XBOX 360 profitability - an analysis

[Lord N]

EaglesEye379 said:

Lord N said:

EaglesEye379 said:

dbot said:

I'm not sure of the numbers in the original thread but the amount would definitely be over $2 billion.  I mean the 10 million consoles alone (assuming that they weren't all arcades sold in the United States which would be ridiculous) would be over $2 billion.  Then licensing fees for every game on the Xbox 360, Xbox Live subscriptions, first and second-party game sales, Xbox 360 peripherals, PC game sales, other revenue generated by Xbox Live (movies, Xbox Live Arcade, ad revenue, etc), Xbox Live Casual web games, Games for Windows Live, Microsoft gaming keyboards and mice, etc.

 

I don't think MS sold 10 million 360's in the nine months these numbers discuss.  

 

Yes they did. They shipped 10m 360s from June 2008 to March 2009.

 

Okay, if we're talking about the number they shipped to retail, then that's true, but still.....

I think the one thing that everyone is forgetting is that the 360 is not in a division by itself. It's in a division with a bunch of other products and services. That being said, no matter how you try to analyze it, there simply is no way to tell for sure whether the 360 or the other products are losing or making money. There is actually more evidence to support that the 360 is not a "cash cow" considering that MS posted a 31 million dollar loss last quarter.

The fact that there is no conclusive evidence to support the 360 being consistently profitable renders this whole thread moot.

 

On the contrary. Of course no one will know for sure as none of us work for MS (at least I dont) but the whole point of the OP was to show that based on mathematical evidence, a large majority of the revenue is made by gaming and a large portion of the costs seem to be non-gaming related.

The evidence is that gaming revenue (360 and PC) alone is $5bn which is 77% of the total revenue. We know that the costs of $6.2bn are made up of cost of revenue (48%), R&D (21%) and Others (31%). Therefore based on the reports, we can see a large part of revenue being generated by gaming and alot of the costs are tied to non-gaming. That is why there is a lot of evidence to support that the 360 is profitable. Thats all, no one can pinpoint the exact numbers, but there is alot of implied evidence here.

The costs this quarter are split like this - cost of revenue (60%), R&D (27%) and Others (13%). SO yes, there there is a loss because of increased cost of revenue and R&D, and there is no numbers given for the gaming revenue alone. Admittedly, this 3-month period proves the point less so than the last 9-months but the general evidence is still there.

 

 

 

 

That still isn't conclusive evidence. As a matter of fact, it's largely gross speculation.

As Slimebeast said, SCE in its best years was pulling in 5bn/yr in revenue, so there's no way in the world that the 360 is pulling that much.

Also, why is it that in a thread that's supposedly discussing profits do people keep bringing up revenue? They are two different things. Even if you want to say that it's other products that are running up the cost, there's no solid evidence to prove that, either. At best, it's speculation, and at worst, it's ignoring facts when you consider that MS spends a lot more money than Sony and Nintendo on advertising and on third party support.