Microsoft Report $400 Million Loss on Xbox One

By Sarah Ryan – 11th August 2014
Microsoft Report $400 Million Loss on Xbox One

It came as no surprise, as figures rolled out following the next-gen launch, that the Xbox One had suffered in sales compared to its main competitor, the PS4. Microsoft handled the launch of its new hardware hideously, and have been feeling the consequences of their mistakes biting into their sales daily. The gaming giant made a huge mistake in overestimating just much built-in restriction they could pass off on the wider community, and it has cost them something in the area of $400 Million in losses on the console.

The Independent reported the set back as the company went live with their annual earnings report for 2014. Figures showed massive losses since the Xbox One release last November, suggesting that the downturn of profits could be attributed to Xbox’s inability to recuperate as expected from the outgoing associated with the launch.

Reports revealed Microsoft’s console sales rising during the 2014 fiscal year as sales hit 11.7 million, compared to only 9.8 million reported last year. The inflation of sales lead to an increased revenue to the tune of $1.7 billion, however this did little to cover the billions Microsoft shelled out to cover the production, launch and increased advertising necessary to push the Xbox One.

“Xbox Platform revenue increased $1.7 billion or 34%, due mainly to sales of Xbox One, which was released in November 2013, offset in part by a decrease in sales of Xbox 360.
“Xbox Platform cost of revenue increased $2.1 billion or 72%, due mainly to higher volumes of consoles sold and higher costs associated with Xbox One.”

It’s important to remember these figures regard only Microsoft’s console sales. As a company, MS still made a ridiculous profit (as always), and continue to be a successful and powerful force in the industry. Their total profit stream as continued to grow, regardless of the performance of the Xbox One.

The fate of the console’s first years was sealed before the hardware even hit shelves. Promises of always online DRM, used game restrictions and a mandatory Kinect sensor lead to a flurry of disappointment and anger from the gaming community, the reversal of which was a deliberate attempt at mere damage control to a market already turned sour. Institutional rivals, such as Sony, played on Microsoft’s appalling appeal to their community with mockery as the derision for the attempted restrictions went viral.

I’m of the opinion that Xbox One is actually a great console, that doesn’t deserve to be reporting the losses it has been. The failings of the console so far are derived directly from Microsoft, their backwards attempt at a next-gen console launch, as well as their insulting attempts to push any and every form of BS past their community. In a few years, I believe the gap between the Xbox One and PS4 will certainly close, but until then, Microsoft need to try a lot harder than they have been to support their machine and allow gamers and developers alike the foundation to develop faith in their practices.

Sarah Ryan

Gaming culture and industry critic. A little sharp tongued, and a little short on patience. Follow me on Twitter at @Auseil, or [email protected] to contact me directly.