220°
Submitted by darkride66 586d ago | opinion piece

Xbox 360 and PS3 losses total $8 billion, ex-Sony employee paints grim future

Xbox 360 and PS3 have cost Microsoft and Sony a combined total of $8 billion, according to industry veteran Ben Cousins.

According to Cousins, Microsoft has spent some $2.996bn on Xbox 360 since it launched in 2005, while Sony has fared worse, spending $4.951 billion on PS3. Both figures are a loss, and you can see an overview of both company’s losses in Cousins’s financial table here.

Cousins, who has worked at a string of high-profile studios over the years – including Sony EA and Lionhead – has shed serious doubt on the future of the home console as we know it, citing Sony and Microsoft’s plan to sell each console at a loss as a reason for such poor fortune. It’s a poor strategy he says, as even with a combined total of 70+ million consoles sold, both companies are still losing money. (Microsoft, Next-Gen, Nintendo, PS3, Sony Computer Entertainment, Wii U, Xbox 360)

Bar_Brothers  +   586d ago
These Consoles are now making money
MS made alot of money with the 360 in the last 3 years but they lost alot in the first years on the market.

Still what really matters is that right now is making money and isnt going away anytime soon.

Next Gen will lose money at first its normal, these things will be powerfull, technology is expensive and they cant sell Consoles for 1000$. But with time, games sales, Live etc... it will make money for them.
Riderz1337  +   586d ago
What really hurt Microsoft is the RROD. I think this time around consumers might be watching Microsoft more carefully because of the disastrous launch of the 360 which was caused by the obsession to launch ahead of the PS3.
darthv72  +   586d ago
was it really...
disastrous? generally, disasters are tough to overcome but they managed to do quite well on their 2nd outing in the console market.

Hardly what i would consider "disastrous". Problems happen but many would rather concentrate on the nature of the problem more so than the efforts put in to resolve it.

Its a matter of selective recollection. only choosing to look at bits and pieces instead of objectively looking at both the bad and good to come from it.
Riderz1337  +   586d ago
@darthv72 Yeah it was disastrous because they had to keep replacing Xbox's which is why they lost a lot of money this gen from the Xbox. Also who knows what future disasters it could have on Microsoft. Maybe people won't feel safe buying the Xbox at launch...maybe they will. Hard to determine right now.
#1.1.2 (Edited 586d ago ) | Agree(10) | Disagree(1) | Report
darthv72  +   586d ago
i'll give you that....
but i'm not the kind of person to hold a grudge if something isnt working. UNLESS there is no effort to resolve the issue.

customer service is the main thing that keeps most consumers coming back. How a situation is taken care of can actually do more for the consumer confidence than the situation itself.

My PS2 laser died a year after having the system. It cost me $150 to get it fixed and yeah i was a bit miffed but not to the point where I would chastise sony out of spite.

im a gamer first and as such I fully know the costs and risks involved with this expensive hobby. Where as many shunned MS in the event of the RROD, they made good on trying to fix it at minimal to no cost to the consumer.

Some say they HAD to but they could have charged a minimal fee of $75 if they wanted to. Hell, nintendo charged me that when the sound chip went bad on my Wii after a year. Many will hate on MS because of who they are regardless of personal experiences.

Like i said before. Problems happen but how they are handled is often times more important to the consumer.
edonus  +   585d ago
I think you are over estimating the costs of RROD.

Yes it was terrible unprecedented and stupid but they fought through it.

They put a billion aside for the issue. That would mean an exchange or a fix and shipping back. If they replace every 360 with a brand new one out they could have replace around 2.5 million premium units that cost $400 a piece. Remember this was just the console no power brick controller hardrive cables.

Now we know they didnt do that, they just fixed them and sent them back. The 360 rrod fix by the do it your selfer was like 50 bucks shipping lets say $10 each way so $20 for shipping and lets be generous and round up the repair to an even $100 totaling $120. With the budget they set aside they could have repaired more than 8.3 million units. When RROD was going strong they were only at about 5-6 million total sold and the majority of people had no issues. Its was reported as high as 33% of the consoles had issues. I doubt they anywhere near the 1 billion they set aside for the issue.

The 360 has plenty of revenue streams to negate that.

Since the 3rd yr of the 360 RROD has been non existent. The only ppl that even remember it are diehard 360 haters/ Diehard sony supporters.

I think RRod was a blssing in disguise for sony because at that time the 360 was starting to roll and pull away hard. Gears Of War had just come out and everybody was going crazy over it., and XBL was leaps and bounds better than PSN.

Anyway RRod was a big hit but not a fatal hit.
morkendo23  +   585d ago
wiil consumers REALLY pay attention this time?? or only gamers will. will people buy xbox next after seeing signs of possible RROD again we dont know.

my crystal ball say:
lets wait and see.
violents  +   585d ago
@ darthv72

I agree it was disatrous. A 72% failure rate cant be called anything less in the eyes of the manufacturer.

My launch Ps3 60gig lasted 6 years before it finally ylod on me. I know people that went through 3 xboxes in a week. One only lasted for like 2 hours. I would definitly consider that a massive fail.
dedicatedtogamers  +   586d ago
And yet people still say "we need better graphics! And we need more voice acting!"

The rubber band is going to snap. Most developers can't keep up with the rising cost of AAA games, and next gen will be even worse.

Plus, we don't have a strong worldwide economy. The name of the game next gen will be "profitability". Who will be able to stay in the console race? It won't come down to number of studios. It won't come down to exclusives. Heck, it won't really come down to sales, either. It will come down to how profitable each game and each console is.
cgoodno  +   586d ago
*** It’s a poor strategy he says, as even with a combined total of 70+ million consoles sold, both companies are still losing money.***

On hardware. All companies are raking in dough on software.

You don't sell hardware to make a profit on hardware. You sell hardware to sell software.

Why do we keep getting idiotic analysis of things that don't matter on their own?
doctorstrange  +   586d ago
Exactly. If these consoles were such catastrophic failures as he suggest, then they wouldn't make another gen of them.
Ace Killa 08  +   586d ago
Because the source works within the mobile market and tries to convince the reader consoles are dying while mobile market is the next way to go.
1upgamer99  +   585d ago
Microsoft sold more after the price cut, as did Sony. Therefore once the console began to turn profit-Price was cut and the profit was no longer there. Allot of people are starting to turn away from Live, seeing as how Sony and Nintendo are not charging the premium fee. Live is great but I am not going to pay to play BOPS2 online when I do it on Wii U free. I no longer support Microsoft Xbox. PS3, Wii U, PC for me. "making money isn't going away anytime soon" Well I am not sure about that seeing as the Xbox will be launching this year, and more than likely sold at a loss. How much first party support will 360 have after this year?
Bar_Brothers  +   586d ago
And when you talk about the Future
Thats must be 30 years from now.

Consoles arent going anywhere son, stop dreaming.
Belking  +   586d ago
They will go away but not for a while. The time will come when you won't need to buy a console to get content and game makers won't need them to deliver their software. I would love to have them forever but I know it won't be.
miyamoto  +   586d ago
Ouya, Game Stick, NVidia and Valve have just announced their new gaming consoles and this guy spew FUD doom and gloom.

So he is saying these guys are stupid and did not do their R&D?

I bet this guy is spewing these crap for his own vested interests.

awaiting a Sony, Nintendo and M$ response...
#3 (Edited 586d ago ) | Agree(2) | Disagree(0) | Report | Reply
ElectricKaibutsu  +   585d ago
I actually think that was his point. Those "consoles" you mentioned are really just computers that you hook up to your TV. The Ouya and Steam Box won't have a proprietary operating system like the Big 3 do. Valve said you can even install Windows on their's. As it becomes more common to hook PCs up to TVs I could see consoles becoming more niche. I'm not happy about that, btw, but it makes sense.
miyamoto  +   586d ago
Oh and its from Kcraptaku!

I should have known!
Nothing from that site is ever positive news worth reading.

darkride66 you should have known better not to bring that garbage here on N4G

Seriously
#4 (Edited 586d ago ) | Agree(3) | Disagree(2) | Report | Reply
darkride66  +   586d ago
It was based off a guest column from Kotaku. Generally I have zero use for Kotaku or their articles, but this wasn't from one of their in-house hacks. Ben Cousins is a developer with some impressive credentials over the years from his time with Sony, Lionhead, EA, Dice and I feel his thoughts on the issue are valid and wildly shared.

We all know that MS/Sony sells consoles at a loss, but if software doesn't make up the difference as is suggested, why would they continue to do this? MS themselves stated way back that the next gen could look nothing like this gen due to costs, stating a low-cost, digital hub may be a better alternative.

Whether we agree or not, these are the discussions that are being had behind closed doors regarding next gen. When return on investment isn't there, you have to start looking at different strategies. This gen they weren't exactly racking it in except for Nintendo, and even then their strategy with the Wii imploded quickly and may not work again.

We've seen studies indicating that the young are turning away from traditional consoles in favor of mobile apps. There's evidence for his argument all around even if you don't agree with his ultimate conclusions. If you think it's garbage, why not pick a point he makes and explain why you don't agree?
Hicken  +   586d ago
He HAD credentials, but now he's firmly entrenched within the mobile market, and his articles more than show what he thinks.

He- apparently- has little faith in the console market, so it's no surprise. Check out the other articles he's had published at Kotaku... if you want to bother suffering through that.

His opinion is hardly unbiased, so that makes it a lot harder to take his words at face value.
Kingofwiiu  +   586d ago
Ouch , that's pathetic. Do they even know what they're doing ? The gamecube was arguably more successfull than the os3 and 360 BECAUSE Nintendo never LOST money on it , they MADE a PROFIT on every unit and game sold.

Sony lives in dreamland trying to show off like the big man with ''UBER TECH'' when they can't even afford to deal with ''UBER TECH'' they're just lying to themselves.

It's like a car salesman buying cars for 4K and selling them for 3K . You can't afford to sell those cars like that LOL.

This is Why the PS4 and maybe 720 is going to be a dissapointment to you drones because the MOST they can do is sell it at breaking even.

Sony need to make some Money or they will be the next Sega.

I know , the truth hurts.

Nintendo is currently by far the most successfull competitor in the Video Games sector.
pedroyamato  +   586d ago
Although I am a big nintendo fan, we cannot call GC a sucess at all.

Nintendo lost a lot of respect and users with the bad GC support.

And the most important, make a profitable system IS important but low sales means unstable market and low investment from investors, and a low stock price is what really hurts the companies...

But yes. Sony is really in a bad position; they need to deliver something really "powerful" to satisfy their fans but they at the same time they cant afford to lose 300,400 USD at each system anymore.
Gemmol  +   585d ago
I do not think you understand his point, yeah it may sold less and loss support, but the GameCube made profit on each sale, which is a success for the company despite the other negatives. At least with making profits on the hardware they can work on software developers another day, but if your own console is not making you profit that is bad.
pedroyamato  +   585d ago
@Gemmol

Is not that simple, u and the 3 ppl that disagree with me are only looking to the numbers.

Maybe the ppl here dont know, but game companies biggest profit are from games license. You can check it by yourself later.

My point is, GC made money from the system? okk, that is good BUT the system sold only 20 millions, compared to the ps2 150 million. Guess which one received more games and therefore made more money with games license?

Overall ps2 made MUCH more money than GC did and the reason is that, games license due system sales base.

However, check wii numbers, it sold 90 millions, but the stocks for nintendo are falling for the last 2 years, the reason? the third party support changed from wii to xbox and sony. In another words, nintendo made money with the system, and many 1st parties, but the biggest profit that come from games license they lost.

I own a GC, a Wii and a Wii U, so I enjoy playing their games, but call GC a success? That is definetely wrong, and even nintendo recognize that. You guys maybe forgot this interview. I didnot.

http://www.1up.com/news/iwa...
#5.1.2 (Edited 585d ago ) | Agree(1) | Disagree(0) | Report
Misleading
The article claims that Microsoft have spent 2.9 billion on the 360 since 2005 but the original source clearly shows that that sum was calculated from 2003 when the original xbox was still selling at a major loss. https://docs.google.com/spr...
Even though the original author does state that he included the fy03 and fy04 to measure R&D and pre launch costs, he also doesn't subtract the losses from the OG Xbox so the numbers are unreliable at best.
#6 (Edited 586d ago ) | Agree(4) | Disagree(2) | Report | Reply
This isnt news...

The money MS and Sony lost on the consoles was made up for in video game sales as is usually the case. Still I doubt they'll continue the trend. The Vita sold for profit at launch and I bet the next hd consoles will do the same. Nintendo seems to be the only one in a position right now to take that kind of "risk".
Belking  +   586d ago
"The Vita sold for profit at launch and I bet the next hd consoles will do the same."

That's actually not true. Vita wasn't sold for profit at launch. Only one to ever profit at launch are Nintendo. Sony probably won't profit for another year or so and that's if they don't keep dropping the price. Right now the vita is selling for a loss.
http://www.examiner.com/art...

"In an interview with Reuters Japan, Sony’s Kaz Hirai stated that Sony aims to make a profit on the PlayStation Vita in three years. Sony often sells their hardware at a lost, so this isn’t anything new for the company as they sold the PlayStation 3 at a loss despite the $600 price tag."
Interesting.

Then why'd they say this just a few days later????

http://www.playstationlifes...

Sony never seems to be on the same page with each other...
ElectricKaibutsu  +   585d ago
Weird discrepancy... Maybe Kaz was including money spent on R&D and the other guy was just talking about price to manufacture?
N311V  +   586d ago
So the head of a mobile gaming company thinks consoles are going to die and mobile is the future. Who would have guessed?
CommonSenseGamer  +   586d ago
Too many people forget that not only did their respective consoles initially cost more to produce than what they sold for but also the billions spent bringing them to market in the first place. A business has to recoup R&D costs otherwise its not profitable.
Benjaminkno  +   586d ago
Game Over
black911  +   585d ago
RROD is what got microsift millions of sales. Idiots rebuying consoles and bew midels everytime they released. Where as ps3 gamers like me still have there phat Original PS3's.
Thepcz  +   585d ago
win for nintendo
and people wonder why nintendo come with 'last gen' tech for wiiu and 3ds. its simply what is affordable/profitable.
what the consumer demands is not even economically realistic, right now.

so nintendo clearly have the right idea and the smartest business strategy.
whoyouwit04  +   585d ago
Sony lost almost 5 billion on PS3 and that's a success? I don't think so.
wiiulee  +   585d ago
let haters keep hating on nintendo and the wiiu...nintendo knows its innovation and great games that wins gaming...not shiny pixels and over the top shooters....and they make games that sells millions because they are classics and have a charm to them.....sony or microsoft one of them will be out the console business soon following the model that they are adopting...i think it might be sony..especially if the next ps4 is 500 dollars

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