A Microsoft executive has acknowledged that the company is not making any profit from sales of the Xbox alone.
The admission came as part of the Apple and Epic Games trial, to confirm that Microsoft was selling Xbox consoles at a loss.
When asked how much margin Microsoft is making from the Xbox, Lori Wright, the company’s head of Xbox business development, said: We don’t do that, and we’re selling the consoles at a loss.
An Epic Games lawyer asked a question: Is Microsoft making a profit from selling Xbox consoles, and Wright replied: No.
Microsoft and Sony typically support devices early in the platform’s life cycle, but these early component costs tend to decrease over time.
These lower costs also translate into lower retail prices for the platforms over time.
The dismantling of the Xbox One S platform revealed an estimated hardware value of $ 324, which is $ 75 less than the launch price of the 2 TB version of the platform in 2016, which was $ 399.
Microsoft also launched a disconnected version of the Xbox One S two years ago, which presumably also sold at a loss.
Microsoft and Sony have similar business models for the Xbox and PlayStation platforms, but Nintendo is the exception.
In court documents, Microsoft estimates that the hardware is a loss for Sony, but a profit for Nintendo.
The reason for discussing costs at this time is due to the trial of Apple and Epic Games, as the latter is not satisfied with Apple’s commission for purchases within Fortnite, but Apple is arguing that Epic Games should also object to Microsoft or Sony about a similar commission rate.
The trial resulted in hours of testimony about whether the iPhone looked like a computer or the Xbox, and a debate about open versus unlocked platforms.
It is clear that Microsoft sees a difference between Xbox and PC, and it has reduced the commission for the PC game store to 12 percent, while the commission for the Xbox store has remained at 30 percent.
It’s also clear that Microsoft wants to maintain its platform business model, and has been trying to push the industry toward digital games for years.
The software giant has millions of active monthly users and Xbox Game Pass subscribers who are compensating for its platform-wise losses.
A Microsoft spokesperson said: With more than 23 gaming studios making games, more than 100 million monthly active players via Xbox, and over 18 million Xbox Game Pass subscribers across the platform, mobile phone, and computer, the gaming business is It is considered profitable and high growing for Microsoft Corporation.
He added: The gaming platform business has traditionally been a hardware support model. Game companies sell game consoles at a loss to attract new customers. Profits are generated from game sales and online service subscriptions.
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