Xbox exec confirms Microsoft isn’t making money from console sales

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Published onMay 6, 2021

published onMay 6, 2021

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Theongoing Epic vs. Apple trialsaw an Xbox exec discuss Microsoft’s console business yesterday, and made it clear that the company isn’t making money from console sales. According to a report fromProtocol, Head of business development at Xbox Lori Wright, who was one of the third-party witnesses offering a testimony yesterday, gave a straight answer to Epic lawyer Wes Earnhardt when asked her “how much margin does Microsoft earn on the sale on the Xbox consoles?”

“We don’t. We sell the consoles at a loss,” Wright answered. When asked if Microsoft had ever made a profit on the sale of an Xbox device, Wright also said no. To our knowledge, this is the first time that a Microsoft exec has ever confirmed this fact. Presumably, this also means that even when Xbox consoles are discounted at the end of a console generation, Microsoft still isn’t making money from them.Teardowns of Xbox consolesover the years have revealed slim, if any margins.

The console business is quite particular as console makers subsidize the hardware and make a profit on game sales and subscription services. That’s why Microsoft and other console makers take a 30% cut on game purchases on their digital stores and also require gamers to pay a subscription for playing online multiplayer games.

This business model has been working very well for Microsoft, and the company confirmed in an official statementshared with The Vergethat the Xbox division does bring Microsoft a lot of money. “With more than 23 studios creating games, more than 100 million monthly active Xbox players, and more than 18 million Xbox Game Pass subscribers across console, mobile, and PC, the Gaming business is a profitable and high-growth business for Microsoft,” a company’s spokesperson said.

Radu Tyrsina

Radu Tyrsina has been a Windows fan ever since he got his first PC, a Pentium III (a monster at that time).

For most of the kids of his age, the Internet was an amazing way to play and communicate with others, but he was deeply impressed by the flow of information and how easily you can find anything on the web.

Prior to founding Windows Report, this particular curiosity about digital content enabled him to grow a number of sites that helped hundreds of millions reach faster the answer they’re looking for.

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