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[Krauser Kat]

Was there any truth to the analyst who claimed that Xbox is a big money sink?

Yes. Other than massive R&D costs microsoft was almost always losing money on the nvidia chip since the deal they negotiated had a static royalty which made it pretty much impossible to downsize enough. Then they stopped paying the royalty and got taken to court and lost. All of this was ontop of the hole they started with of the OG xbox and all of the R&D for the 720 and red rings. Its hasnt been that great for them.

 

[Sandfox]

Was there any truth to the analyst who claimed that Xbox is a big money sink?

I think MS selling the Xbox business has more with investors and higher ups wanting to focus more time and money on fixing their other divisions.

 

[greg400]

But if they (or anyone else) buys the Xbox division, they'll have to get rid of the Xbox name. It's brand name is ruined almost everywhere because of the DRM scandal.

No, it really wasn't. If RROD didn't destroy the brand and if the PSN hack-fest didn't destroy Sony's brand they will be fine. Reversing course and fixing decisions/issues can do wonders in the long-term (especially if it's an issue such as the DRM one that was never actually placed on consumers).

 

[ItAintEasyBeinCheesy]

Don't know why Samsung or Apple would want X Box, they are good at making profits and gaming would be a bit of a sink hole for either one.

Amazon would be more likely if they where getting into gaming, Valve might consider it just for the IP's and then use the Steam Box hardware. Sony might buy some of their developers and IP's.

 

[vctor182]

If the xbox division is a money sink then who in their right minds would buy it?

 

[SlipperySlope]

Name a brand that Microsoft has grown more successfully than Windows and Office. Other than Xbox.

Its a HUGE brand.

You think Xbox is a more successful than Windows or Office?

 

[Anticitizen One]

Sony should buy it. They would take very good care of RARE and 343i properties

 

[NavyPharaoh]

I just explained my reasoning. If Sony was running somewhere in the 4% profit range during the PS2 days, MS and the 360 (which was much less successful, had an unprecedented era of failure issues requiring MS to pay for replacements, doesn't have a presence in as many markets, etc.) Has an even lower chance of making much money. Revenue? Sure. Profit? Not that much, if any.

Another contrast is that Sony wasn't paying for many exclusives back then. They were the de facto home for most console games. The pull was so strong that even when a developer like Mikami wanted nothing to do with the platform, his game ended up there anyway.

This was my feeling long before that article.

No matter how you look at it, even if they somehow ran a business that evened out in the black, it doesn't come anywhere close to approaching the profit of initiatives like Office, Windows, Azure, and so on. Even a lame duck like Windows phone has more potential to interface with their existing profit centers. Xbox supporting Skype doesn't really help, that hasn't been a big moneymaker either.

This post is for all the Xbox is making Microsoft sooooo much money folks. Great post here. Games don't make themselves, live's infrastructure wasn't built overnight by a 1 guy making 40k a year.

I've noticed that people have been throwing Nintendo's name around a little bit here.


Xbox Live is the main prize here if Nintendo were interested. So long as the network costs aren't too serious, integrating that into Nintendo Network would be a massive coup and would allow Nintendo to easily implement and centralize that between Wii U and 3DS without having to do it themselves. Nintendo is continuing to push digital business heavily. Being able to buy the Xbox Live patents and network would be a big deal.


Other than that, I can only see Nintendo being interested in Rare, and that would have to be after serious analysis to see if Rare can be brought back to a level that matches their studios without completely breaking the bank. I doubt they'd be interested in Halo or any of that stuff.

This could be significant! Never thought about that but if anyone needed live its Nintendo. This would be good for the industry too as Nintendo is never going anywhere. This is the speculative thoughts I come to Gaf for

 

[MrMephistoX]

Yahoo should use its post Alibaba IPO money to merge with Bing. Samsung or Valve make a whole lot of sense as potential Xbox suitors go...or just sell RARE back to Valve, Nintendo or Sony and kill the rest.

 

[Terrell]

The videogame business is a pretty low margin affair. Why should companies like Apple or Samsung want to enter it? I have a feeling that most of us don't understand how lucky we actually are that companies like Microsoft and Sony are willing to put up with this shit and stay in videogames.

The way Sony and Microsoft do business, maybe.

Any hope of selling the Xbox business as a whole is a joke.

Apple isn't ready for it, Samsung won't buy something unless there's a huge market for it in their Korean homeland, and not many other players could afford it.
The hardware business would be dissolved and the development and IP assets would be sold discretely.

 

[jmls1121]

But if they (or anyone else) buys the Xbox division, they'll have to get rid of the Xbox name. It's brand name & reputation is ruined almost everywhere because of the DRM scandal.

ehh, its all about mindshare. Playstation's name was "ruined" after $599, but it recovered.

Now in Asia? XBox may need a new name, yes.

 

[ConteZero76]

There is another. From the east.

Spoiler

and it's not Nintendo

LG ?

 

[G.Newell]

Sony should buy it. They would take very good care of RARE and 343i properties

Sony wouldn't be able to afford it, maybe a few pieces of it but not the whole division. And if it was piecemeal 343i with halo would be one of the top things that people would bid on, i doubt they could afford that in there current situation.

 

[charsace]

The way Sony and Microsoft do business, maybe.

Any hope of selling the Xbox business as a whole is a joke.

Apple isn't ready for it, Samsung won't buy something unless there's a huge market for it in their Korean homeland, and not many other players could afford it.
The hardware business would be dissolved and the development and IP assets would be sold discretely.

The way business is generally done in the industry makes it a low margin affair. I think eventually the video game development will look like the movie industry in the future.

 

[Imperfected]

Yes, but can they run the licensing and talent management sides? (I don't know enough to say).

They'd be hard-pressed to do worse when it comes to talent management. Microsoft hasn't exactly done gangbusters when it comes to retaining talent, either internal to their teams or externally in managed studios.

 

[Doctor_Thomas]

If the xbox division is a money sink then who in their right minds would buy it?

Someone after patents and IPs.

 

[Sandfox]

Sony should buy it. They would take very good care of RARE and 343i properties

Given what those companies have produced I honestly wouldn't expect too much.

 

[FyreWulff]

Name a brand that Microsoft has grown more successfully than Windows and Office. Other than Xbox.

Its a HUGE brand.

The Xbox division is still in the red, all the way back to the original Xbox.

The Xbox still exists because very few companies in the world can soak a loss-fest like the Xbox. Microsoft wills it into continued existence because they want to get a foothold in the living room.

 

[18-Volt]

Google buy Xbox hardware and Halo IP,
Nintendo buy Rare back and all of their legacy IP's
EA buy Lionhead back
Activision buy 343i,
Ubisoft buy Turn 10 and Forza IP,
Samsung buy Kinect technology (they love this kind of stuff)

and everybody's happy.

 

[Forsete]

What will Sony buy?

 

[Dv8thwonder]

By my estimates, the Xbox brand has has cost Microsoft a little over $450B since 2000. That's not counting the cost of the Xbox One and these latest reported losses.

/selfie for perspective

 

[vctor182]

Someone after patents and IPs.

Maybe IPs but how many good and successful IPs do they have besides Halo, Forza? Aren't the patents tied to Microsoft and not the Xbox Division?

 

[MrMephistoX]

Google buy Xbox hardware and Halo IP,
Nintendo buy Rare back and all of their legacy IP's
EA buy Lionhead back
Activision buy 343i,
Ubisoft buy Turn 10 and Forza IP,
Samsung buy Kinect technology (they love this kind of stuff)

and everybody's happy.

That would be glorious...or sell Halo to Activision and thus force Bungie right back into annual franchising.

 

[Mr Swine]

So in other words it's either:

MS keeping the Xbox division, loosing more money down the road. They challenge Sony and every console gamer is happy and a few years they eventually will change the brand to make it profitable and won't challenge Sony on the high end console market.

Or

MS sells the Xbox division and start to make a profit and focus on other stuff and the console gamers whine about the incoming console Big Crunch where Sony has monopoly on the market (not likely)

 

[spwolf]

Samsung buying Xbox division would be nightmare for Sony. They are the reason Sony's TV market shrink from first place. Plus, I think Samsung knows how to run hardware side of things 10x better than MS.

And now Samsung does not make any money from TV's anymore either.

No successful company will buy Xbox business or Playstation business because they wont pay to lose money. It is very simple really.

 

[Skeff]

What will Sony buy?

If it was piecemeal then I'd guess fable would be a good start if ms own the ip as Sony could do with bolstering that genre, forza seems unneccesary with having GT and halo would be a Target but likely too expensive, also if the main people bidding are third part pubs then Sony would be happy for halo to go 3rd party as long as its on a Sony platform. There's a chance they would pick up a studio or 2

 

[Terrell]

The way business is generally done in the industry makes it a low margin affair. I think eventually the video game development will look like the movie industry in the future.

Tell that to Nintendo. They just made their first annual loss since before 1982. Their margins seem pretty alright. Seems the razor/blades business model in video games was more of a Sony and Microsoft introduction, and it's not exactly working for either of them when 1 weak generation can utterly ruin the division financially like it has with the PS3 and the original Xbox.

 

[Alx]

I honestly don't care who owns the Xbox brand, but for the main reason that keeps me interested in it : kinect would be nothing without Microsoft Research.

 

[zomgbbqftw]

Valve has no ability to compete with Sony on the console front, they are too small.

Samsung will eventually come.

Margin is too poor for Samsung IMO. It would be someone like Amazon who are trying to push a digital ecosystem and establish themselves beyond a retailer.

 

[kodecraft]

Samsung to buy the Xbox division.

Nice. Samsung is good. I wouldn't mind this.

 

[PseudoKirby]

Google buy Xbox hardware and Halo IP,
Nintendo buy Rare back and all of their legacy IP's
EA buy Lionhead back
Activision buy 343i,
Ubisoft buy Turn 10 and Forza IP,
Samsung buy Kinect technology (they love this kind of stuff)

and everybody's happy.

ORRR none of that shit happens and MS stays in one piece and everyones happy

 

[Cipherr]

A bunch of people are about to have their semi Dreamcast moment. I was skeptical about the whole 2 billion a year in losses, but maybe its not that far off...

Awful lot of smoke, I'm assuming there's actually a fire now. I wager most won't miss or even notice Bing changing hands, but the Xbox brand moving owners would probably leave quite a few people angry.

Gonna miss those tryhard Bing commercials.

 

[Nemesis121]

If they want to sell Xbox so badly give it to Apple i am sure they can do better....

 

[BrokenIcarus]

Halo 4 takes inspiration from Metroid Prime.

Retro makes Halo 5

Profit???

Seriously

please someone make this happen

 

[The Maverick]

I believe this is the last generation we see Xbox under Microsoft, barring an act of God. If I were an investor, I'd be clamoring for the death of the Xbox division. Television, video games, music investments, these are all sectors struggling at the moment, dragging down the profit margins of the whole company. Why is Microsoft wasting money and time trying to make inroads here?

A new CEO is coming in pretty soon, and he's probably going to see things the same way. And hopefully, he has answers to these questions.

 

[Trogdor1123]

Wouldnt it essentially kill the xbox if they did this? The development side would have issues with a total retructuing of managment wouldnt they? Couldnt this grind development to a rather ugly stop?

 

[Sydle]

One question, though, is whether that whole strategy would be more profitable than simply broadening Office distribution by selling it through competitors' stores and having it work on their devices.

Office is and has been available on iOS for years now. It's not great, and neither is iOS share in business markets. If they really want the good Office they can easily run Windows in a VM environment.

Android? Isn't it mostly a consumer brand? Why on Earth do they need a $100+ year subscription to Office when Google Docs does 99% of what they need?

Maybe I'm missing something, but these seem like incredibly short-term gains. If this is the big idea for the company then it's an awful one.

 

[Odrion]

And how is that good for the industry? If Sony's only 'competition' is low powered streaming boxes it will be a race to the bottom.

I don't know how you read "It's not about consoles" and think we were still talking about consoles.

It's not about consoles anymore.

 

[TaroYamada]

I think giving up bing is a bad idea if they have any major ambitions in online advertising, search is an important tool. They've spent a lot on it too and it's a rather solid product. Xbox is a toughie too, as I'm not sure they should be giving up the living room.

There's some mildly hard choices ahead but mostly I'd keep on the current path, it's slowly working, I'd say work on pushing Windows Phone faster and increasing Windows 8's tablet marketshare. As a consumer I want more Xbox games on PC and a none full-screen start solution in Windows 8 but those aren't going to really benefit them in a sizable manner.

 

[DC1]

LG ?

Goldstar wait...

 

[smurfx]

the xbox without the real secret sauce

Spoiler

ms money

wouldn't do very well.

 

[Carlbeego]

Go get it Sega.

 

[Ploid 3.0]

Sony should buy it. They would take very good care of RARE and 343i properties

It's over man, Rare is damaged goods. They are a totally different group from the golden age of Rare.

 

[DR3AM]

I wonder how major nelson and albert feel about this, they are probably reading all this. good luck guys

 

[Guevara]

I wonder how major nelson and albert feel about this, they are probably reading all this. good luck guys

Well, if they can feel their ship sinking it would certainly explain their bizarre behavior lately.

 

[greg400]

I don't know how you read "It's not about consoles" and think we were still talking about consoles.

It's not about consoles anymore.

You specifically said less, which you have no data to support with. The tail-end of a generation will always make it less relevant.

Also I said this:

they are currently their biggest threat with regards to the market they're aiming for.

Sony and Microsoft are going for the gamer. Generic low powered device maker is not.

 

[Fox Mulder]

But I like Bing. I get to see cool new pictures/gifs everyday and MS gives me XBL money when I do a bunch of searches.

Bing is solid, and has some unique features I like. It was almost an impossible task going up against Google, or even the legacy use of Yahoo.

They've lost a lot of money since starting it and only have like 30% of the market if you combine Bing with Yahoo, which uses Bing.

 

[jcm]

Tell that to Nintendo. They just made their first annual loss since before 1982. Their margins seem pretty alright. Seems the razor/blades business model in video games was more of a Sony and Microsoft introduction, and it's not exactly working for either of them when 1 weak generation can utterly ruin the division financially like it has with the PS3 and the original Xbox.

I'm pretty sure Nintendo knows it, since they haven't had an operating profit in a couple of years.

 

[Odrion]

You specifically said less, which you have no data to support with. The tail-end of a generation will always make it less relevant.

Also I said this:

Sony and Microsoft are going for the gamer. Generic low powered device maker is not.

Nintendo and Sony were the only ones aiming for the "dedicated" portable gaming market with the 3DS and Vita, and yet they compete with more than just each other now.

 

[avaya]

Margin is too poor for Samsung IMO. It would be someone like Amazon who are trying to push a digital ecosystem and establish themselves beyond a retailer.

Yeah, that sounds more plausible.