More interesting Microsoft news has arrived thanks to the Epic Games v. Apple. In a series of questions focusing on the differences between console and mobile app stores despite both suffering 30% revenue cuts (a controversial figure that is at the center of the overall picture). Epic v. Apple lawsuit), Microsoft’s revenue model for Xbox was implemented.
Lori Wright, Microsoft’s Xbox Business Development Manager, was asked about Microsoft’s profit margin through Xbox console sales. Her response was simple: “We are not doing it,” she said. “We are selling consoles at a loss.”
It was not clear whether Microsoft would ever profit from console sales, as later in the hardware lifecycle obsolete components generally became cheaper to produce. But even when a console becomes cheaper to produce, at this point in a device’s lifecycle it’s also usually sold for less, so maybe Microsoft is saying that under no circumstances is it really making a difference. notable profit on its consoles.
It’s a well-established fact that console makers sell their machines at a loss, even in the case of the PS3 back when it cost $ 600 at launch. Yet hearing Microsoft reaffirm this fact early in the Xbox Series X lifecycle tells us that little has changed from a business model perspective.
The ultimate goal of console makers remains to sell software and, in Microsoft’s case, Game Pass subscriptions. After all, why go to all the effort to sell a consumer a single software that is a one-time purchase when you can sell it on all software at once through a single subscription that generates reliable recurring revenue?