Microsoft Says That It Has Never Made A Profit From Selling An Xbox Console

Video game consoles have for many years been sold at a loss, and barring a few exceptions, that status quo of taking a hit on the hardware and making a profit on the software appears to be intact for the Xbox Series X. In the ongoing Epic Games vs Apple trial, Xbox business development vice president Lori Wright, a third-party witness, was questioned by Epic lawyer Wes Earnhardt as to how much money Microsoft earns from Xbox console sales.

"We don't. We sell the consoles at a loss," Wright answered (via Protocol). When asked if Microsoft had ever made a profit off of any Xbox device sale, Wright simply said "no."

Wright also mentioned that losses are offset by games, services, accessories, and subscriptions. While component prices do usually come down over time, so too do console prices in an effort to remain competitively priced in the market, and thereby the companies take a financial knock with each unit sold.

As Niko Partners senior analyst Daniel Ahmad noted, the PS5 also costs Sony every time one of those consoles is sold, but both next-gen devices are expected to become profitable later in their respective life-cycles.

Only a few consoles have generated revenue over the years, with the PS4 being a prime example thanks to its $299 price tag that remained constant for the latter part of its run. Combined with lower production costs as well, the pricing remained attractive to consumers while it turned a profit for Sony in the end.

The Nintendo Switch is also an outlier, as the hybrid console was profitable from launch day. Nintendo chief executive officer Tatsumi Kimishima explained back in 2016 to VentureBeat that the console would be both profitable and attractively priced for consumers.

The rest of the week has seen a number of fascinating industry secrets revealed from the Epic vs Apple trial, including PlayStation's stance on cross-play possibly being illegal, Fortnite being a huge money-maker for Epic, and Microsoft keeping a close eye on its competition's first-party games.

For more on those stories and other news from the trial, you can check out our dedicated Epic vs Apple court case hub.