Hiku said:
darkenergy said:
Hiku said:
Hmmmmm....
Yeah I don't think they made a lot of money giving away so many free games and selling the console for a value of $150 during the holidays. Cutting their production investments with Kinect abruptly, premature pricedrop, marketing efforts going down the toilet in Japan, etc.
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Mmmmmmmm....
Yeah somehow giving away 2(one not even worth a whole $60 since it release a year ago) or in a few cases 3 free games(sunset bundle sold out before holidays began) with an extra gift card ONLY available in selected retailers NOT officially from Microsoft is somehow alot(PS4 did the same with GTA5 and TLOU Remastered and others like LBP3), offering a Kinectless X1 while still offering one with it,price drop happen DURING the holidays(Kinectless doesn't officially count cause its still available at FULL price), we don't know how big they push X1 in Japan but remember it still doesn't really need it to be sucessfull worldwide. Also it should be noted that they also make money by membership, accessories, and by people buying other games,etc. Sooo....yeah.
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Yes, even one of those things is significant when the manufacturing cost of XBO is esimated to $396 without Kinect. All combined together, and it certainly amounts to a lot. Abandoning their Kinect plans is not as simple as selling it separately. All the component manufacturing deals they've made are going to cost them because the unit will no longer sell or need to be produced nearly as much as they originally planned. Not to mention the abandonment of their DRM plans. All those things go into the initial budget plan. They expected to make a lot more money on game sales that way, by elliminating second hand sales. Those expected profits were then used to invest into other aspects of XBO's development. But that money is no longer part of their projections, so it'll either have to come out of their pockets, or result in cancelation of plans.
And no, PS4 did not do the same thing. Not even close. Besides giving away more free games, they also added a $50 price cut onto the console itself. A friend of mine picked up an XBO during the holiday sales for $450 with 5 free games and a $50 gift card towards a sixth game. AC Black Flag, AC Unity, Destiny, Lords of the Fallen, Sunset Overdrive and Dragon Age Inquisition. Even being generous and assuming each game is only worth $50, that's still $150 for the console. As for Japan, they had adds everywhere in front of stores and midnight launch parties with invited celebrity figureheads from the industry, etc. And in the end, pretty much no one showed up, and they have a baseline of like 200 units per week in Japan, dropping towards 100. So whatever the cost was, it was pretty much all down the drain, as it's hard to see how they would be able to do much worse even if they hadn't tried.
Then there are the marketing deals they spend lots of money on, where the PS4 version still ends up selling more. In those cases it's obvious they would have done even worse had they not had the marketing deals. However, it still begs the question if it's worth the money for them with the small boost they do get.
Yes, companies make money on software sales and subscriptions, etc. That doesn't mean they can slash prices any way they want and remain profitable. PS3 for example never made up for the losses it cost them. Just the premature $50 price cut being in effect since last year is making the console sell for less than it costs to make. And that's only the cost of the copmponents. Not counting factory, boxing, shipping, and retailers taking their cut, etc. They're going to be using cheaper components soon, but if they add another price cut again to match Sony if they add one this year then they're back to losing money again. Especially if Sony do a $100 price cut, as they historically have done with all their previous consoles.
You're the only one on this forum I've seen suggesting that they're making money. If things go as planned, they will make up for the losses later. As for right now, there's no doubt they're eating losses.
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