The Xbox Was a $4 Billion Charity
Will The Xbox 360 Be Any Different?
Looking at the videogame industry, and Microsoft’s moves in particular, it’s easy to forget that the goal of this business, any business, is to actually make money.
Everyone feels that the Xbox was a success. They took second place in the United States from Nintendo (although made nearly zero impact on the Japanese market). While Sony made a fortune on it’s huge user base and Nintendo made a fortune on it’s Gameboy empire, Microsoft lost $4 Billion on Xbox. To state it another way, while Nintendo and Sony made the money it takes to sustain and grow a business, Microsoft lost roughly 2.7 million dollars a day for each day it was on the market, from it’s launch to the launch of it’s successor.
It’s fair to say that Xbox wasn’t a business. It was a charity. How can anyone say with a straight face that the Xbox was a success when it dug a four billion dollar hole in the ground.
The question isn’t whether the Xbox 360 will sell (it will) or whether Halo 3 will be amazing (absolutely). What customers and investors should be asking is can Xbox 360 actually turn a profit? Can the Xbox 360 make a single dime? Should the Xbox 360 even be considered profitable until it has made up it’s unit’s outstanding four billion dollar loss?
Can the Xbox 360 answer the four billion dollar question? The real test starts now.
Permanent Link
I think this is the reason for getting the jump on Sony. There’s no definite launch date for the PS3, but I’m thinking it won’t be more than a year from now. So Microsoft has that much time to build on it’s user base. I’m sure the 360 will signal the arrival of HD content into many households (my own included), and even the new advances with Xbox Live seem to be more appealing than ever before.
I’d like to think that it will succeed (as in making a profit), but there’s really no telling is there?
How does this whole podcast thing work? Just when I started blogging they bring these new things out…