The PS3 and Xbox 360 Have Made “Huge Losses,” up to $8 Billion?

According to calculations made by former EA and Sony man Ben Cousins, the PlayStation 3 and Xbox 360 have collectively cost Microsoft and Sony just under $8 billion in losses, despite having sold 70+ million units of hardware each.

Sourcing Microsoft and Sony financial reports, Cousins analyzed the profits and losses of the two giants’ gaming divisions from as far back as two years preceding their respective console’s launch to the present. His numbers spit out a total loss of $2.996 billion for Microsoft and $4.99 billion for Sony.

Cousins highlights the fact that consoles are sold at a loss and that companies “hope to make back the money from the license fee they charge for every game sold on the system.” He goes on to say:

“In order to offset the huge cost of hardware production, distribution, R&D and marketing, a hardware platform holder must sell vast quantities of hardware, and even bigger quantities of software. So much needs to be sold, in fact, that the data points to PS3 and Xbox 360 having made huge losses, despite having sold 70+ million units of hardware each.”

While it isn’t outright stated, the implication seems to be that those “huge losses” — the $8 billion figure — factors in hardware and software sales.


via MCV

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5 Comments on The PS3 and Xbox 360 Have Made “Huge Losses,” up to $8 Billion?

R.J.

On January 7, 2013 at 3:16 pm

Hefty losses on consoles is pretty normal. Like Cousins pointed out, the goal is to turn a profit on the games, since most systems have to be several years old before the production costs drop enough to make any money on the hardware. Perhaps the total losses are heftier than usual, but the concept isn’t shocking. Lots of companies sell one thing at a loss in order to get you to keep coming back for other things that make a profit. It’s why printers can be bought for little or nothing, because the printer companies make their money on ink, not the printers.

Heru

On January 7, 2013 at 4:11 pm

PC gaming FTW :)

Luther

On January 7, 2013 at 5:45 pm

I agree with R.J.

If you look only at the hardware then those numbers are not that shocking but lets see the sale figures for the games and royalties that are coming in.

Trust me Microsoft and Sony are not in the business of giving away freebies they are here to make money and the fact that Microsoft is making another console ( and sony too?) shows that they made far more money then those projected losses in hardware or they would stop.

Last I heard earnings for 2011 on there gaming divisions has been bringing in profits of around 10 or 15% of all profits made by Microsoft so that’s huge!

Michael

On January 7, 2013 at 5:48 pm

This is BS.
These numbers are flat out wrong. Just like the countries deficit. Its like you telling everyone how much you have in your bank account. People are dumb to believe this nonsense.
This is just a way for them to raise prices and justify a no disc console. Thats all.

D.R.

On January 8, 2013 at 8:07 am

The country’s deficit and debts are indeed very real, and if anything, they are severely (if not criminally) under-reported. Their being used for political gain, however, is a different discussion.

As for this article – I’m more inclined that the hardware console costs are substantial, if not totally in line with these numbers quoted here. Isn’t this the opposite of Nintendo’s whole stated act? They won’t sell consoles for a loss? This isn’t entirely surprising.

What I’d rather complain about is pushing games that obviously aren’t ready to meet deadlines for profit…