Xbox Is Too Profitable For Microsoft To Quit The Market – Michael Pachter

The Xbox One X is launching this year – and for the Xbox division, given how much the system has been talked up, and its arrival hyped, it seems as though a lot is riding on this new console. However, if it were to underperform – which isn’t an entirely implausible proposition, given that it’s priced extremely high, going up against a dominant Sony and resurgent Nintendo, and as of right now has a minimal slate of exclusives – then is it possible that Microsoft might just decide to give up on the console market? Analyst DFC stated last year that Microsoft is all set to leave the hardware market, so would an underperforming One X be the final blow to Microsoft’s console market presence?

This was the question we asked Michael Pachter, analyst at Wedbush Securities. He, however, does not think this will happen. ‘No, I don’t think so,’ he said flatly. ‘[Xbox consoles] are wildly profitable. We are concerned about warring about who is first and who is second, but that’s like saying, Pepsi doesn’t sell as much cola as Coke does, why not just shut down? Or Burger King doesn’t sell as many hamburgers as McDonalds, so why not shut down? They’re both profitable, who cares? The only people who care are fanboys.’

I think he is right- if Xbox is profitable, Microsoft has no reason to quit. The question is- is Xbox profitable? I know Xbox Live is- but Xbox Live is a service that is becoming increasingly device agnostic as time goes on.

The Xbox One X’s high price is one thing- but there’s also the weakness of its lineup, in that it has no mass market appealing exclusive that will induce people to pick up on it, like Horizon or Zelda. We asked Pachter whether this will be a detriment to its sales potential.

“You know, I think it is something they should address, I just don’t know if that’s a priority to them, and I don’t know if they have an internal studio that’s on par with Sony’s internal studios, so… I don’t know,” he said. “Horizon was Guerrilla, and those guys are really good. It’s hard to come up with stuff like that. Unless Microsoft does something like buy Take-2, and develop GTA and Red Dead as exclusives, it would be hard for them to come up with something like that. So yes, they should to do it, but whether or not they are able to, I don’t know if they can.”

Personally, I at least agree with him that Microsoft lack the bandwidth, if not necessarily the talent- they have some very talented studios, but as long as they are all tied up with traditional Xbox franchises like Halo and Gears of War, the chances of seeing something new and exciting are unlikely.