Saturday, November 18, 2006

how the xbox 1 lost billions

or why Gates wouldn't want to trade places with sony right now.

Ever wonder how they make money when they subsidise the consoles so much ? It is much harder than you think. Nick, Sam - did you make Sony any money on your PS2s ? I guess they really are a money printing machine for Sony now.

So, if you have your console for three years, you’ve probably bought the 15 games that Microsoft needed to sell to break even. What happens in the fourth year? You buy games #16, #17, #18 and Microsoft (or Sony) starts making huge profits.


It’ll be interesting to see whether Sony can break this cycle and get more games sold per box (if Sony really is losing $300 per box it sells, it needs to see an attach rate that’s higher than Xbox to have any chance of breaking even).

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