New Report Says Xbox Is Losing “Hundreds of Dollars” on Each Console Sold – WGB
A few days ago, Xbox chief executive Asha Sharma and chief content officer Matt Booty released an open letter addressing the ongoing problems of Xbox as a product. In the middle of the letter was an acknowledgment that Xbox is currently expected to end the year with a “3% turnover rate”, which is the brand’s internal profit metric. “Moving forward, this cannot continue,” the letter said.
Now, we have a new report from Jez Corden of Windows Central that says it has the details. Well, some details, anyway.
What really struck me is that Xbox seems to be losing the most money of all consoles right now, because they “struggle to secure anywhere near enough memory in the constant amounts needed to keep their hardware parameters healthy.”
According to Corden, Xbox loses “not a lot, but hundreds of dollars” on every Xbox Series S/X sold. Granted, there aren’t many for sale right now, but there are still enough.
Remember, this is after several price increases. It’s not just Xbox, of course, as memory prices affect everything, but it seems the green brand has struggled to secure better deals and supply chains to help mitigate some of the damage.
Elsewhere, Jez says the Xbox has benefited from impressive game sales, but those gains have been offset by failures in other areas.
“I’m told that Age of Empires, Flight Simulator, and of course, Forza Horizon have all been huge success stories for Xbox Games Studios, along with things like Sea of Thieves, Immortality Revisited, and Grounded.”
On the other hand: “Games like Avowed, Keeper, Kiln, South of Midnight, Hellblade 2, Forza Motorsport (not Horizon), and Outer Worlds 2 did not come within the expectations set by Microsoft’s spreadsheets, I am told – either in terms of raw sales on external platforms or through the involvement of Xbox Game Pass data and storage.
Corden goes on to discuss the various canceled projects that cost the company money
Game Pass was apparently “a money pot that Xbox used to fund other parts of the business”, but then calls were made to raise prices on that, which Matthew Ball, Chief Strategy Officer, recently said had cost them millions of subscribers.
“That’s when Microsoft used Activision-Blizzard profits to fund the Xbox, but when Call of Duty had an off year … again, it compounded the problems of that funding,” Jez said.
All of this is why Asha Sharma is talking about a “reset” of Xbox and having to make “tough decisions.” Journalist Jason Schreier says the company is planning major layoffs in July, and The Verge speculates that it could include studio closures.
In an effort to change everything, exclusives are back on the menu with both Gears of War: IE-Day and Clockwork Revolution announced as Xbox console exclusives. Future titles are worse, though, so while we’re still promised more exclusives, there will be a multiplatform release, too.
