sully1311 said:
Arkaign said:
Revenue =! Profit
As margins are terribly tiny to nonexistent on hardware, the revenue isn't too far off of MSRP on X1/PS4/U/etc.
Profit varies wildly though.
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Where did I say profit? They don't get $400 dollars in revenue. Where I used to work it wasn't non-existant. Ranged from 5%-12%.
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Nowhere, but it's close enough to call it basically even. Consoles, particularly for the first several years (and beyond, if they get aggressive price cuts) are basically sold-through at close to cost to retailers. Anyone who has run an independent game shop can tell you that there is no way to make profit from the consoles themselves, and even for the mega retailers, they are selling them so that they can make the money on games and in particular : accessories.
A $399 PS4 is sold through at retail at a cost somewhere around $385+, and that is your revenue percentage : a bit over 96%. Or close enough to call it almost a 1:1 revenue setup. Also, it isn't uncommon (as it was with the Xbox One with the first $449 Titanfall + Kinect bundle) for a product to produce losses at the same time as revenue. In essence, revenue - operational costs = profits, put very simplistically. If revenue is less than costs, then you have losses to report.
When there are special promotions, the manufacturers typically reimburse or balance out their retail partners so they don't lose their asses on stacks of consoles that are suddenly selling for $50, $100, whatever less than what they 'paid'.
Of course there are a myriad of endless accounting details such as write-downs and shell games to hide profits, losses, expenses, investments, holdings, liabilities, and so forth that vary from totally legit to "don't tell the SEC!".
It all boils back down to : a PS4 @ $399 or an X1 @ $349 effectively generates that same sum in revenue, minus a scant percentage.
