Sony makes a bold move to push it's console..

    Quote from Thrik

    What are you basing that claim on, Kosmo?

    It's hard to see the overall Xbox and Xbox games revenue but Microsofts game division grabs the cash, their yearly revenue is around 2 billion dollars where as Xbox has made maximum of 1.1 billion dollars losses.

    I know, it's more than half the revenue gone to losses but they still make profit out of this. Through game sales.

    And common sense says that, not even Microsoft is a company that would make a second Xbox if it didn't make them any money in the long run. I think investors would have kicked MS pretty fast if it did that.

    Quote from Thrik

    Heh.I think everybody knew that MS shot themselves in the financial gob with their original Xbox pricing, but I really can't believe that they've gone and done it again. They must either really not care about making a profit or are just thick.

    The fact is that every console manufacturer whether it be Sega (not anymore I guess, since they no longer make consoles) Sony, Microsoft, Nintendo... lose money on the actual hardware sales. This has been true for quite some time now. Simply put, it costs these companies more money per unit to make then it costs us consumers to purchase them. It is natural for consoles to launch at a somewhat hefty price. Especially since the beginning manufacturing costs are not as low or as optimal as they can be.

    The manufacturers make all their profit off of software sales, especially when you factor in things like royalty fees, etc.. When you start to see things from the standpoint of things like a) god knows how many titles are made for each console during its life span, b) the costs of Dev Kits (which are pretty much beefed up versions of the retail versions, which costs ALOT of money for developers to acquire) and lord know what else, these things add up to serious money for console manufacturers.

    Thats a good reason why the life span of the consoles are as long as they are.. its gives the manufacturers a chance to make up for lost money in console sales through a good lifespan of title royalties and whatever else.

    Dont you worry.. Microsoft knows exactly what they are doing. And Im sure when PS3 comes out.. it will be expensive as well.. but I can tell you that at the end of the console's life cycle..when all is said and done.. there is more than enough money floating around to a) launch the next version and b) buy high power executives the newest houses, sports cars, and whatever else they need to survive!

    Cheers,

    NRG

    Lol knowing how it works in other biznesses I really doubt they are selling under the costs value.

    Mass production at a huge scale can make something really cheap.

    Ofcourse they need a number of sales to be profitable, but if anyone actually believes that they need to sell the games itself to make the console sales profitable ....

    Not all console owners are that fanatic gamers, alot have less then 5 games and trade with friends or loan at a video store ...

    Quote from Bluestrike

    Lol knowing how it works in other biznesses I really doubt they are selling under the costs value.

    They do. They always have.

    Straight from the IDGA: http://www.igda.org/articles/behr-wallace_contracts.php

    Quote

    It is to the royalty percentage that developers usually devote their greatest financial attention, but that can be a mistake. The developer typically will be compensated with a royalty based on a percentage of net receipts. While the developer of a computer game usually can expect royalties of about 20 percent to 25 percent of net receipts, top developers can command 30 percent to 35 percent, and sometimes more. Console-game royalties generally are lower because three parties—developer, publisher and console manufacturer—are involved and because console manufacturers, who need to make up on software the losses they suffer in selling consoles at below manufacturing cost, end up with a healthy piece of game-unit revenues.

    The average video game system owner is going to own the base system, a memory pack or two, a few extra controllers, and half a dozen games. They make a pretty good cut of each video game, and a really good cut from the official accessories. That 40 dollar wireless x-box 360 controller has about 10 dollars of tech inside of it. Since it's development cost is already factored into the development of the system itself, buying extra controllers can make up a huge chunk of manufacturing losses.

    Yes, manufacturing costs go down over time, which is why prices cuts become viable down the road. And if anybody really wants to debate the matter any farther, look at the Gamecube. It did cost $200, now it's donw to $100, which is still waaaay under manufacturing costs. If you think there's only $100 of tech in that thing, you're retarded.

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