| fastyxx said: Remember that $50 a console on 60k units a week is $3 million dollars a week in price cuts. And way more than that at peak time (holiday). They need to move a lot of consoles on this cut and pair that with Live/games/accessories/downloads to make that money back. If they would've moved 3.5 million consoles in North America the rest of the year without a cut, that's $175 million to recoup in terms of increased sales of merchandise/services. |
20k units a week
So that means probably an average of $6 per year profit per extra unit per year from Xboxlive gold
they would also expect to sell 10 games for these machines lifetime. $70 per machine @ $7 royalty per game.
So if it cost $4 million per week,
Live will give them $18 per extra machine averaged over the lifetime of the machine and the extra numbers sold.
The extra games sales - 10 of them @ $7 each over 3 years will earn them $70 over the lifetime of every extra machine.
The recouped costs 20,000*(18+70) = 1.7million returned to their coffers, being extremely conservative.
If you increase the number of game sales to 15 - (5 per year) it makes it (18+105) *20,000 =2.46million per week of the cost will be offset by extra profit oportunities. (Being extremely conservative on game profit by excluding 1st party software such as Halo 3 and Banjo and Xboxlive gold revenue.
If I had more information I would say that they'd break even on this price cut and they will maintain the same average profitiability.
Tease.
