Wednesday December 6, 2023

Microsoft Has Never Turned a Profit on Xbox Hardware

  • Microsoft has never turned a profit on hardware sales from its Xbox consoles.
  • The inability to profit was revealed during the Epic v. Apple trial.
Xbox/Design: Alex Brooks
Copy Link
Link Copied
Link Copied

As the trial between Epic Games and Apple over commission fees on in-app purchases continues, there was a revelation Wednesday that caught many by surprise: Microsoft has never turned a profit on hardware sales from its Xbox consoles.

The bombshell was revealed when Xbox VP Lori Wright took the stand to testify as a third-party witness. 

Epic’s lawyer Wes Earnhardt asked Wright about the profit margin Microsoft earns on Xbox hardware and she responded: “We sell the consoles at a loss.”

  • The original Xbox, released in 2001, sold 24 million units. 
  • Xbox 360, was even bigger, selling 84 million units in its lifetime. 
  • Microsoft stopped reporting individual platform sales in 2015, saying it would focus on the number of active users of its services.

Microsoft partially offsets losses from Xbox hardware by implementing a 30% commission fee on PC game sales. Starting in August, Microsoft’s cut will drop to 12% — the same percentage Epic takes from sales in its store. 

Xbox Game Pass has soared to 23 million subscribers, but Xbox marketing executive Aaron Greenberg once said the service isn’t a “big profit play,” either. Licensing, investments, and maintenance keeps costs high.

Despite Game Pass and Xbox hardware’s lack of profitability, Microsoft’s broader gaming division is well-positioned for a competitive future.

The company saw its first $5 billion quarter for gaming revenue during its fiscal Q2 2021 — when the Xbox Series X|S hit the market. And with a near-$2 trillion market value, Microsoft has more than enough cash to support its Xbox teams for a long time.

Copy Link
Link Copied
Link Copied

What to Read


Would Disney's ESPN Walk Away From The NBA?

Will financial pressures impact the company's decision with a longtime partner?
Inter Miami CF forward Lionel Messi smiles as he walks on the field against the New York Red Bulls during the second half at Red Bull Arena.

The Results of Messi Mania Are In

A million people per match tuned in for Messi and Inter Miami.
Jimmy Pitaro of ESPN

Disney Explores Equity Deal With NFL and NBA for ESPN Amid Financial Challenges

With company under pressure from Wall Street, talks are heating up to sell a stake in ESPN.

MLS Playoffs Format Facing Criticism From Fans, Players

This year, first-round matches are being played across three-game series.
podcast thumbnail mobile
Front Office Sports Today

Premier League Sets New Bar with Media Deals


Featured Today

The College Football Playoff is considering rotating TV networks for the national championship game.

CFP Considers Super Bowl-Like Rotation For National Championship Game

Multiple networks could share rights to the championship game, sources told FOS.
Brett Favre
November 27, 2023

Favre Welfare Case Hold-Up? "AG’s Office Has Not Expressed Interest In Pursuing"

The DOJ interviewed Brett Favre in early 2020.
The future of the Pac-12 rests on a court decision.
November 24, 2023

The Pac-12 Plays Its Final Regular-Season Game. Then A Court Decides Its Fate.

The conference's future rests with a court decision.
Lane Kiffin
November 9, 2023

Ole Miss, Lane Kiffin Lawyers Argue for Dismissal of Player Lawsuit

FOS obtained audio of Lane Kiffin's interaction with the player behind lawsuit.


Powered By

Careers in Sports

Looking for a new job? Check out these featured listings and search for openings all over the world.
Multiple - USA Careers
Live Nation
Multiple - USA Careers
Saco Bay PT
Multiple - USA Careers

PENN Entertainment's High-Stakes Gamble with ESPN Bet Kicks Off on Tuesday

After his Barstool failure, PENN CEO Jay Snowden has plenty riding on a deal with ESPN.
The U.K. regulator is Microsoft's last major hurdle to pass.
August 22, 2023

U.K. Reconsiders Activision Takeover Amid Revised Microsoft Offer

Microsoft's new proposal grants cloud streaming rights to Ubisoft.
A general view as Faze Clan takes on EUnited during the Call of Duty League Finals e-sports event at Miami Beach Convention Center.
October 20, 2023

FaZe Clan, Once Valued at $725M, Sold at $16M Valuation to Jerry Jones-Backed GameSquare

The deal, closing in Q4 2023, is being characterized as a merger.

NHL’s Chris Foster on Amplifying Content Distribution With Automation

Learn how the NHL is using WSC Sports to increase fan engagement.
A judge denied the FTC’’s injunction request to block Microsoft’s deal.
July 11, 2023

Microsoft Beats FTC to Move Forward With Activision Blizzard Takeover

A judge denied the FTC’’s injunction request to block Microsoft’s deal.
The FTC is filing an injunction to block Microsoft's deal.
June 12, 2023

FTC Makes Another Move to Block Microsoft’s Activision Blizzard Takeover

Microsoft's $69B takeover faces scrutiny in the U.S and U.K.
Goals from the Stanley Cup Final are being shown as 3D videos on Roblox.
June 7, 2023

NHL Uses Roblox to Recreate Stanley Cup Final Goals in 3D

The Roblox activation leverages the NHL's puck and player tracking system.
Nike's .Swoosh NFTs will integrate with future games from EA Sports.
June 2, 2023

Nike NFTs to Appear in EA Sports Video Games

Nike launched its .Swoosh NFT marketplace last year.