[Sigia-l] Game Console Business Model (Was: WhatsWrongWithU)

[Timothy Karsjens]

It is the business model of any console manufacturer to lose money on the hardware itself and like a previous poster said, make money on subscriptions and software.  Sony and Nintendo do it as well.

A moderately successful game will sell around 100,000 copies at 49.99 each.  The total sales gain for that game will be around 49,000,000.  If you subtract half of that for the distribution licensing, and another half of that for development costs, that is what a game development shop can normally make off of a successful game.  There are, of course, caveats to publishing deals, but you get the idea.

Now, Microsoft, on the other hand, publishes and distributes their own games.  They also have the most popular games for their console under their banner.

I think they are willing to take a hit on the hardware, when you consider that the first Halo alone sold many millions of units, and it was wholly owned by Microsoft.  If you take into account other games distributed by Microsoft Game Studios that were developed by other companies which had to buy the rights to develop on the platform...

I think you truly begin to see why Microsoft, Sony and Nintendo all sell their hardware at a loss.

--tkarsjens