Microsoft's Home & Entertainment Division (Xbox) loses $293 million in Q4 2005

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Microsoft's Home and Entertainment division, which overall includes the Microsoft Xbox video game console system, PC games, the Home Products Division, and TV platform products for the interactive television industry, saw revenue of $1.56 billion in the 3 months to the end of December and a significant loss of $293 million, compared to $1.37 billion revenues and a small profit of $55 million in the same period last year.
 
Makes sense though. You have all the high costs of putting the 360 out and they are selling them at a loss as well.
 
There are rumors that M$ is looking into releasing a portable media player themselves, w/ possible gameplay capabilities. Me thinks they should focus on strengthening the 360 camp before venturing into another foray.
 
Not surprising, and they would never say it, but I dont think M$ is in the videogame business to make money. They certainly havent made any yet. But them losing a few billion on the Xbox is like you losing $20 on a failed lemonade stand venture.
 
[quote name='Puffa469']Not surprising, and they would never say it, but I dont think M$ is in the videogame business to make money. They certainly havent made any yet. But them losing a few billion on the Xbox is like you losing $20 on a failed lemonade stand venture.[/QUOTE]

If that's the case, what is the point of this venture? What would M$ hope to gain?

I believe they said that, if the 360 division fails to post positive numbers by the end of its life cycle then this will be the last Xbox. Despite how deep Bill's pockets may be, they're not bottomless.
 
[quote name='Ecofreak']If that's the case, what is the point of this venture? What would M$ hope to gain?
[/QUOTE]


Market Share? Brand recognition? Bragging Rights?

I have nothing against the Xbox or the 360 but its clear that getting into the videogame console business is a vanity project for Bill Gates. He wanted to beat Sony and Nintendo at their own game. And while Xbox may have sold many millions of units, and games, it never made a dime. If Xbox was its own company, and not an arm of Microsoft, they would be out of business by now. Microsoft is still only a player in the console wars because Gates is willing to flush billions away on his desire to beat Sony & Nintendo.
 
[quote name='shipwreck']Makes sense though. You have all the high costs of putting the 360 out and they are selling them at a loss as well.[/QUOTE]

I would really think M$ would try to learn from the mistakes of the XBOX rather than follow pretty much the same path with the 360. I'm not sure if there system costs will go down over time but that would be the smarter route to take. I believe the PS2 is now cheaper to make than it was back when it was released.

I think its really too early to see a clear view of how the XBOX 360 will perform in the long run though. It doesn't help M$ that they have a shortage of 360's because they would probably be selling along with more games, acessories, live subscriptions so on and so forth.

I agree with the comment about the handheld...they really should focus on what's in front of them.

Although I'll be a late adopter this gen. the 360 has some nice features like LIVE arcade and what not that could booster sales if they keep providing the content. They also need to pick up steam in Japan.

I think I'm kind of glad I'll be taking a wait and see approach this gen.
 
It doesnt sound like any of these companies are going to survive. Microsoft not posting profits. Nintendo's last hurrah coming up, and sonyt in bankruptcy.
 
[quote name='Puffa469']Market Share? Brand recognition? Bragging Rights?

I have nothing against the Xbox or the 360 but its clear that getting into the videogame console business is a vanity project for Bill Gates. He wanted to beat Sony and Nintendo at their own game. And while Xbox may have sold many millions of units, and games, it never made a dime. If Xbox was its own company, and not an arm of Microsoft, they would be out of business by now. Microsoft is still only a player in the console wars because Gates is willing to flush billions away on his desire to beat Sony & Nintendo.[/QUOTE]
Very insightful.
 
[quote name='thingsfallnapart']It doesnt sound like any of these companies are going to survive. Microsoft not posting profits. Nintendo's last hurrah coming up, and sonyt in bankruptcy.[/QUOTE]

Nintendo remains the only profitable company from the last generation. This is CERTAINLY not their last hurrah.
 
[quote name='thingsfallnapart']It doesnt sound like any of these companies are going to survive. Microsoft not posting profits. Nintendo's last hurrah coming up, and sonyt in bankruptcy.[/QUOTE]

I dont agree.

Microsoft not posting profits? Its only the xbox division thats losing money. Thats a very small part of MS, which is a very big, very profitable company. They can afford to make and Xbox 420, an Xbox 512, and an Xbox 666, and have all of them lose money.

Nintendo's last hurrah? Please explain further. Nintendo is a highly profitable company that makes lots of money off of its handheld systems, and highly profitable licenses like Pokemon.

Sony as a whole may be in trouble, but that certainly doesnt mean its the end for them. And Sony Computer Entertainment, the division responsible for all things playstation, continues to be profitable in spite of what may be going on with the rest of the company.
 
[quote name='Puffa469']I dont agree.

Microsoft not posting profits? Its only the xbox division thats losing money. Thats a very small part of MS, which is a very big, very profitable company. They can afford to make and Xbox 420, an Xbox 512, and an Xbox 666, and have all of them lose money.

Nintendo's last hurrah? Please explain further. Nintendo is a highly profitable company that makes lots of money off of its handheld systems, and highly profitable licenses like Pokemon.

Sony as a whole may be in trouble, but that certainly doesnt mean its the end for them. And Sony Computer Entertainment, the division responsible for all things playstation, continues to be profitable in spite of what may be going on with the rest of the company.[/QUOTE]

Listen to the man, he speaks the truth! Very well done good sir.:applause:
 
I think sony is the one most in trouble. From my experience in retail, people are tiring of their franchises and they don't see the PS3 as doing anything new except better graphics. There has been tons of hype for the 360 among online users, and tons of hype for the revolution amongst our more hardcore gamers, but very few have been excited for the PS3, beyond gawking at the graphics.

I really think the PS3 is going to be just like it says, a sequel to the Playstation 2, with very little new to offer. More metal gear, more EA, more jak/ratchet/sly, more killzone, more tony hawk, more crappy online, more technical problems, more bullshit. IMHO.
 
[quote name='gtguru']Its possible this could be N's last hurrah console-wise, but the handhelds will prevail.[/QUOTE]
Yeah... no. Nintendo's the only one of the 3 who's life in the handheld market and the home console market is sure.
 
Puffa469 is on a ball with this thread. And I do agree that the Xbox has always been a vanity project for Gates. Lets face it: he was only widely well known because of his wealth before the Xbox came about which got him celebrity in the gaming world and things like the cover of Time.

But yeah there will be another Xbox after the 360 because he said so in the EGM issue 200 interview. You know the one after the Peter Moore interview.
 
[quote name='thorbahn3']Puffa469 is on a ball with this thread. And I do agree that the Xbox has always been a vanity project for Gates. Lets face it: he was only widely well known because of his wealth before the Xbox came about which got him celebrity in the gaming world and things like the cover of Time.

But yeah there will be another Xbox after the 360 because he said so in the EGM issue 200 interview. You know the one after the Peter Moore interview.[/QUOTE]

1101840416_400.jpg


Pretty close.
 
Gates is too smart to blow millions on a "vanity project". They wouldn't be in the business if there wasn't a profit to be made. One of the things they're focusing on is service revenue, i.e. Live and micropayments. They want the 360 to be an entertainment portal into the living room. Content comes in, cash flows out.

Don't fool yourself into thinking that one of the world's best businessmen isn't interested in profiting.
 
[quote name='Puffa469']Market Share? Brand recognition? Bragging Rights?

I have nothing against the Xbox or the 360 but its clear that getting into the videogame console business is a vanity project for Bill Gates. He wanted to beat Sony and Nintendo at their own game. And while Xbox may have sold many millions of units, and games, it never made a dime. If Xbox was its own company, and not an arm of Microsoft, they would be out of business by now. Microsoft is still only a player in the console wars because Gates is willing to flush billions away on his desire to beat Sony & Nintendo.[/QUOTE]


Yeah Gates just wants to be king of all media. Maybe in 20 years the line between TV & game Console will be really thin. And if that is the case MS wants to cover it's bases.
 
I don't remeber the publication, but it was widely reported. Unlike the first xbox which had a constant fixed cost that didn't go down much over time to make, the way the xbox 360 was made, that each year the system should drop considerably to produce. If I remember correctly, they stated after 01/01/06, that msft would be able to break even on cost, due to the parts dropping in price. The article suggested that the 360 could possibly drop in msrp by about a $100 a year, and still make msft some profit.

Also msft is making a major move to control the living room. They are in partnerships with compaines such as comcast, and verizon for next gen cable box software. That was in a business week from about a year ago. It said with msft software, on the cable box, someone watching a football on there verizon (yes they were pissed about att/comcast moving into the digital phone market, and are going to go after there cable market) cable box could change to anyone of the camera's at the game to watch the play. Lets say the default on tv now is the side view, well the next gen box would allow you to go to lets say the endzone camera and watch the game. Msft software would also take care of the bandwidth problem that currently limits tv viewership. A current gen mailbox only can handle so many channels, as they are all the channels info are going into you cable box now. The next gen box, wouldn't take any channels in. You put the tv to espn, they cable box contacts the server and get the info for that show only. This would allow for 1000's of tv channels to be able to be broadcasted. Not that there is much good on tv now, but it would be possible.
 
[quote name='jer7583']I think sony is the one most in trouble. From my experience in retail, people are tiring of their franchises and they don't see the PS3 as doing anything new except better graphics.[/QUOTE]

The same argument could be made of the 360 at this point in time (PGR3 or DOA4, anyone?).

There has been tons of hype for the 360 among online users, and tons of hype for the revolution amongst our more hardcore gamers, but very few have been excited for the PS3, beyond gawking at the graphics.
Click to expand...

It all depends on who you ask / talk to. IMO, the most exciting thing the 360 has going for it right now is the XBL Arcade; without this, there's little to sustain current interest. Full Auto is pegged for a mid-February release date, but as with any achedule, dates are tentative.

Nintendo will always have its share of supporters. From a developer perspective, however, there's a distinction between expressing interest in a platform and actually developing for it, something that third-party outfits remain on the fence with.

I really think the PS3 is going to be just like it says, a sequel to the Playstation 2, with very little new to offer. More metal gear, more EA, more jak/ratchet/sly, more killzone, more tony hawk, more crappy online, more technical problems, more bullshit. IMHO.
Click to expand...

It's a two-way street with sequels, regardless of platform. Until developers are willing to take more risks on new IPs and consumers venture more into original material, we'll continue seeing sequels because of the lower risk and greater likelihood of profit associated with them. Both Insomniac and Naught Dog have stated that they're working on new IPs for the PS3, so Jak and Ratchet sequels may be on hold for the PS3 (for now).

How is the situation any different on the 360 when two of the more anticipated titles on the 360 are sequels (Oblivion in March and Halo sometime in 2007)? Last I checked, EA and Activision (publisher of Tony Hawk) were multi-platform and not PS3-centric.

If you don't like the PlayStation (or Sony, for that matter), you're entitled to your opinion, but don't blame either solely for the ills of the gaming industry; Nintendo, Microsoft and almost every third-party developer are just as culpable for their contribution to the stagnation of innovation.
 
[quote name='psiufoxx2']Nintendo remains the only profitable company from the last generation.[/QUOTE]

This isn't accurate. Sony has turned a profit on the PS2, having broken even on manufacturing costs and R&D more than two years ago; even at a price point of $149, Sony is earning a profit on every PS2 sold today. It's the other electronics divisions that have faltered in recent years; Sony's gaming division has been carrying the company the past few years, which is why they're banking heavily on the PS3 as a major revenue source.
 
Making a console wasn't Bill's idea, and Steve Balmer was against it. It was J Allard that outlined the vision in detail to Bill, and convinced him to go at it. J Allard never planned to win against the PS2, his plan involved creating a base in very specific ways. And everything J planned for the Xbox came true. J's plan involved them winning the console war on their 2nd generation box. History shows that J has been on the mark, and now we're going to see if he can fullfil his vision to beat Sony's PS3. And you can't say Sony expects the PS3 to carry the company either. It wasn't their idea to start a new generation this fast. It will likely be 2008 or 2009 before the PS3 makes Sony any money. Microsoft as a software company makes billions no matter what. They could stop selling anything, and have enough assets to function for several years. They have enough assets to buy the entire airline industry. Microsoft is just that financially powerful. Sony being a hardware company usually runs on thin margins, and you can bet the 360vsPS3 battle is going to stretch them to their limit. Sony isn't stupid, and you know they are concerned about how this will turn out. Anyone smart would be.
 
Is it really that complicated? How much $$ have you spent on games? I own all three last gen systems. I'm pretty sure every company has profited from me.
 
[quote name='KingDox']Yeah Gates just wants to be king of all media. Maybe in 20 years the line between TV & game Console will be really thin. And if that is the case MS wants to cover it's bases.[/QUOTE]

Thats exaclty what they're planning for. By 2015, I'm fairly certain Microsoft will have branched into cable systems and internet providers. We'll just have one box that controls our games, internet, television, and movies.


Then again, the world could end is 2014
 
[quote name='Joon2324']Is it really that complicated? How much $$ have you spent on games? I own all three last gen systems. I'm pretty sure every company has profited from me.[/QUOTE]
The point is that, while you made their losses less, Microsoft still LOST money, and that's a problem.
 
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