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Comment by loosescrews | Hacker News Reader

Has Xbox ever been profitable for Microsoft? The rumors I have always heard indicated that it wasn't [1]. Maybe it was worthwhile for protecting their Windows business, maybe they never should have bothered. Even if it is profitable now (I can't find any information one way or another), it doesn't seem like it turned out to be a worthwhile investment. Maybe Steve Ballmer was right?

[1] https://www.cgmagonline.com/2017/08/14/microsofts-xbox-never...

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It's possible that Xbox serves as a loss-leader for introducing/keeping people in the brand.

For kids who may only have chromebooks at school, and macs at home, an Xbox may be the first time they make a Microsoft account. That account then goes on to accumulate digital assets and stays with them until much later when they're ready to make bigger financial commitments.

Anecdotally, for the past few years, gaming has been the only reason for me keep a Windows device around at all.

I have seen it claimed that, roughly speaking,

- The sale price of the Xbox itself pays for the per-unit cost of the machine

- The percentage Microsoft gets of the sale price of games, adds just about enough to pay for the development and marketing costs, so at that point, the business doesn't do much better than breaking even

- But when you add in the ongoing revenue from online gaming, that's where the profit comes from

Can anyone confirm or refute this?

After start up costs (starting from scratch with the original Xbox was certainly more expensive than iterating to the current version), in general, consoles are loss leaders and you make up for them in rights fees from games (console makers traditionally do much better than breaking even here). Online services, like Xbox live gold, is another revenue stream.

MS probably gets some value from more people getting Microsoft accounts, too.

Kinect alone was a ~$1B loss from what I remember. They bought 2-3 time-of-flight companies to develop hardware, $300mil from what I remember, and it turned out to be too early so they had to license from primesense (Apple bought them later). Then on top of that it turned out gameplay it enabled was abysmal(latency).

I think a lot of Xbox products and services are meant to funnel into Azure or other cloud services these days.

The point of Xbox is to maintain a stalemate against PlayStation.

Tangent but I just launched the Halo Master Chief Collection from Steam on my Ubuntu Desktop using the Proton compatibility layer and it plays really well. So I can play every game in the halo series up to Halo 4 (including Reach and ODST) on my Linux machine! What a time to be alive!

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