Forums - Microsoft Discussion - Xbox One Breaking Even, Profits with Software!

And expect another 3 years and over 100 games from 360, says Mehdi

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 - a feat normally reserved for Nintendo.

Speaking at the Citi Global Technology Conference on Tuesday, Mehdi told listeners that: "the strategy will continue which is that we're looking to be break even or low margin at worst on [Xbox One]," he explained, "and then make money selling additional games, the Xbox Live service and other capabilities on top.

"And as we can cost-reduce our box as we've done with 360, we'll do that to continue to price reduce and get even more competitive with our offering."

Mehdi also expanded on his employer's plans for the continuing support of the Xbox 360, that the machine will be receiving support for another three years - a period which he expects to see the release of over 100 games.

"You've seen us over the years constantly be focused on profitability and improving year over year," Mehdi explained when asked about the profitability of the Xbox business and how it would weather the launch of the One. "There are different points in the cycle when you invest in new hardware.

"If you look at 360 that platform lasted for seven to eight years and it's going to go for another three years. It's incredibly profitable now in the tail.

"Some of these things take some time in the launch year in which you invest, and then they they play out over time. We're going to continue to invest in Xbox 360, and the two devices can work in concert. So it's not like the day we ship Xbox One your 360 won't work. We'll continue to support it."

Answering more directly to the question of margins, Mehdi highlighted the importance of the revenue stream from XBL memberships as a growth factor - a subscription which Microsoft obviously hopes many customers will continue on its new machine.

"We've seen our Xbox Live subscription service continue to grow. We're up to 48 million members now. We're shipping more games than we've ever done before. Those are things I look to to say, 'hey we can grow not just top line revenue but also profitability.'"

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



 

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Seece said:

"Some of these things take some time in the launch year in which you invest, and then they they play out over time. We're going to continue to invest in Xbox 360, and the two devices can work in concert. So it's not like the day we ship Xbox One your 360 won't work. We'll continue to support it."


We'll see dedicated games for the platform then?



so...why isnt it cheaper?

This is a good thing, providing they dont need to panic-cut 6 to 12 Months into things.

Also leads me to believe were getting that long awaited 360 cut too sometime soon.

bobgamez said:
so...why isnt it cheaper?


Because they run a business and want to make money.



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bobgamez said:
so...why isnt it cheaper?


Because MS are a very money minded company, whereas Sony's aim is to sell hardware being strcitly a hardware company.



 

Pre order editions will bring a loss though.

Even with Kinect? Huh. Wonder if they're being subsidized by "interested parties"

Worth looking into at least.

http://gamrconnect.vgchartz.com/profile/92109/nintendopie/ Nintendopie  Was obviously right and I was obviously wrong. I will forever be a lesser being than them. (6/16/13)

They don't love us.. they should take a 150 dollar loss just to show us they love us!

Face the future.. Gamecenter ID: nikkom_nl (oh no he didn't!!)

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areason said:
Pre order editions will bring a loss though.


Because of the free games? It seems limited to day one editions, how many day one editions are out there on the market?

Doesn't really matter, it would be a small one time loss. At worst what, $30 per copy to EA? We don't know the deal MS made with EA, it could be that they are doing royalty free on future released games or something else.



It's just that simple.