cry.  You'll still be able to buy overpriced Sony consoles so you can get them repaired five times a year, and Microsoft consoles which in one more generation will just be a PC.  It's okay.

My playstation 2 is still working great, but both my dreamcasts often mess up....

[thx1138]

My first PS2 died on me.

[CatchFiveBats]

I got a PS2 right when it came out.  I've had to use a DVD Cleaner on it a couple times, but other than that I haven't had too many problems.

[Arrrhalomynn]

And let's not forget that the saturn cost 520 euros when it was released here in 1995 (including virtua fighter).

[nupoile]

Losing money on hardware to sell the software is nothing new. When Atari came out with the 2600 it was actually part of their continuing marketing plan to sell the hardware at a loss and profit on the software. (I am currently reading The Ultimate History of Video Games) There have been other instances of this marketing plan as well. I'm sure everone likes to profit but perhaps Microsoft doesn't/didn't feel it was worth it to persue lower production costs on the xbox hardware when they made money on the games.

[Lord Nepenthean]

You're missing something huge here, nupoile.  Microsoft's Home and Entertainment division has taken NET LOSSES of billions of dollars over the past few years.  This is AFTER any money they made on software, so it's not the same thing as Atari losing money on consoles and making money overall after software sales.  Translation: any other company would have gone under a long time ago.  Microsoft just has billions in the bank and from their computer division.

[nupoile]

...ah, yes you are right, I missed that part.

[Lord Nepenthean]

It's kinda easy to miss though I guess, because numbers like that seem obscene.

[Hydrobond]

Also keep in mind that the cost to make a modern game is much, much higher than games that appeared on the Atari consoles.  Making something like Centepede is down right easy when compared to writing a 3D engine.   I don't know how much most of the old Atari games sold for, but even if they were half the price of current games, I would guess that there was much more profit in the old Atari games on a per unit basis.  

[Lord Nepenthean]

Actually, it's not really true that profit margins were higher back then, because for one thing the physical video game cartridges cost an enormous amount more in comparison to an optical disc.  Also, video games were not a mega-billion dollar industry back then.  There weren't games that sold a million copies the day they released.  There were no GTA's that sold tens of millions of copies at $50 a piece.  In other words, the userbase just was not there.  The programming process may have been less time-intensive, but they really didn't profit more back in the Atari days....  especially not at Atari, which if you know anything about video game history was sold due to a complete lack of finances.

[Izret101]

This is just my spin on it.
The more Microsoft is losing thru sales translates to more loss for the competition because even with their loses they were ahead of the competition in sales (if i remember correctly Xbox did pull ahead of both cnosoles i know it was ahead of GCN)

So even if they are losing money now they figure they can make it up later as the competition is slowly choked out.

Both Sony and M$ have alternate revenue to take money from to fund their gaming sections if they do acrew loses. Where as Nintendo has only gaming to rely on for revenue.

IMO that is one of the reasons Sega went out of buisnes because the amount of revenue they could make off the home console market was not enough to compete with Sony(who is in all facets of technology ) and Nintendo (consoles and handhelds). So once Sega was pulling in net loses they had nowhere to take money from to fix the problem.

So once nintendo console sales or game sales slow down to much they are going to have to pull out of the market or part of the market.
The more diverse a major company is in the market the more likely they are going o be to succeed.

IMO MS and Sony are in it for the long haul. So long as they are leaders in any of the other markets they are in they will be able to fund their gaming ventures.