According to Phil Spencer, chief executive of Microsoft’s gaming division, Microsoft faces losses of up to $200 for every Xbox console it sells. A report from CNBC’s website says Phil Spencer recently revealed that Microsoft is subsidizing development costs by $100 to $200 per Xbox console production.
The content of this report mentioned that Phil Spencer added that Microsoft officials hope to make up the difference through the sales of games and peripheral goods, because it is well known that the company can indeed bring higher revenue performance in this part. However, the report did not detail the difference in cost subsidies between Microsoft’s Xbox Series X, Xbox Series S and Xbox One consoles.
During the past period, many players have learned that the current generation of game consoles often face losses in sales. But it is indeed the first time that a top executive from a game console publisher has personally disclosed detailed loss details to players, or given a range for cost subsidies. Since CNBC did not directly quote Phil Spencer’s own words in this report, GameSpot tried to contact Microsoft in a follow-up interview, hoping to get more detailed information.
Before Spencer made the news public, he also confirmed that Microsoft’s Xbox Game Pass platform did bring them benefits, but did not give too detailed data on the performance of this platform. In addition, the executive recently hinted that his Xbox console, services and other related costs may rise after this year’s holiday season. Prior to this, Microsoft’s competitor Sony had already taken the lead in announcing that the cost of its PS5 console would increase due to supply chain and logistics costs, so it announced an increase in the price of the console. Even if Microsoft stressed at the time that they would not follow up, it seems that this Probably not for long.
However, the loss of Xbox console sales is not unexpected, as selling the console at a loss and then filling it with other sales has been a strategy adopted by Microsoft and Sony for several generations. According to court documents made public in the Apple vs Epic case a few months ago, Microsoft revealed that they never made money from the sale of the Xbox console itself, a strategy that dates back to the days of the original Xbox console. As for Nintendo, it has become a rare case that they can make a profit just by selling the Nintendo Switch console.
Even as Microsoft faces losses on sales of the Xbox console itself, Xbox’s total first-quarter earnings over the past three months, helped by software and other services, smashed the company’s 20-year record. In addition, Spencer also said that he does understand that it has been a long time since the Xbox has released a real console exclusive, and will have to wait until 2023 to see the launch of “Starry Sky” and “Blood”.