Most consoles are sold at a loss (well, unless you’re Nintendo). That’s a pretty well-known fact. However, as the systems age and hardware production becomes easier and less costly, most console hardware eventually becomes profitable. Apparently, that has never happened for any of Microsoft’s consoles.
This new comes courtesy of the ongoing Epic v. Apple antitrust trial, and was first reported by Protocol. As part of a direct examination by Epic counsel Wes Earnhardt, Lori Wright, the head of business development at Xbox, was asked outright if Xbox hardware sales were profitable. “How much margin does Microsoft earn on the sale on the Xbox consoles?” Earnhardt asked.
“We don’t. We sell the consoles at a loss,” Wright responded. When asked why, Wright responded that Microsoft subsidizes it with game sales and subscription services, which are profitable. Microsoft’s goal is to serve as an “end-to-end consumer experience.” When asked if Microsoft has ever earned a profit from the sale of Xbox hardware, Wright said no.
This really isn’t surprising. Console sales are generally viewed as a way to lock a customer into an ecosystem and make money from their purchases over time. Still, it’s interesting to see a high up person at Microsoft say it out loud.