How can I conceive that figure? Oh, I don't know. Maybe because my wife was one of the first employees to join Sony Computer Entertainment of America, for starters. The figure has also been published in the media and noted by analysts. Some say it's cumulative. Some say it's annual. From what I see, it's annual. Trust me, there's a reason why that stock has been flat for the better part of five years -- even with cash dispersals in the form of dividends. There's also a reason why the head of their gaming division quit a couple of years ago -- because he knew the Xbox is a dead hippo rotting in the sun.
Everybody knows that Microsoft and Sony lose money on their hardware in order to drive software sales. However, your counterargument about the profitability of software sales is a gross oversimplification. They get a royalty on each piece of software sold -- a far different situation than pocketing all the revenue from a retail sale. Do you have any clue as to what the top selling games are? Vast majority still PS2. Yes, Xbox has one or two legitimate hits -- but they're still barely ahead of Nintendo. And the only reason Xbox gained market share over the holidays was because a parts shortage kept Sony from producing as many PS2s as people wanted. So they settled for an Xbox.
Microsoft, because the only thing they've ever been successful at is being a computer operating system and application software monopoly that got big by pushing computer geeks around, really knows how to flush money down the crapper. Hired a ton of people early on to develop titles on its own. Had dozens of people with six figure salaries wondering around office space in Seattle doing nothing for months because they staffed up so fast. Went nowhere for years before pulling the plug. Oops. Blew a fortune trying to drive online gaming through the Xbox. Anybody you know do it? And now the Xbox360 vaporware launch. That MTV launch special? You're looking at $40-50M right there. For what? To show off a styrofoam dummy with a green light bulb in it -- and games being played on a Mac. Preston Tucker would be proud.
In fact, the losses may get worse as Microsoft is now throwing gigantic money at developers, such as the Japanese guy who developed the Final Fantasy series, to get product exclusives. Typical Microsoft. When you can't compete with a better product -- bury the competition by throwing tons of money at it. Can't wait. With some of the deals they've signed, a title will have to sell 100 million units before they can break even. Good luck.
Last edited by b_a_betterperson; 05-14-2005 at 01:00 PM.