- Testimony in court revealed that Xbox consoles have never turned a profit for Microsoft.
- The company compensates for those losses through revenue generated from its app store.
- The confirmation came in response to a series of questions put up by an Epic Games' lawyer.
When two bigwigs of an industry take things to court, the fallout is bound to affect others. Case in point, as Apple vs Epic saga continues, revelations of several other companies are being made. Microsoft is the latest in line for its hailed gaming division Xbox.
During the court case, it was recently revealed that Microsoft's Xbox has never been profitable since its inception. The affirmation was made by none other than Xbox vice president Lori Wright.
The Microsoft executive admitted that the company sell its Xbox consoles "at a loss." In fact, he went on to admit that Xbox was never earned a profit on the sale of an Xbox console. The statements by Wright came in response to a series of questions by an Epic Games' lawyer.
The argument was made to reflect the differences between the app stores of smartphone and gaming platforms. In the case of Apple and Microsoft, both charge 30 per cent cuts to other developers for listing their games or apps on their app stores.
The contrast lies in the motives behind this cut. Apple enjoys hefty sales from both its App Store and its hardware products like iPhone. On the other hand, Microsoft considers the app store fee a way to cut down on the losses incurred on its Xbox gaming consoles.
Note that the profits mentioned here are specific to hardware sales through the years. A report by Thurrott mentions that Xbox has displayed profits in its quarterly earnings, but that is through the sales of its components like software and games. Due to the hardware losses, its overall business has never been profitable.
The proceedings highlighted a similar case with Sony for its PlayStation business. Surprisingly, or not, Nintendo has been able to generate profits through its consoles.
The revelations do not really come as a surprise, as gaming companies are known to struggle with revenue flow for their hardware components. Their software presence, though, is a different ballgame altogether.