According to Ben Cousins’ report on Kotaku, Both Microsoft and Sony have lost a lot of money on both the Xbox 360 and PlayStation 3. Microsoft’s spent on the 360 since it launched in 2005 has been $2.996 billion, while Sony’s spent on the PS3 was $4.951 billion faring much worse than the 360. Both figures are sold at a loss.
Cousins has shed some serious doubt on the future of console gaming as we know it, citing Sony and Microsoft’s plan to sell their consoles at a loss being the reason for it’s poor fortune. He goes so far to say it’s a pitiful strategy as even with a combined total of 70+ million consoles sold, both Microsoft and Sony ARE STILL LOSING MONEY!
“Consoles like Xboxes, PlayStations & the Wii U are sold at a loss”, said Cousins. “It costs more to manufacture and distribute the device than it is sold for. Console manufacturers do this because they hope to make back the money from the license fee they charge for every game sold on the system.
“In order to offset the huge cost of hardware production, distribution, R&D and marketing, a hardware platform holder must sell vast quantities of hardware, and even bigger quantities of software. So much needs to be sold, in fact, that the data points to PS3 and Xbox 360 having made huge losses, despite having sold 70+ million units of hardware each.
“Of those 70 million Xbox 360s sold, a large proportion (approx. 40%) were bought after the most recent price cut of August 2009. Of the 70 million PS3s sold, a large proportion (approx. 42%) were bought since the introduction of the PS3 Slim.”
With what Cousins saying is true, then Sony and Microsoft’s loss-leading strategy is failing for them to bear fruit. The issue isn’t being helped with some 50% of game console owners also having a smartphone, tablet or both, devices which are seeing a rapidly increasing capacity of supporting triple-A like content.
“Mobile developers and publishers are starting to target these ‘mainstream console gamers’ aggressively. I work for a mobile publisher just slightly smaller than EA, and we are targeting them aggressively.”
Cousins prediction on the gaming market comes to 2 and consoles are not one of them.
“Mobile devices like smartphones and tablets will serve the biggest market—covering kids, casual gamers and the mainstream console people.
“The core and ultra-core gamers would be served by PC gaming, which will be smaller than mobile, but that will continue to grow. Many of the old-school PC gamers I know that moved to playing games on Xbox over the last 10 years are coming back to PC because of free-to-play and indie games, controller and TV support, as well as incredible digital distribution on platforms like Steam.”
What are your thoughts on this news? Do you believe the console market will go while the mobile and PC market will rise? Leave your comments below!
