While Xbox 360 and PlayStation 3 sales pale in comparison to Nintendo's Wii U, they aren't all that shabby relatively speaking. One would think that with Microsoft touting the fact that it's held the console sales lead in the United States for over two years, that the company would be doing so profitably. That might not be the case, however, as Wedbush Securities analyst Michael Pachter said today.
Despite the fact that consoles are known to be sold for a loss when they first launch, with very few exceptions, over time as technology becomes cheaper, the units typically turn greater profits. But according to Pachter, that "probably" isn't true.
"I think Microsoft and Sony probably barely made money on their console sales at 75 million [units sold]," he said in today's special episode of Pach-Attach, "But Microsoft made a ton of money on software and a ton of money on Xbox Live."
It's well known that software sales are the most profitable form of income for everyone in the games industry, so that shouldn't be surprising. But to fathom that after almost eight years, the longest console cycle ever, the Xbox 360 and PlayStation 3 have not yet earned money for their companies.
What remains to be seen is how much next-gen consoles will cost to develop. We do know that the Xbox One is priced $100 higher than the PlayStation 4 due to Kinect, but hopefully we will see platforms ending up in the green sooner, if at all.