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Rare Spike in Microsoft Console Profits

Zonk posted more than 9 years ago | from the a-little-goes-a-long-way dept.

Microsoft 39

PLMIV writes "Microsoft said the company's home and entertainment division, which includes games and the Xbox video game console system, posted its first profitable quarter on sales of its hit game Halo 2. But the company said the division probably would be back in the red for the rest of the fiscal year and would not achieve sustained profitability until sometime in fiscal 2007."

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39 comments

Massaging the books? (1)

SunFan (845761) | more than 9 years ago | (#11505790)


What are the legal ways for companies to conveniently shuffle money around so the overall numbers are the same but make certain things look more profitable? They could be throwing a bone to XBox supporters while nothing has really changed.

Re:Massaging the books? (1)

SetupWeasel (54062) | more than 9 years ago | (#11505891)

You are assuming that they care that the XBOX looks profitable. It's not like the Bush administration is going to come after them for abusing their Windows monopoly to undersell their console hardware. They have no fear of stockholder, customer, or legal backlash, so what do they care?

Re:Massaging the books? (0)

Anonymous Coward | more than 9 years ago | (#11506444)

Dubya won't be president forever (although it will SEEM like forever). Microsoft needs to make sure their books look good so the Clinton administration can't go after them in 2009.

Re:Massaging the books? (2)

DreadPiratePizz (803402) | more than 9 years ago | (#11506017)

Or could be that Halo 2 was one of the biggest selling video games ever?

Re:Massaging the books? (2, Insightful)

buffer-overflowed (588867) | more than 9 years ago | (#11506378)

It umm... doesn't even make the top 10 last I checked.

I think it's sold 6.7 million copies worldwide atm. Nothing to sneeze at, and very respectable...

But the thing is there are a LOT of huge sellers in previous console generations.

Mario Kart 64 for example sold something stupid like 12 million units worldwide. Mario 64 sold 10 million units in Japan and the US alone.

And that's just Nintendo, last generation.

I guess it depends upon your definition of biggest.

Re:Massaging the books? (1)

king-manic (409855) | more than 9 years ago | (#11516152)

Or could be that Halo 2 was one of the biggest selling video games ever?

It had good sales. It's more notable for beign quick then copious.

Re:Massaging the books? (2, Informative)

Bill Walker (835082) | more than 9 years ago | (#11506745)

They could do it by recognizing expenses late (or early), or failing to account for inter-division expenses in the console segment's books, or by cross-ownership of other businesses (eg. like Circuit City does with CarMax). All of these, incidentally, are pretty obvious. The SEC's pretty strict, so it's hard to cook the books legally.

However, they're not doing anything of the kind. Their press release says this is a blip because of Halo 2, and that they don't expect sustained profitability in consoles until 2007.

Why would they 'throw a bone to xbox supporters', anyway? You can't just buy the console group; you have to buy the whole company.

Re:Massaging the books? (1)

drinkypoo (153816) | more than 9 years ago | (#11514747)

They massaged the books by buying Bungie and making a game that everyone (or close enough) wanted to play. Remember, some kinds of massage aren't even dirty.

"Micro$oft is losing money with my Xbox purchase" (2, Interesting)

FriedTurkey (761642) | more than 9 years ago | (#11505863)

Are people still telling themselves that they are sticking it to Microsoft by buying an Xbox? Microsoft is making money on every unit sold now. Not that I am against Microsoft making money on a console, it just seems these people are lying to themselves. It doesn't bother me if you want a Xbox but stop lying to yourself that you aren't supporting Microsoft.

Re:"Micro$oft is losing money with my Xbox purchas (1)

Fr05t (69968) | more than 9 years ago | (#11505915)

I stick it to Microsoft by not buying their products.

Really? (1)

AtariAmarok (451306) | more than 9 years ago | (#11506254)

"I stick it to Microsoft by not buying their products."

Really? That is a novel approah for boycotting that I have not considered. I have been protesting Beijing's policies by buying as many Chinese-made consumer goods as possible. But after reading your message, I will reconsider this approach. I also wonder if "sticking it to the Republicans" by voting for George W. Bush was a good idea either.

Re:"Micro$oft is losing money with my Xbox purchas (1)

pluke (801200) | more than 9 years ago | (#11505948)

what if i bought an xbox when they were still losing money on everyone they sold, and have used it for XBMC and emulators ever since? Can i still take the moral high ground?

Re:"Micro$oft is losing money with my Xbox purchas (0)

Anonymous Coward | more than 9 years ago | (#11506026)

You could...but from up there hopefully you will be able to see you still supported MS by doing that. If the xbox cost MS $249 to make and you paid $199 for it then instead of MS losing $249 they now only lost $50 which they seem to be making up on the sales of Halo2 (probably the plan all along).

You are still contributing to their bottom line.

Re:"Micro$oft is losing money with my Xbox purchas (1)

shawb (16347) | more than 9 years ago | (#11506417)

I'm just wondering... does this $249 indicate actual per unit incremental costs, or does it also include some fixed costs (research, costs of running factory, etc?)

If the price is purely the incremental cost, then you would indeed be screwing Microsoft buy buying an Xbox. However if the price includes a portion of the fixed costs, then buying an Xbox is simply helping them to recoup their investment.

Re:"Micro$oft is losing money with my Xbox purchas (0)

Anonymous Coward | more than 9 years ago | (#11506110)

What about the copy of Halo2 your bought? Do you really have zero games??

All your game are belong to us. (1)

AtariAmarok (451306) | more than 9 years ago | (#11506294)

"Do you really have zero games??"

What, you say? "Zero Wing" are only zero game belong to us.

Re:"Micro$oft is losing money with my Xbox purchas (1)

pluke (801200) | more than 9 years ago | (#11506429)

ok i admit it i have bought the odd game, ghost recon 2 being the latest. Halo 2 never floated my boat, its lack of bots really pissed me off. i don't look after the xbox any more and have lent it to my impoverished teacher friend, I mainly used it as an all in one media centre for my music and dvds, and playing a host of old games of which i own at least one copy, the wires under my tv were getting way to much to have all those consoles and controllers hanging around. More of a theoretical question really :)

Re:"Micro$oft is losing money with my Xbox purchas (1, Funny)

Anonymous Coward | more than 9 years ago | (#11506123)

Of course you can still take the "moral high ground" from pirating games...
moron.

Re:"Micro$oft is losing money with my Xbox purchas (0)

Anonymous Coward | more than 9 years ago | (#11506836)

I did you one better... I bought a refurbished, modded XBox, and I never buy games. I rip them straight to the upgraded hard drive.

Granted I vicariously contributed to Blockbuster's demand for MS xbox games by renting from them... but I'm pretty happy that my contribution was small.

Re:"Microsoft is losing money with my Xbox purchas (0)

Anonymous Coward | more than 9 years ago | (#11514965)

I bet you have a pirated copy of Windows XP too. You're a thief and a hypocrite.

Re:"Micro$oft is losing money with my Xbox purchas (1)

Lisandro (799651) | more than 9 years ago | (#11507872)

If you thought that you were screwing with Microsoft because they sold the XBox at a loss, you're wrong from the start. The logic behind selling at a loss is that, well, you sell a lot of them so the necessary goods that *DO* make cash for it (namely: software titles) sell well. And for every geek buying one to use it as a Linux server there are another 1000 geeks that buy one to play games ocasionally.

The more they sell, the more they earn. Simple math.

Re:"Micro$oft is losing money with my Xbox purchas (1)

drinkypoo (153816) | more than 9 years ago | (#11514711)

Yes, it's simple. The more games they sell, the more they earn. The more peripherals they sell, the more they earn. However, for every Xbox linux cluster, they lose some money. In the end... they come out in the red. Not because of the Linux users, but they make a contribution. Well, unless the whole thing is a lie and they make money on hardware now. Personally, I bought ONE new Xbox, and I'll probably buy a new Xbox 2, but I'll be buying used Xboxes for Linux, because I don't care if they've been banned from Live or whatever. I am working on sticking it to Microsoft every day, by badmouthing their products to everyone I possibly can. I firmly believe the world would be a better place without Microsoft - but I sure do love my hacked Xbox. Incidentally, I bought mine new because it came with the only two Xbox games I cared about at the time - Sega GT and JSRF. JSRF is somehow not as fun as Jet Grind Radio was on DC but that might just be because I'm burned out. Sega GT is everything I dreamed it would be, and then some. I haven't bought a single new game since the bundled ones. But, I bought the Advanced AV pack and the DVD kit so they probably made a bit on me. If everyone stopped buying everything from Microsoft except video games, maybe they'd just make games :P

Re:"Micro$oft is losing money with my Xbox purchas (1)

Ayaress (662020) | more than 9 years ago | (#11514441)

Even if microsoft were losing money on that sale, they're still benefiting. More sales means much more reason to say that the system is appraoching profitability, meaning more string to draw in investors.

Re:"Micro$oft is losing money with my Xbox purchas (1)

AlexMax2742 (602517) | more than 9 years ago | (#11514928)

I bought an Xbox..... .....

I am supporting microsoft...... ....

so what

Re:"Micro$oft is losing money with my Xbox purchas (0)

Anonymous Coward | more than 9 years ago | (#11517771)

There's nothing wrong with that. There's something wrong with the morons who were buying Xboxes to "screw Microsoft."

Not a Rare spike (3, Funny)

EddieBurkett (614927) | more than 9 years ago | (#11505920)

Bungie made Halo 2 and therefore is responsible for this spike. The Rare spike will occur when the new Conker game is released.

Re:Not a Rare spike (1)

centauri (217890) | more than 9 years ago | (#11506873)

Good point. I think what's happening here is that Bungie has cause Microsoft's stock to bounce back up.

Re:Not a Rare spike (1)

fireduck (197000) | more than 9 years ago | (#11506991)

I had a similar thought as well. MS paid $375 million for Rare and since then, they've released 1 game on the Xbox, and 4 or 5 GBA games in that time. Unless Conker becomes a runaway hit, I don't see MS recouping their expenses for that purchase anytime soon...

Re:Not a Rare spike (1)

pluke (801200) | more than 9 years ago | (#11507124)

I still wish Ninteno had never sold them. They could really have done with another 2nd party developer and the i imagine Rare had several games in the pipeline for the cube when they got sold off, which many would have been released by now. From a gamers point of view the selling of Rare was a black day

Re:Not a Rare spike (1)

KDR_11k (778916) | more than 9 years ago | (#11507669)

Looking at Starfox Adventures, Grabbed By The Ghoulies and the number of companies formed by ex-Rare employees perhaps Nintendo saw that Rare had it coming and they'd rather sell the horse to the butcher before it's completely worthless?

Re:Not a Rare spike (1)

hunterx11 (778171) | more than 9 years ago | (#11510385)

I hear the next Perfect Dark game is expected to come out "some time before Duke Nukem Forever."

Re:Not a Rare spike (1)

PedanticSpellingTrol (746300) | more than 9 years ago | (#11511575)

The simple fact that PD once faded entirely from the public memory, and seems to be making a comeback in recent weeks, is indicative in itself. Why are people suddenly bringing up in posts again? Even I have, and I don't know why.

Meanwhile, back in Japan (1)

Mike Hawk (687615) | more than 9 years ago | (#11507028)

Source [idg.com.au]

"As a result of the sales forecast revision, the company also revised its financial forecasts downward for the year to the end of March. Nintendo said it expects consolidated net sales to be YEN 520 billion (US$5 billion), a drop from the previously forecast YEN 540 billion, while net income is now forecast to be YEN 70 billion, a drop from the prior forecast of YEN 90 billion. Despite the revisions, consolidated net sales and net income are still expected to grow by 1 percent and 111 percent respectively for the year."

Still very good. But slowly the tide is changing...

Re:Meanwhile, back in Japan (0)

Anonymous Coward | more than 9 years ago | (#11516893)

The tide is changing?

As you noticed, Nintendo was still profitable this past quarter, continuing their streak of XXX-1. GCN sales were flat last year, and still Nintendo profits on the strength of software sales and handhelds.

MSH&ED expects to be in the red for the quarters to come, because there is no new equivalent Halo 2 to cause temporary spurts in system sales and there is no longer a PS2 shortage.

For whatever vague personal reasons you want to see Nintendo fall and Microsoft rise, it just isn't happening.

Benevolent? (1)

Goosey (654680) | more than 9 years ago | (#11512477)

Certainly I understand the supposed Microsoft strategy: Be in the red as long as it takes to build up the brand, at which point it turns to gorgeous green. And certainly I understand that Microsoft has enough resources to maintain this for quite some time.

But (and I am fully prepared to be modded down to oblivion for the following :P) it seems almost benevolent of Microsoft to continue in this fashion. How long are they going to be in the green just to regain lost sales afterall? I suppose it is true that Microsoft is a smart buisness, and thus all the dots must all connect somewhere to equal massive profits...

I don't know. The XBox is a wonderful console, and by far the most mod-friendly. While certainly it can be said this was an accident (poor planning) and simply a result of M$ stick with what they know best (PCs).. But I have this nagging thought in the back of my head that perhaps there is some goodwilled tech team that planned for such an accessible box.

Furthermore XBox-Live is a real innovation in the console world, and I believe is the sole reason that online gaming has gained such momentum in that arena. Certainly Sony's online attempts are a response to this, and Nintendo is even starting to come around. It doesn't seem unfair to thank Microsoft for bringing popular online gaming to the console realm.

I think this generation, and perhaps next generation's, major console advances can largly be attributed to what is currently a 'gift' from the evil borg empire. Perhaps there is some benevolent midpoint manager in there that loves gamers more then the bottom line. *shrug* Maybe it is just an error in the borgs profit-processing AI? ;)

Re:Benevolent? (1, Interesting)

Anonymous Coward | more than 9 years ago | (#11516960)

No for-profit corporate entity exists just to lose money to the benefit of its customers.

MS sees the console games industry as a means of getting a Windows-operated box into your living room, that will serve as a media hub and entertainment command center. MS wants to sell content and also be the means by which you lease, rent, license, view or play that content.

Xbox is a stepping stone, just like PS2 is a stepping stone. The living room infrastructure is currently not suitable for either to have been designed around doing more than just play games and watch DVDs, although MS has started gotten people to pay for online gaming subscriptions. The next generation will see an even stronger push in the pay-for-content-and-access direction from AT LEAST MS, but Sony is likely to go for it as well.

Nintendo just wants to make inexpensive games machines that play ever-improving games. They don't want to be the middleman salesperson to sell you downloadables and access to content, they just want games makers to be able to make and sell their games for their systems. Since that's the least intrusive and least expensive route (backed by some of the best games designers in the industry), it's the approach that I support with my money. I don't want to subsidize companies that seek to introduce and establish technologies and products that I do not find valuable.

Patients (0)

Anonymous Coward | more than 9 years ago | (#11515005)

The scariest quote buddy Bill has ever said was "Microsoft is a patient company"

The console market is a very important media market to control... The average game takes about 20 hours to complete, thats a long time to have someone's attention... compare that with the average 2 movie...

personally i've jumped all over the xbox, the amount of hardware you are getting for the price is unparalleled. microsoft is like the pusher... the first one is always free!

Only a mega-corp like Microsoft can do this... (1)

jareth_chong (845417) | more than 9 years ago | (#11524704)

Microsoft has deep enough pocket to lose money until 2007 so it can build long-term brands and profitibility. Xbox is a great machine. Even then, Microsoft has to project losing money for a long time before it would be able to capture enough market shares from an firmly established Sony and for Xbox to become profitable by itself. Imagine you are a new start-up that has created a brand new, cutting-edge gaming machine. You hawk around your design until . Your investors usually want to see profits in two or three years, MAX. If you are the most fortunate son of a b!tch in the entire human history, your investors will grudgingly support your money-losing venture for five years, absolutely no more than that. And for that generousity, you will have to promise back your wife and children, plus an arm and a leg. So there is absolutely no way you, as a small start-up, can lose money for seven or eight straight years just to build up a brand. That means you just can't compete with giant corporations like Microsoft or Sony in an established market like the console gaming industry, EVEN IF you have a great idea. You have to build a brand new market that does not exist before if you want to build a new empire . And that is why Linux and open source will never beat Microsoft, especially when no company is willing to lose money for a LONGtime to support them.
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