The Xbox One beat the PS4 in November, but at what cost? We do the math

[MoHasanie]

S.T.A.G.E. said:

MoHasanie said:

jlmurph2 said:

Oh, then that's the retailer paying that, not MS. If a retailer is giving out a free game or a gift card then they are trying to get the consumer to buy from their store.

But that's what I don't get. Why would every major retailer accept such a big loss? The MS store had the offer too. 

The stores get the product at wholesale prices just like the production company gets parts from the manufacturer when they buy in bulk. MS is is truthfully paying out to Ubisoft. They've essentially witheld on profit for three months and are paying out to Ubisoft for their product until the contract is up January third. Its instant sales for Ubisoft and gets the MS the short term attention they demand. The whole point of the risk is to get eyes on them and not on Sony.

Ah, this is the answer I was looking for. The only way retailers can offer such deals and be profitable is if MS is selling those X1's to them at a cheaper price. All this proves is that MS made a much much bigger loss on the X1 hardware this quarter than the $63m figure in the article.