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XBox (Games) The Almighty Buck

Xbox Division Slips Back into Loss 69

Posted by Zonk from the you-can't-win-em-all dept.
Despite general news that Microsoft's revenues were up last quarter, the Xbox division slipped back into the red with a $164 million operating loss. From the article: "The operating loss in the division also dropped year on year, falling to $164 million from $204 million, which could be seen as very positive - but can equally be interpreted in light of the fact that the previous quarter, ended on December 31st, saw the division post its first quarterly profit since the launch of Xbox."
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Xbox Division Slips Back into Loss More

Xbox Division Slips Back into Loss

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  • Here's what I think (Score:4, Interesting)

    by Will2k_is_here ( 675262 ) on Sunday May 01, 2005 @01:23AM (#12396454)
    Recent sales are low because everyone is anticipating XBOX2. Why not?
    • "Recent sales are low because everyone is anticipating XBOX2. Why not?"

      Because people play games and not machines?

      • Re:Here's what I think (Score:5, Informative)

        by Rayonic ( 462789 ) on Sunday May 01, 2005 @01:51AM (#12396547) Homepage Journal
        "Recent sales are low because everyone is anticipating XBOX2. Why not?"

        Because people play games and not machines?


        Tell that to the Sega Dreamcast.
        • "Tell that to the Sega Dreamcast."

          Huh? The DC died because Sega couldn't keep producing machines to sell. It's a widely regarded tragedy, not a mass exodus to a machine that Sega was hyping up.

          • Re:Here's what I think (Score:5, Interesting)

            by ZephyrXero ( 750822 ) <zephyrxero AT yahoo DOT com> on Sunday May 01, 2005 @03:46AM (#12396868) Homepage Journal
            There are two reasons why Dreamcast "failed". They didn't have a DVD player and PS2 did (the first year of PS2 sales in japan were almost exclusively for the dvd functionality and not the games). The other, main reason it's no longer with us is the Saturn. The Saturn was such a horrible failure that it put Sega billions of yen in the hole. The Dreamcast would have had to be extremely popular to pull them out, but it didn't take off quite as fast as they hoped/needed. Since you usually don't take a loss on software, it was only natural for them to switch to a software only company. If it weren't for the Saturn, we'd probably still be playing new DC games and hearing rumors about its successor coming out this fall :(

            • Re:Here's what I think (Score:4, Interesting)

              by NanoGator ( 522640 ) on Sunday May 01, 2005 @04:25AM (#12396954) Homepage Journal
              The Dreamcast had a respectable user base when the PS2 came along, it was cheaper, and the graphics on it were better than what was typically shown on the PS2 for it's first and second generation games. Granted, it is doubtful the DC would have beaten the PS2, but if Sega had more money I bet you it'd most definitely be around today.

              As for the DVD player, I agree that had a strong effect on getting the PS2 off the ground, but realistically speaking that is NOT what's carrying the weight of the system. I would be REALLY curious to see if the XBOX remote control that enables DVD playing was sold with a lot with the 1st year of its sales.

              Frankly, I'm saddened by the death of the Dreamcast. It was the first real hardware I truely appreciated from Sega. The others really felt like they cut too many corners. (Well.. maybe not the Genesis. I didn't like that machine a whole lot, but by the time I came on board the SNES was out.)

              • The DVD player thing is mainly just about Japan. In Japan companies were having a hard time convincing the public to make the switch, and the PS2 kind of ushered it into popularity. In American and Europe that was not so much the case, and by the time the Xbox and Gamecube (Japan got a dvd edition) came out it didn't matter anymore..
            • There is a third major reason: Piracy. It is well-known that the Dreamcast employed their GDROM system with a gigabyte of storage that at the time couldn't be burned by the home user market. Unfortunately, most games developers didn't actually fill their GDROMS, so one could be duplicated easily and burned to a CDROM. Add that to the fact that to pirate games all you needed was a bootdisk, no other modification, and the Dreamcast had a thriving market for pirated games. Having looked for a second hand Dream
            • I think it was a much simpiler reason. Piracy. The DC was the first console I know of that was extremely easy to copy the games. I don't like it's hyperbole to say everyone was doing it.

              They lost money on every console sold and no one bought any games. The games were great it's just that sales must of been awful.

              I can almost hear Sega scream "Stop buying our hardware you're killing us!."

    • Re:Here's what I think (Score:5, Insightful)

      by shadowzero313 ( 827228 ) <shadowzero313 AT gmail DOT com> on Sunday May 01, 2005 @02:35AM (#12396696)
      I'd say it's because the only killer app for xbox in the last year or so has come and gone. If people wanted to get halo 2, they would have within a month of it launching. Those who didn't buy at launch were either convinced for it or against it relatively soon after, so now halo 2 is the same as most games for sales. Now that the big event has passed, the market for xbox games is settling back down into it's old behavior.
      • GTA San Andreas is coming out for XBox in June last I heard, so there may be one more killer app. I will probably rent it first, I was not nearly as impressed with San Andreas as Vice City. If they do it in 480p and have decent sound and textures plus have the custom radio stations, it's a buy.
    • It gets a little old playing the same old shooters and sports/racing/fighting games over and over again. Maybe they can invest in some more original content for the xbox2 (how about some MMORPG's or online strategy titles, people?).

      -Eric

  • The console wars continue (Score:4, Insightful)

    by SpartanVII ( 838669 ) on Sunday May 01, 2005 @01:25AM (#12396462)
    I guess they have priced themselves out of any profits. I bought my XBOX for $300 back in November '01 when it was first launched. At that time, those $300 got you the console and one controller. These days (last time I checked), for $150, you can get an XBOX, two controllers, and one or two games. The console wars have driven down the price from what used to be an arm and a leg to something much more affordable in an attempt to sell more and more units.
  • Regardless, Microsoft will keep fielding consoles for as long as Billy says they can, while Nintendo seems flimsy, with barely any support, and Sega sits in the corner, having no fucking clue what they're doing.

    Thus, I am now reminded of how violated I feel.
    • Well, they're not exactly one time expenses, since those are usually investments in hardware and machinery. This was more of an investment in Sameus Blackley, and as it turned out, he didn't think too hard about computers. Yes, PC hardware rapidly evolves, but that doesn't mean your parts drop in price because manufacturers will push performance up to make up for it. Somehow, MS and Sameus were convinced that PC hardware was on some other plane of commoditization compared to the console systems you're used
      • The Xbox did more than just convince some PC developers to start supporting consoles. The Xbox was the final thing necessary to push me over to gaming entirely on consoles. I was absolutely sick of the six month upgrade cycle you need to follow to run the latest PC games, and suddenly there were (nearly) all of the PC games I wanted to play, on a $300 console!

        The one thing that worries me about the design of the Xbox 360 is the removal of what you mentioned as being a flaw with the original... the PC hard
        • This is exactly why the Xbox is a problem for MS , They didnt sway many hardcore console gamers , They bit straight in to their own PC-Gaming market.
          The Xbox to me is a console i could never understand , Its loud , ugly , large and is basicaly an x86 pc (which makes hacking easier so that is a plus ). It really featured non of the things i love about console gaming,Most of the A1 title games are PC ports or PC games in console form, oh and i didn't like halo.

          This machine did not appeal to me , I am unasham

  • Halo 2 (Score:5, Insightful)

    by skyman8081 ( 681052 ) <skyman8081@gmaiAUDENl.com minus poet> on Sunday May 01, 2005 @01:43AM (#12396516) Homepage
    Sales are low because everybody already bought Halo 2.

    But not everybody's buying Turf and the other new map for said game.
    • I bought an xbox so I could play Halo2. I admit there are no other games for the system I am interested in, nor will I be buying maps for it.
    • I bought the X-Box with Halo and a tennis game (both included).

      Since then I've bought Halo-2 and Beyond Good and Evil (great game).

      I can't see anything else worth playing...

  • Somebody doesn't understand seasonality... (Score:5, Insightful)

    by ComputerSlicer23 ( 516509 ) on Sunday May 01, 2005 @02:11AM (#12396617)
    but can equally be interpreted in light of the fact that the previous quarter, ended on December 31st

    Okay, let me explain this to you. Christmas is the biggest, baddest ass time of year when it comes to retail business. I want to say like 35% of all retail business takes place in the month of December.

    Game publishers try to get their best games out around Christmas seaons, because they know it's a great way to have a block buster game.

    If X-Box has equalled the quarter that had Christmas during any quarter that doesn't have Christmas in it. Either they did something incredibly wrong during Christmas, or they did something incredibly right during the non-Christmas quarter.

    There's a reason they seasonally adjust all retail numbers when doing economic analysis. It's because not all quarters are equal.

    Kirby

    • Yeah, they launched Halo 2, making one of the largest initial shipments to retail ever, which retails still haven't worked through. Last quarter shouldn't be just seasonally adjusted, it should be adjusted for the fact that a highly anticipated game, with development costs in previous quarters, unbalanced the results.

  • Pressure (Score:5, Insightful)

    by warmgun ( 669556 ) on Sunday May 01, 2005 @03:34AM (#12396849)
    From what I understand, Microsoft's plan was to take a hit with Xbox so they could get a user base and then recoup their losses with a profitable Xbox 2 (360?). So this puts a lot of pressure on their next console. If it tanks, remains #2 or #3, or just has a lukewarm response (which is likely), I don't see why Microsoft would stay in for another generation.

    PS I thought the Xbox was supposed to be the key to Bill's wet dream, convergence. What ever happened with that?

    • Re:Pressure (Score:1, Funny)

      by Anonymous Coward
      I thought the Xbox was supposed to be the key to Bill's wet dream, convergence.

      He's only half way through it.

      hold one second

      BAM!

      There's the mental image forming in your head.

      Suckers!

    • PS I thought the Xbox was supposed to be the key to Bill's wet dream, convergence. What ever happened with that?

      Yeah, I bet they're still building up to that. In fact I'd bet it's the whole reaon they made WindowsXP Media Center Edition [microsoft.com], so they can put a half-assed version of it into the Xbox2pi(or whatever) like they did with Windows 2000 and the xbox.

  • If you take the time to read their quarterly earnings blurbs, you will notice they told you this would happen -- the last quarter was a fluke, they don't expect to make a steady profit with the Xbox until 2007.

    Nothing here to see, ladies and gentlemen, please move on...

    • Re:Microsoft had said this would happen (Score:4, Interesting)

      by justforaday ( 560408 ) on Sunday May 01, 2005 @09:07AM (#12397568)
      ...they don't expect to make a steady profit with the Xbox until 2007.

      And since they've stated that they're EOLing it in 2007, I guess their ultimate plan is to NEVER make the xbox profitable. How did these guys make so much money again?
  • This late in the product cycle the Xbox should be a cash cow throwing off the money needed to fund future consoles, repay the investment in the first console, etc.

    Instead it is just a big old rathole into which money continues to flow.

  • ... but at least they make a profit! Sure Microsoft has huge pockets and could lose money like this forever if they wanted to, but a company can only do this so long before stockholders want to see some improvement. Remember that hardware sales equal a loss, software sales equal a profit.

    Look to see Microsoft try to make more games and sell cheaper hardware with 360.
  • As the people hear more and more news about the Xbox360, PS3 and revolution, the amount earned by ALL companies will go down, it's just that microsoft are making a loss because of the expense of producing the xbox

    I'm sure sony and nintendo are also experiencing lower profits in the run up to the next generation
  • They should just release Halo 3: the Rest of Halo 2. That was pretty much the only reason XBox really did well. Heck, that's why I bought the XBox. I still haven't found another game that I would want to buy for it.

  • Meet the decline (Score:2, Interesting)

    by rAiNsT0rm ( 877553 )
    This is the beginning of the big gaming decline ver. 2. Having lived through the first gaming implosion in the 80's all of the stars are aligned for a second one. And isn't it amazing how cycles always go in 25 year increments... almost to the day this will again.

    Nintendo is the only one staying out of the hardware arms race and will smartly stay alive and strong through this one. The sheer costs of R&D of Sony and MS's continual losses as well as their R&D costs are going to be the downfalls along

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