Landguy said:
I agree. No chance for M$ to jump ship on the XBox business. THey are focusing the whole company on creating a connected OS structure and XBOX - Music/movies/games etc... This is a big part in courting the younger audience to stick with them for the long term. THat is why they bought Nokia's cell phone unit. THey have to have a foothold in that arena long term. |
They won't continue to burn cash on Xbox forever. Xbox OG was the foot in the door, 360 was used to grow the brand, and XB1 was intended to dominate the market, and be a paywall to all forms of living room entertainment (and focused advertising using the mandatory Kinect), along with paywalled used-games w/online check. ALL of the XB1 plans have failed.
Terrible sales globally, and virtually dead in Europe : Check
Consumer pushback on paywalls and online checks causing 180s : Check
Removal of Kinect basically stripping it's monetary value in terms of market manipulation/advertising multiplier : Check
XB1 is on track for 35-50M lifetime sales, with no added revnue sreams that they planned on. Remember Zune? I thought so. Microsoft wanted that Apple-like iTunes revenue, and tried until they gave up.
Project Xbox was around 5 to 5.5 billion in the red as of 2012 for the totality of the years from inception, with yearly profits only marginal (at the rate of the last year it would have taken something like 42 or 43 years to make back all of the losses).
Marketing and Develeoping XB1 and Kinect2 probably dumped them another 2 or 3 billion in the red. 360 revenue is decreasing rapidly. A lot of the expenses were wasted. They paid huge for Titanfall + gangantuan marketing on that deal, AND they had to compensate EA for the free copies they packed in to XB1s AND they had to reimburse stores for the $50 discount to try to get them to move AND they had a minimum 1-year agreed manufacturing deal with their Chinese makers to supply the Kinect2 that had to be adjusted after the fact. In electronics manufacturing you have to sign contracts in advance for annual production deals, it's not an a la carte deal unless you want to pay a massively higher rate. That way the mfg is guaranteed its margins, the salaries for the workers, the amortization for the books, have taxes prepared and so on. Reports also emerged that the high initial demand had them in trouble when demand fell off a cliff unexpectedly in 2014, with the supply chain overloaded, and units had to be shipped back to warehouses to be reskinned as Titanfall bundles, and to be stored long-term for the bulk overstock. All of this costs HUGE in this industry.
Microsoft is not dumb on an infinite scale. If they can't see a light at the end of the tunnel which will be worthwhile, they will give it up easily. And there's no plan for the XB1 than can make it a useful resource for them to blow a ton of money on. But, they've already bought the cow, the epic expenses are over with. Odds are what you'll see is minimal maintenance, and a steady drawing down of the expenses until cancellation. Forces within the company and from shareholders have long questioned the financial sanity of endlessly hemmorhaging funds into the effort, but were stayed by the promise that XB1 was supposed to fulfill : a cash printing press in a dominant market stance. The paywalls that were designed to make each unit highly profitable have been stripped, and there's nothing even remotely close to market dominance in XB1's fortunes.
Face it, XB1 is the end for Xbox. As projects complete, the powers that be will continually draw back expenditure until it makes sense to pull the plug.
