Xbox consoles sold at a loss, says Microsoft

By Sean Carey,
Microsoft has been selling its Xbox consoles at a loss, Lori Wright, vice president of business development at Xbox, confirmed in court yesterday.

Microsoft has never made a profit from the sale of Xbox consoles.

With the Epic and Apple legal battle still raging, Wright testified as a third-party witness, giving insight into the video game industry, according to Protocol. Wright was asked several questions by Epic's lawyer Wes Earnhardt regarding Microsoft's business model for the Xbox ecosystem and if the company made a profit from Xbox hardware sales. "How much margin does Microsoft earn on the sale on the Xbox consoles?" Earnhardt asked.

"We don't. We sell the consoles at a loss," Wright replied. The Xbox exec explained how Microsoft sells Xbox hardware at a loss and subsidises it with the sales of video games and subscription services such as Xbox Game Pass.

"Just to be clear, does Microsoft ever earn a profit on the sale of an Xbox console?" Earnhardt then asked. Wright simply replied, "No," according to IGN.

Niko Partners senior analyst Daniel Ahmad notes that video game hardware is usually sold at a loss and for a while after, before pointing out outliers such as the Nintendo Switch and the PS4. Ahmad says that both the PS5 and Series X|S are being sold at a loss right now but "will become profitable down the line most likely," before echoing Wright's comments saying "the platform holder recoups the investment in hardware via its own first-party game sales, services, the cut it takes from third parties that sell games / DLC."
Sean Carey
Written by Sean Carey
Sean graduated from Southampton Solent University with a first-class honours degree in Journalism, which he uses to keep TrueAchievements and TrueTrophies topped up with the latest gaming and industry news. When not scouring the web for the latest big story, you’ll find him tearing up the streets in Forza Horizon 5, or failing miserably in Call of Duty: Warzone.