Microsoft Admits That Xbox Consoles Are Sold at a Loss
In a court hearing, Microsoft’s Lori Wright said the company has never earned a profit from Xbox consoles.
Microsoft‘s VP of Xbox business development, Lori Wright, said in a sworn testimony on Wednesday that the tech giant knowingly sells Xbox consoles at a loss.
Adi Robertson, a senior reporter at The Verge, was live tweeting from the Apple v. Epic Games trial, a lawsuit brought about by Epic Games challenging Apple over its hold on in-app game purchases. According to Robertson, Wright was asked whether Microsoft makes a profit from selling Xbox consoles.
“No,” she responded.
“Has Microsoft ever earned a profit on the sale of an Xbox console?” lawyer asks.
“No,” Wright says.
— Adi Robertson (@thedextriarchy) May 5, 2021
The lawyer also asked Wright why Microsoft continues to sell Xbox consoles at a loss, to which she explained that the company’s business model is optimized for an “end to end consumer experience” that makes money from other sales and subscriptions.
A spokesperson from Microsoft told HYPEBEAST that the company has millions of monthly active users and Xbox Game Pass subscribers that offset their losses.
“With more than 23 game studios creating games, more than 100 million monthly active Xbox players, and more than 18 million Xbox Game Pass subscribers across console, mobile, and PC, the Gaming business is a profitable and high-growth business for Microsoft,” the spokesperson explained. “The console gaming business is traditionally a hardware subsidy model. Game companies sell consoles at a loss to attract new customers. Profits are generated in game sales and online service subscriptions.”
Despite losses from Xbox consoles, it appears that Microsoft has had a profitable financial quarter. Last month, company released its results for the quarter that ended on March 31, noting revenue of $41.7 billion USD.
