Microsoft gaming a "disaster"

By Robert Purchese Published 20 April, 2007

Says investor person.

Investor adviser Roger Ehrenberg believes Microsoft's foray into gaming has been a "disastrous endeavour", and that it should rethink its entire strategy.

His conclusion was based on "objective numbers" taken from the Microsoft's financial statements, which show a total loss of USD 5.4 billion from its efforts.

"Microsoft needs to take a long, hard look at its gaming strategy: and, in fact, its entire H&E [Home and Entertainment] strategy," Ehrenberg stated on Forbes.com. "At what point, regardless of its virtually endless financial resources, does it say 'enough is enough'?"

"Would we have been better served by returning the extra cash to shareholders rather than investing it in a franchise that seems to have questionable prospects for turning around? These are the kinds of questions Microsoft management should be asking. And hopefully, for shareholders' sakes, they are."

Apparently the company's focus on hardcore gamers has left it with a dwindling user base. If it continues with the same strategy then he believes it will have a problem. Instead, Ehrenberg reckons, it should take a long hard look at Nintendo's master plan, with a mass-market approach and cheaper console.

He even cites EA as measure of how successful a particular console is considered to be, believing that the more games the publisher throws at the hardware the more important it is. Which makes us scratch our heads, because Xbox 360 has had and continues to have strong support from EA.

"Nothing short of a tectonic transformation in perception of Xbox 360 relative to its competitors," will change things, he added.

It is fair to say Microsoft hasn't enjoyed the success it dreamt of in Japan, which Ehrenberg picks up on, but its persistence with JRPGS like Blue Dragon and Lost Odyssey could show strong will power. Not to mention the success of Gears of War across the region.

We can't help but think Mr. Ehrenberg would fit right in to our very own comments threads. And if he did, what would you like to ask him?

Picture of Robert.

About Robert Purchese

Bertie is Eurogamer's Senior Staff Writer. When he's not hunting down news stories he's often found playing with his kids or gabbling about fantasy games and strange online worlds.

Read more articles from Robert by visiting the Robert Purchese archive page.

You may also like...

Comments (204) Latest comment 5 years ago

Comments threads automatically close after 30 days, but please feel free to continue chatting on the forum!

  • Sid-Nice #1 5 years ago

    Microsoft are winning.

  • ecureuil #2 5 years ago

    Maybe a disaster from their perspective, but it worked out well for the consumers. The money they've lost, is money we've saved.

  • Lukus #3 5 years ago

    I'm sure the 360 will perform a lot better than the old Xbox. It already has a more promising software line up. Plus they're at least breaking even with each 360 sold, unlike the old machine which was sold at a loss.

  • AcidSnake #4 5 years ago

    Hmmm...I'd like to ask him what he sees as a viable option now?
    Should MS just call it quits?
    Ride out this gen and fade away?
    I believe that the toughest part is already over for microsoft...

    Besides, they made a lot of gamers happy...And it's not as if it really really needed that money anyway

  • Sir_TimAlot #5 5 years ago

    I was totally gonna say what ecureuil said. maybe be a busniess diaster but not at all a gaming diaster. Not like Microsoft is gonna go bust anytime soon. erm...

  • Dizzy #6 5 years ago

    He has a strange obsession with Japan this guy.

    And yeah.. MS gave us consumers shitloads of free money ;)
    Edited by 1 at 20/04/07 @ 14:02

  • Nova5lag #7 5 years ago

    Id ask him if he is mates with good ol JT.

    Maybe hes changed tack and thought "I know! Rather than attack specific titles and publishers I will just get the format holders to pull out the gaming market! God I am clever!"

  • Tonka #8 5 years ago

    Where is Arnie when you need him?

  • Skooch #9 5 years ago

    Well, that's that then. MS best pack up shop and call it a day. :p

  • muftak #10 5 years ago

    "Microsoft are winning. "

    bullshit they are .

    A: a one year lead

    b:flooding the market with poorly made consoles.

    c:Nintendo are doing way better at this present time in terms of time vs ratio sales.

  • Obsequious #11 5 years ago

    Pushing 40 million consoles sold now, adding this gen and last.

    Some disaster.

  • badabing #12 5 years ago

    Best PR money they've ever spent.

    I could never have imagined myself being a vociferous supporter of Microsoft before the xbox, live and 360.Windows, word and office were never going to put a smile on my face

    but these days......................lets face it I've turned into a fanboy

  • BillGaitas #13 5 years ago

    I wonder, would that be enough money to buy Sony or nintendo?

  • muftak #14 5 years ago

    "Pushing 40 million consoles sold now, adding this gen and last.

    Some disaster. "

    source please on this

    M$ are known channel swampers , proberly just figures sent out not sold

  • Pac #15 5 years ago

    The C&C3 demo is actually available to dowload on XBL now folks.

    /if your're interested that is

    /if not go back to the thread and ignore me

  • BM #16 5 years ago

    Dear Mr. Ehrenberg,

    Do you have a dog, and if so which fascist dictator is it named after?

  • Maldoror #17 5 years ago

    You have to look at it from a financial view. Forget all the great games, superb online service etc. Their investors doesn't care about that at all.

    Microsoft is losing big money on their gaming division, most likely the only part of the company thats losing money. So why should they continue to pour that amount of money into something that looks pretty bleak in terms of profit?

  • mattigan #18 5 years ago

    Japan is no longer the yard stick for success in the gaming industry, yet people who have absolutely no idea about said industry continue to see success in Japan as the holy grail of all things gaming.

    MS have clearly lost a stack of cash on both XBoxes so far but less so on the 360 and will be in an even better position when Xbox 3 rolls around I beleive that they are and have been looking at the long term picture, in future I expect them to actually make a stack of cash from gaming.

    Of course Sony will probably wipe the floor with them come the PS4, but hey what do I know about anything?!?

    IMHO.
    Edited by 1 at 20/04/07 @ 14:12

  • JayPee #19 5 years ago

    Swish. I've contributed quite a lot to that 5.4bn!

    I somehow feel the love!

    Surely at this point they (Microsoft) have to make it a success, else it will only be a huge loss for them (the shareholders)? They must be making a fair bit back now from X360 games sales right?

  • loopy #20 5 years ago

    "Would we have been better served by returning the extra cash to shareholders rather than investing it in a franchise that seems to have questionable prospects for turning around? These are the kinds of questions Microsoft management should be asking. And hopefully, for shareholders' sakes, they are."

    Questionable prospects? It seems to be doing fine from where I'm standing. Then again, as an investor, the above statement makes it absolutely clear what your real motivations are Mr Ehrenberg and somehow I don't think it has much to do with the idea of healthy market competition and/or consumer interests.

  • dazzaman #21 5 years ago

    Wow, all this cos he couldn't get past the final level on Gears of War. Or something.

  • Walshicus #22 5 years ago

    Didn't this get refuted by other analysts? There was an http://www.Xbox-scene.com< /a> article on it.

  • RumpyStumpy #23 5 years ago

    They will continue to throw money at the games division because they can afford to do so with a long term view of enventually making money and having a media hub in millions of homes around the globe.

    Afterall snatching gamers from the playstation brand which has been so dominant over the last decade wasn't just a case of releasing a console and hoping people would jump ship. They need to change peoples perception of Microsoft which has never been positive and also the perception of the competition. This takes millions of dollors in much the same way politions in the US spend millions of dollors on their campaigns to become president.

    They have a great product on its own merits but not everyone knows this to be true and it costs to change peoples minds.

  • northernlights #24 5 years ago

    I think he is missing the big picture here i.e the long term view. Microsoft are not where they are by being stupid. The 360 is not just about games for Microsoft its about moving into the Home Entertainment Market which will be very finanically rewarding over the next twenty years as technology comes together. Take Apple, they dominate in the online music/mp3 market as MS do in the home computer world. Apple got to thier current position via the iPod which in turn gave them the iTunes music store which may in the future mean Apple will be the major leader in digital disturbtion which will take over from CD's/DVD's one day and they get all this from the success of the iPod.

    If the 360 wins the console war or is a huge success come the next round of console swhich wiill offer everything on them from sky+ services, tv services, movie's, shopping, teleconfercing and then a few years later devices that control everything from paying your gas bill to reminding you your low on milk, MS or Apple or Sony etc etc will off got there because of past successes

  • Psychotext #25 5 years ago

    I don't see it as a failure. MS in tons of living rooms, IPTV coming soon, video marketplace in the US, game division moving toward profitability. 360 outselling PS3 in US, mostly on par in Europe and yes, disastrous in Japan but PS3 not doing much better there.

    Sure, the Wii is gonna end up selling more - but they aren't competition for MS in the sense that Sony is with the PS3.

  • RumpyStumpy #26 5 years ago

    I have a wii and a ps3 as well as the xbox 360 and this is how my gaming goes:

    Bought 360 have maybe 40 games love live and arcade.

    Bought wii with Zelda and wii sports have not purchased any more software, show friends when they come round, play for 30mins then they want to play the 360.

    Bought PS3 and motorstorm, now waiting for exclusives only because if they are multiplatform I will get the 360 version for achievements rumble and live.

    Its not just the number of consoles sold that matter it is the amount of software and microsoft seem to be doing a good job in this area.

  • Hylis #27 5 years ago

    for 6 billion, you can give away 10 million of 600$ consoles

  • Goban #28 5 years ago

    It's a failure until they actually make some money.

  • dudefella #29 5 years ago

    Games for Windows may not be a huge hit, but the 360 is doing just fine for itself.

  • mash the x button #30 5 years ago

    Time for Sony and Nintendo to have a whip round to buy out Microsoft's gaming wing mwahahahahahahah :-)

  • Goban #31 5 years ago

    Sales of the 360 are ok, but not good enough at the present time to recoupe those losses. Microsoft cannot be viewed as winning anything until they actually get into the black.

  • Xerx3s #32 5 years ago

    Financially they might not be the best but in terms of games I wouldn't call them a disaster. They have some pretty good franchises imo. They also have been in the business of making games longer than some others in the market.

    HED != MGS.

    We can't help but think Mr. Ehrenberg would fit right in to our very own comments threads. And if he did, what would you like to ask him?

    I NAME YOU: JMM! ;p

  • Steroyd #33 5 years ago

    Not worth boasting 75% marketshare if your not making money from it.

  • Goban #34 5 years ago

    It's all very well making good game/consoles, but if your not profitable somethings got to give eventually.

  • chupachups #35 5 years ago

    I suppose if he was expecting market share on the scale of Windows then Xbox 360 is a disappointment, but if it outsells the PS3 (which it's doing in America at the moment) then surely MS is doing pretty well for a second attempt.

    And Windows is an unfair comparison anyway, because it got market share more by default than through real competition.

  • thinktank #36 5 years ago

    Good for us gamers and bad for the suits, sometimes we do get a break.

  • -TKF- #37 5 years ago

    Apart from this guys being the "analyst thing" he makes one very important point that Fanboys and Eurogamer (i guess) wants to ignore.

    His conclusion was based on "objective numbers" taken from the Microsoft's financial statements, which show a total loss of USD 5.4 billion from its efforts.

    "Would we have been better served by returning the extra cash to shareholders rather than investing it in a franchise that seems to have questionable prospects for turning around?"

    5.4 BILLION DOLLARS that is a disaster for anyone except those that print money of Windows Licenses

    Someone must have the numbers on the Playstation 2 success and how much Sony earned on the console. Compare it to the 5.4 Billion LOSS and try and figure out for how long Microsoft has to pump money into the XBOX before it breaks even. Then do some math and try and figure out when they will make a profit worth mentioning.

    Then make a cup of tea and imagine the World when Microsoft has a Monopoly on the Console games and the PC Gaming platform. Then think of how you will be milked dry if you want to play.

    Finally put the 5.4 Billion in stocks and bonds over the same time and checkout what Microsoft would have earned doing that.

  • paulf #38 5 years ago

    surely its not about where it is now, but where it will be in 5- 10 years time when the xbox 1080 (or whatever it's called) will be the home entertainment hub of choice. I feel microsoft's strategy here is all about (xbox) live and digital distribution. You gotta invest to reap the rewards in the future, this 'anal yst' has got no imagination :)

  • kangarootoo #39 5 years ago

    Sounds to me like Roger Ehrenberg doesn't actually "get" what MS's strategy is. Its not really about making money from game sales.

  • manic_mouse #40 5 years ago

    muftak: "bullshit they are ."

    Are you trying to say that the 360 doesn't have the biggest install base of the current three "next-gen" consoles?

  • KoenigMKII #41 5 years ago

    Mr Ehrenburg is an accountant, such people reduce the world to a spreadsheet full of numbers and try to make decisions based on that viewpoint alone.

    The more complex and difficult the business, the more dangerous such people are if they actually make the decisions in a company.

    In a simple business, a man like him could be a successful as CEO. Making cheap generic baked beans for example [not Heinz, he would try to cut costs and ruin the taste and therefore the brand]

    I held shares in Microsoft for six years from 1993-1999. One of the reasons I sold them was that eventually the current generation of management leaders would be replaced by a narrow focus-on-the-numbers chimpanzee like Ehrenburg.

    Gates was a bastard, yes, but he was effective because he undestood business strategy and long term planning in the "strategy of technology."


    Interestingly, since the Iraq War was recently mainly run by a similar sort of man to Ehrenburg, a civilian Businessman except for 3 yars service in the Navy 60 years ago, his name was Donald Rumsfeldt- and he made ALL the decisions.

    Theorectically, the war would be won by a light cavalry backed by massive aerial firepower, he said. "Away with you General Shinseki, we do not need 300,000-500,000 troops, for I have seen the light and truth in my spreadsheet - you may retire or be sacked."

    That is true financially, if the enemy is uniformed and organised as a conventional army. So in the US went, with 3 divisions. Then the conventional war finished and a war against terrorists using stealth tactics, shaped charge Bazookas (RPG-7) and suicide bombers began.

    Then, looking at his spread sheet, Rumsfeldt said, NO! naughty troops on the ground! - you can't have any more M1A2 Abrams main battle tanks or Bradley IFV's, they are too expensive as are more troops to control Iraqs borders - you must be light cavalry and take your licks. [4000+ dead, 17,000+ VSI, 75%+ P.T.S.D.]

    "It is true, for I have seen it in my financial projections - and the President wants his tax cut."

    Back to Microsoft. Just as the massive long term investments in the gaming segment are about to pay off i.e. XBox360 is winning the installed base and software support, Mass Effect, Bioshock, Too Human, Fortza 2 are all coming soon to annihilate the PS3 in the next six months, Xbox live download business is booming, the Xbox Bill of materials falls making each console profitable, WHAT DO WE GET???

    EHRENBURG the bean counter pops up:-

    "look at all the wicked long term investments made, what a waste, you should have paid all the cash to share holders instead!!!"

    All I can say is accountancy is a usefull tool in business decisions, but also a very poor master.


  • kangarootoo #42 5 years ago

    @Goban

    "It's a failure until they actually make some money."

    Hardly. Its called investment.

  • kangarootoo #43 5 years ago

    @Bill Door

    "MS are trying to force Sony out of the hardware market"

    No they aren't. The HW is a means to an end for MS (same as it for Sony actually, but not the same end).

  • Goban #44 5 years ago

    Kagarootoo- "Hardly. Its called investment."

    Investments need to make money, simple. Otherwise they are classed as failures. Has MS made money yet, No. Will they break even eventually, probably. But until it does it cannot be viewed as a success.

  • UncleLou #45 5 years ago

    Games for Windows may not be a huge hit, but the 360 is doing just fine for itself.


    Yeah, Games for Windows is a financial disaster, only just so balanced by the Xbox branch. :p

    Games for Windows is just a standard. It doesn't cost them any money (well, a few marketing dollars maybe). If you mean the MS published PC games themselves, Flight Simulator, Age of Empires etc. are all a huge success. They are actually earning money with them.
    Edited by 1 at 20/04/07 @ 15:52

  • cyber_nicco #46 5 years ago

    "Not worth boasting 75% marketshare if your not making money from it."

    Is that the new yardstick here at EG? Profitability?

  • KnickKnack #47 5 years ago

    He does have a point to make I suppose. With that much money spent, how long will it take for MS to recoup those costs.

    However, Microsoft is not alone in their gamble that home entertainement and the fight for what sits under the telly and (probably more importantly) the sofware that is used to enjoy the games is going to be a lucrative one. Maybe not today, maybe not tomorrow, but soon, and for the rest of our lives.

    I think they're making the prediction that PC and TV and Games will one day be one and the same and we're already beginning to see that with the Live film and TV service aswell as Apple TV etc.

  • Xerx3s #48 5 years ago

    5.4 BILLION DOLLARS that is a disaster for anyone except those that print money of Windows Licenses

    That's a tiny little speck. One of the first googles: <a href="http://finance.y ahoo.com/q/is?s=msft
    ">http://finance.y ahoo.com/q/is?s=msft
    </a>

    Think those are nice numbers? Note the "All numbers in thousands" on the top. Yes, those are monthly numbers compared to your total.

    Enough there to buy a small country every year.

    /cries @ seeing his paycheck

    EDIT: I'm a financial runt so I'm ready to get an arse kicking on this one.
    Edited by 1 at 20/04/07 @ 15:55

  • Freek #49 5 years ago

    "Would we have been better served by returning the extra cash to shareholders rather than investing it in a franchise that seems to have questionable prospects for turning around? These are the kinds of questions Microsoft management should be asking. And hopefully, for shareholders' sakes, they are."



    Gamers response: Fuck the shareholders, we want Halo 3!

  • kangarootoo #50 5 years ago

    @Goban

    "Investments need to make money, simple"

    Well I realise that obviously. But an investment has a time frame attached to it in every case (or it should do, if its not shite).

    To say "It's a failure until..." takes no account of the relevant time frame, so its not really a fair critisism.

    By your reckoning, most new byt successful businesses are "failing" for the first 18 months at least.

    "But until it does it cannot be viewed as a success"

    I fundamentally disagree. If a business of not on track to recoup its investment, then you could say they are failing. But if they are bang on schedule, that is success. You might not agree, but the share price would.
    Edited by 1 at 20/04/07 @ 16:00

  • kangarootoo #51 5 years ago

    @cyber_nicco

    "Is that the new yardstick here at EG? Profitability?"

    What, for business? Ermm, yes... surely.

  • optimusprym8 #52 5 years ago

    and Sony aren't losing money on every PS3 sold?

  • KoenigMKII #53 5 years ago

    @confounder

    Your criticism of the Xbox 360 has weight. What I would say is that the "Ehrenberg-doctrine" faction is too aggressive at squeezing suppliers. They focus on the financial numbers too much on that decision, i.e.

    The big problem is that they have used too cheap DVD drives. That ends up costing them more in repairs [at least in the USA - they still have to sort out the problem here] than they saved from the components...

    But Sony's mistakes have been so huge that nothing can really save the PS3 from a nasty protracted starvation from lack of AAA software games. That is my opinion of course.

    NPD March:-
    Via SonyCowboy's post at Neogaf:-

    HW Sales
    Nintendo DS 508K
    PlayStation 2 280K
    Wii 259K
    Xbox 360 199K
    PlayStation Portable 180K
    Game Boy Advance 148K
    PlayStation 3 130K
    GameCube 22K
    Xbox n/a


    Top 10 SW

    PS2 GOD OF WAR II 833K
    360 TOM CLANCY'S GHOST RECON: ADVANCED WARFI 394K
    360 GUITAR HERO 2 W/ GUITAR 291K
    WII PLAY W/ REMOTE 273K
    PS3 MOTORSTORM 199K
    NDS DIDDY KONG RACING 189K
    NDS SPECTROBES 165K
    360 MAJOR LEAGUE BASEBALL 2K7 165K
    PS2 MLB '07: THE SHOW 164K
    360 DEF JAM ICON 148K

  • Goban #54 5 years ago

    At the rate their recouping its going to be 2020 before they make it into the black. Hardly a good timscale. (this date is not based on hard facts so please don't ask me to link)

  • tonynibbles #55 5 years ago

    USD 5.4 billion

    This world is so wrong.

  • kangarootoo #56 5 years ago

    @Goban

    Well firstly, as far as making it back into the black, I don't MS ever stepped into the red.

    As for it not being a good timescale... says who? MS are probably better at planning this sort of thing than either of us.

    You see, I'm not saying I personally understand it all better than you. I'm just saying that MS have a record that suggests they know full well what they are doing, so in this case they probably do and Roger Ehrenberg doesn't.

  • patlike #57 5 years ago

    "All I can say is accountancy is a usefull tool in business decisions, but also a very poor master."

    Great post.

  • wired009 #58 5 years ago

    Microsoft's games division is not a failure but it can't be called succesful either. PS2 is essentially the must have console of last gen and the Wii is in the highest demand this gen. Unless Xbox360 can break out with something compelling then they are stuck in a last gen market strategy, and we know how that turned out already with Xbox 1. They are banking heavy on FPS, a Bioware title, a JRPG, and the standard cross platform titles. This will not gain them any significant market share. Hardware wise, MS has shot itself in the foot with their marketing strategy. First, they make an HD-DVD accessory that they discourage their user base from buying. Next, they are going to exploit their manufacturing cost improvements by raising the price of the console with the Elite edition. Ehrenberg may not on the mark about the reasons for Xbox360s average sales, but he has a point when saying that MS needs a better strategy. This has nothing to do with how much I like the Xbox as a platform. Clearly, if MS remains unprofitable this console cycle then the games division should be held up to closer scrutiny.

    I want to add that we should stop picking on the poor number crunchers because they tell some truth even when they are mostly clueless. Afterall, video gaming is all about number crunching too.
    Edited by 1 at 20/04/07 @ 16:39

  • Goban #59 5 years ago

    This is about Microsoft Gaming, not Microsoft as a whole.

    I honestly don't think Microsoft had a clue, when they first set out, that it would be quite as difficult as this.

  • smelly #60 5 years ago

    "the 360 has been out for a year, Sony wont see a return on their console for 4 to 5 years! this is how the industry works, does this prat not know that."


    He's not a prat.. that's EXACTLY what he's saying. Look at nintendo, it's making profits no problems.. From an investors pov, the smart money is with the people making constant profits - not losses.

  • Psychotext #61 5 years ago

    I notice some people have said that the manufacturing defects are costing MS lots of money. I seriously doubt that - I imagine that the manufacturers MS uses are being heavily financially punished by them for it. MS will be covering the support costs etc though so it will be costing them a bit.

  • mysteryfaceuk #62 5 years ago

    The 360 is a good piece of kit – there’s no doubting that – but regardless of how many it’s sold so far it really risks living in the shadow of the Wii and PS3. I think Microsoft (and Sony) have really been caught out by the success of the Wii (although I think it will have a limited lifespan compared to the other two as it lacks their power). They stand no chance now of achieving success in Japan and look likely to be number 2 to the Wii in a few months. Microsoft only keep going with the Xbox because they have money to throw at it and they don’t like to lose.

  • Gurgeh #63 5 years ago

    US first quarter hardware and software sales:

    [link url=http://ar stechnica.com/news.ars/post/20070420-first-quarter-console-s ales-nintendo-rules-the-roost.html
    ]http://ar stechnica.com/news.ars/post/200...[/link]

    - Nintendo win the hardware sales
    - MS win the software sales

    IMHO only Nintendo are going to make money out of the next-gen consoles and it will be a long time before we see the PS4 or XBox 720 as both Sony and MS try to recover their costs.

  • bauhaus #64 5 years ago

    He should speak to bundy

  • Rodster #65 5 years ago

    Microsoft gaming is a disaster? Me thinks this wanker works for Sony because last time I checked they are in the lead. :p
    Edited by 1 at 20/04/07 @ 16:42

  • kangarootoo #66 5 years ago

    @smelly

    I think this is an issue of goalposts.

    If this guy defines success as making pure profit within 18 months (the general benchmark for many business models) then it probably seems to him that MS is cocking up. I suspect they simply aren't on the same songsheet. None of this is cast in stone.

    "From an investors pov, the smart money is with the people making constant profits"

    As has already been mentioned, no company makes constant profits from the off. They have to offset their investment before they break even. Perfectly smart money can be invested in a long term plan. Just look at banks that provide mortgages for example.

  • Lemon Project #67 5 years ago

    MS are in this business for one reason - to plug a hole in their software monopoly. They'd rather not make hardware, they're a software compnay after all. In fact they initially tried to palm xbox hardware manufacture onto OEMs who wouldn't have a bar of it. Once left with no alternative they outsourced it themselves. To that end xbox is an investment. If Sony approached MS and said we'll let you run your software on our platform the whole xbox project would be immediately redundant.

  • kangarootoo #68 5 years ago

    @Mr.Psycho

    The strategy could still do with a tweak in some areas and MS know it. But then everyone could use some polish.

    Nintendo have a great attach rate but a poor game to console ratio. They are selling plenty of systems (relative to their plan and taking time into account), but each purchaser is not buying quite enough games as they would like.

    MS on the other hand have a great game to console ratio, but they simply haven't sold as many actual consoles as they would like. So they are making good money on the games they sell, but long term that isn't enough if your installed base isn't growing as you would like.

    So everyone starts off with a strategy that suits their model, but that isn't to say they won't adjust it as they go (or that they would benefit from doing so).

    My issue with what this analyst guy says is that he describes MS's strategy as a disaster. I suggest that, whilst it could do with some adjusting (and lets be sure, they are almost certainly adjusting it right now) I'm not sure he has the same priorities in mind when he describes it as such.
    Edited by 1 at 20/04/07 @ 16:48

  • kangarootoo #69 5 years ago

    @Lemon Project

    +1

  • L0cky #70 5 years ago

    'We can't help but think Mr. Ehrenberg would fit right in to our very own comments threads.'

    Thanks for the insult!


    'Fuck the shareholders'

    I concur. The only valid question is:

    1). Has the console been worth your money?

    If the answer is yes, then it is a success story.

    I couldn't give a flying toss what's going on at the business end of the company who makes their 'product' unless they're drowning kittens to add special ingredients. It's all about us (us being their staff too, when they aren't at work obviously).

    Microsoft want to dwindle $5.4 billion to make games? I may have other concerns about their practices and how their money is used (as well as large companies in general), but if it boils down to 'the money would be better back with the shareholders to try and profit on some other black box investment project' then who is really going to cry them a river?

    Not me!

  • the_sas_man #71 5 years ago

    If Microsoft is failing, with an endless amount of cash and is second in the consoles war, then what in earth does this analysis have to say of the PS3?

    I mean, he claims its not mass market enough - not cheap enough? Has he pooped into his local HMV and asked how much a PS3 is?

  • Ginko #72 5 years ago

    What the author also fails to mention is that the Home and Entertainment division accounted for 2.96 billion in revenues in fiscal year 2006, nearly 24% of Microsoft's total revenue- a 76% increase over the previous year. The revenues have risen year after year so it's certainly a growing business for Microsoft, they just need to get a handle on their losses which I'm sure are underway. Nevermind Microsoft made billions that fiscal year and their stock price actually went up...in other words, the investors are fine. I'm sure they're happy that Microsoft is using its mountains of cash reserves for more projects, and even happier it's for one that's seeing so much growth and potential.

    Also, Bach clearly stated about a year or so ago that they would not begin to turn a profit on the Xbox project until fiscal year 2008, or the end of June 2008. More than that, the original Xbox team said it was a long-term project from the word go and they knew they were going to be sinking billions in to it. They've already committed to a third Xbox before the 360 was even released which reinforces the point that it is in fact a long-term investment. The article presented here is obviously short-sighted.

    As for the author's emphasis on Japan...he's way off. They're no longer the powerhouse they once were, and that's evident seeing as how their developers are having to market their games globally in order to be successful (see Capcom).
    Edited by 1 at 20/04/07 @ 17:07

  • JonFE #73 5 years ago

    One has to spend money, in order to make money...

  • TheUnionFrag #74 5 years ago

    Fucking Bankers . . . what do they know? They have to pay for sex.

  • Ginko #75 5 years ago

    "The second factor is that Microsofts experience on XBox has clearly informed their strategy for 360, hence the plethora of titles in the same narrow genres and little outside of that. Consider Halo3. I'm sure its going to be a smash-hit but is it going to grow the 360's userbase considerably? Lets face it, if you are looking for FPS action theres plenty out there already to tempt you."

    Hey there...

    Kameo, Forza 2, Banjo-Kazooie, Viva Pinata, Blue Dragon, Lost Odyseey, Infinite Undiscovery, Project Gotham Racing 4, Halo Wars, Alan Wake, and Too Human from MGS all wanted to say hi.

  • miiiguel #76 5 years ago

    the article seems a bit "heavy" to be considered trustworthy, and as someone said MS doesn't have the reputation os "loser"..., or having "bad decisions".
    Anyway, this raises a few questions; shouldn't I play with my 360 anymore ? must I buy a wii ? is PS3 a success ? MS is "doomed" ? If there's a good product that I shouldn't buy it because "Bill Gates doesn't dig Marx" ? Should western-civilization stop making video-games, because Japan is teh hip ?

    so confused...
    Edited by 1 at 20/04/07 @ 17:23

  • smelly #77 5 years ago

    "Anyway, this raises a few questions; shouldn't I play with my 360 anymore ? must I buy a wii ? is PS3 a success ? MS is "doomed" ? "


    WTF?

    Someone says that microsoft games devision is a bad investment for investors due to it constantly making huge losses.. No-ones saying you should stop playing your machine?

    How the hell do you make that mental leap?

  • mysteryfaceuk #78 5 years ago

    The heart of Microsoft’s problems is that they’re not doing enough to expand their user base. They are too reliant on hardcore games like Gears of War and Halo and although they may appeal to a lot of people who visit sites like this one, casual gamers would not be interested in them. Besides, if you want to play lots of FPS games, isn’t a PC better? It runs higher-resolutions than a 360.

  • smelly #79 5 years ago

    "As has already been mentioned, no company makes constant profits from the off. They have to offset their investment before they break even. Perfectly smart money can be invested in a long term plan. Just look at banks that provide mortgages for example."


    Yes but the xbox came out what, 5 years ago? It's made HUGE losses. It'll have to do a MAJOR turn around to start bringing in profits, so maybe 10 years into the future with the xbox 5 - everyone will have one... It then might start going into profit

    But that's not really ideal for an investor..

    Besides, it's obvious to anyone with half a brain cell that they're running their games division as a loss leader in order to promote their pc OS (which turns a profit). Anyone who doesnt expect to be playing xbox 3 games on their pc's is quite frankly delusional.

  • miiiguel #80 5 years ago

    moral of the story: PS3 is da best. MS is either evil because they have huge profits, or suck because they sell their products too cheap. MS is doomed!

    Let's all play... what's the name of that PS3 game...?

    PC gaming is also so much better, and we don't need MS for that...
    Edited by 1 at 20/04/07 @ 17:44

  • Kbone #81 5 years ago

    MS are in a very good position, with a very good platform for games development.
    Market analysts predict the Wii to fall off when consumers get bored with the novelty aspect to the console.

    MS have a shed load of titles coming out this year including Bio Shock, Mass Effect and Halo3 = all of which will be AAA titles.
    It is about the games and MS are clearly ahead in that area.

    This guy should shut his mouth and let the 7million user's plus enjoy their experiences. Plus 5billion isnt really gonna make that much of a dent in MS's pocket when they are already key players in a ever expanding market.
    MS are here to stay period - Probably just some Sonyite twat causing shi^.

  • Ginko #82 5 years ago

    "Yes but the xbox came out what, 5 years ago? It's made HUGE losses. It'll have to do a MAJOR turn around to start bringing in profits, so maybe 10 years into the future with the xbox 5 - everyone will have one... It then might start going into profit

    But that's not really ideal for an investor..

    Besides, it's obvious to anyone with half a brain cell that they're running their games division as a loss leader in order to promote their pc OS (which turns a profit). Anyone who doesnt expect to be playing xbox 3 games on their pc's is quite frankly delusional. "

    You're not confusing profits with revenues are you? The Xbox 360 has brought in substantial amounts of revenue, and the trend is very much upward. It's not unfathomable to think Microsoft will get a handle on their losses as hardware manufacturing costs get less expensive, and they start bringing in revenues from their other current investments such as new games (both first and second party, both of which are in great number) and get a return on their costs of adding more and more to the Xbox Live service.

    Also, don't forget that the Home and Entertainment division includes the Zune and all costs assosciated with it (R&D, marketing budget, etc).

    Why would they consolidate the two branches when the whole thing started because Microsoft wants to be at your desk and in your living room?
    Edited by 1 at 20/04/07 @ 17:46

  • MARKIV #83 5 years ago

    Yeah it's good Billy Gates is giving something back to us users though. I think in hindsight, Microsoft should of called it the Halo Box!

    I bet they don't do another console mind, what with the hardware problems and their convergence of Xbox Live to Windows, that will probably be the end of the Xbox. :(

  • miiiguel #84 5 years ago

    No one here uses MS products... everyone uses Linux and plays on a PS.

  • TRUTH #85 5 years ago

    muftak:
    "Microsoft are winning. "

    bullshit they are .

    A: a one year lead

    b:flooding the market with poorly made consoles.

    c:Nintendo are doing way better at this present time in terms of time vs ratio sales.

    How many games on Wii in Europe & USA hit the top 10 - None! except Zelda...The games are not selling so well on Wii; probably because most are crap to average at best...XB360 seems to always hit the top 10 fairly often, both in EU & USA - where the console is selling well and as are the games: Gears Of War, Dead Or Alive 4, Dead Rising, Lost Planet, Project Gotham, Elder Scrolls, Fight Night 3, Call Of Duty, Ghost Recon, Rainbow Six etc etc all 1m or 1m+ sellers...And with recent releases eg: Crackdown, NBA Homecourt, Guitar Hero also selling well too...So pleeeease; if possible, name me 1 GC tiltle that has sold well (not Zelda) ?

    A point that you might like to know is that XB360 has the best ratio game sale. I hope you haven't forgotten the Gamecube: sold plenty, not enough decent games, not enough good games, not enough excluisves, support dried up! - didn't end a winner, did it!
    Edited by 1 at 20/04/07 @ 17:51

  • Mr_Whacker #86 5 years ago

    +1 LOcky

    Too right. I love my Xbox but beyond wanting more games in the future I don't give a toss about the business or profits. Thats Microsoft's problem.

    Its games Quellism. Free yourselves.

  • mysteryfaceuk #87 5 years ago

    Bio Shock, Mass Effect and Halo3 - Kbone, they're all hardcore SF games. Don't get me wrong, I don't have a 360 but games like this do interest me a lot and they look great. But it's not games like this that are going to increase their user base. They're just addressing one set of users like they did before. Where's their platform game to go head-to-head with Ratchet & Clank? What have they got to compete against Ninja Gaiden or Heavenly Sword this year? Where's the innovation found in PS3 games like LittleBigPlanet?

  • miiiguel #88 5 years ago

    mysteryfaceuk: you're right! so is Guitar Hero II and DDR, all hardcore music games!
    PS3 will eventually catch up, it's da best!

    ... and RFoM is a "friendly" FPS, it's none of that hardcore bullshit!
    Edited by 1 at 20/04/07 @ 17:55

  • Vin #89 5 years ago

    I don't have enough brains for all the Sony schmucks in this thread.

  • Ginko #90 5 years ago

    Bio Shock, Mass Effect and Halo3 - Kbone, they're all hardcore SF games. Don't get me wrong, I don't have a 360 but games like this do interest me a lot and they look great. But it's not games like this that are going to increase their user base. They're just addressing one set of users like they did before. Where's their platform game to go head-to-head with Ratchet & Clank? What have they got to compete against Ninja Gaiden or Heavenly Sword this year? Where's the innovation found in PS3 games like LittleBigPlanet?




    Banjo-Kazooie 3
    Ninja Gaiden 2
    Too Human
    Blue Dragon
    Lost Odyssey
    Viva Pinata

  • miiiguel #91 5 years ago

    and if you look right at the numbers you'll see that selling 3 millions it's actually better that 10 millions, because with 10 millions you'll have more loss as MS is selling 360 loosing money in each unit, as Sony is, so it's better to sell less.

    I forgot another harcore title: Viva Piñata... gosh!!!! must be a video-game rat to play that... so hardcore!
    Edited by 1 at 20/04/07 @ 17:58

  • smelly #92 5 years ago

    "MS have a shed load of titles coming out this year including Bio Shock, Mass Effect and Halo3 = all of which will be AAA titles.
    It is about the games and MS are clearly ahead in that area. "

    LMFAO!!!

    Those games only appeal to hard core gaming geeks on forums. They're not system sellers.

    I'm gonna sound like a blatent fanboy here, but the numbers speak for themselves.. look at the sales figures compared to length of time they've been out. The wii will outsell the 360 by the end of the year, and the "disaster" which is the ps3 wont be too far behind.

    Now I happen to think the 360 is a good machine - and indeed better than the ps3. But that wont stop it from dropping to 3rd place.. Which'll mean that you can expect the xbox 1080 within 2 years.

  • smelly #93 5 years ago

    >Where's the innovation found in PS3 games like LittleBigPlanet?

    YEAH!! Like that's gonna sell..

  • miiiguel #94 5 years ago

    smelly: once again right.... who bought Halo's anyway ? a couple of harcore gamers - a huge flop, wansn't it ?
    MGS and Killzone! That's more likely! True un-hardcore games!

  • mysteryfaceuk #95 5 years ago

    We all need to remember that the people who visit sites like this, and especially those of us who really do have a keen enough interest to contribute to discussion forums, don't make up the majority of people who buy games. Few people take the time to look at reviews or know enough about the diferences between the different consoles. When the 360 came out a lot of casual gamers would have been attracted by the cool graphics but with the PS3 showing alongside it that's no longer a hook. The Playstation brand and Sony is far more well know. I know people who even think the 360 and Wii are made by Sony simply because Sony so dominates in this industry. All that's stopping the 360 going the way of the original Xbox is the price of the PS3 and that will drop.

  • Kbone #96 5 years ago

    I am sure they'll start bringing more innovative games out down the line.
    There is Viva Pinata which is quirky and bizarre...I must admit Little Big Planet looks very cool....there is no disputing the PS3 has alot of potential.

    My main gripe is this guy is writing off a company who have revoloutionized online game play and brought about 2 damn good console experiences against heavy competition.

    If it werent for MS, Sony might have grabbed a monopoly on the market and we wouldnt be where we are today with services/experiences offered.

    MS are renound for FPS and racing games - purely because that's what the majority of us want. Once the heavy hitters have passed, there willl likely be more diversity.

    Edit - Smelly, youre clearly a twat and live on a forum using phrases like 'LMAO' whateve tha fu** that's supposed to mean...Bio Shock was included for best at show E3 '06. as was Mass Effect for best rpg and Halo 3 well you know what thats all about right?
    Edited by 1 at 20/04/07 @ 18:10

  • miiiguel #97 5 years ago

    mysteryfaceuk: don't u worry! our company will win! PS3 rulez! Sony! Sony!

    PS3 has the many family games: RFoM; Motorstorm; Def Jam: Icon; Call of Duty... you name it... we don't like those FPS's...!
    Edited by 1 at 20/04/07 @ 18:06

  • mysteryfaceuk #98 5 years ago

    MGS and Killzone are hardcore games but MGS can sell in every territory, including Japan, whereas games like Halo 3 and Bio Shock won't. I admit that Halo 3 will outsell Killzone and will probably be better but Final Fantasy XIII will outsell Blue Dragon several times over.

  • miiiguel #99 5 years ago

    yellowtruck: Yeah! we bought the cristal ball on the same place!
    More units sold = more fun for the end user!
    Edited by 1 at 20/04/07 @ 18:08

  • miiiguel #100 5 years ago

    ...and if PS3 doesn't outsell 360 we have our martires to sacrifice themselfs on every 360 shelf!

    Can't you see that Halo is a flop that only appeals to hardcore game-foruns users ? Can't you see that 360's Guitar Hero is tooo hardcore ? - you can even download new music pack from the internet!!! so geekish!
    I bet if Bioshock debuts on PS3 it'll be oh so much better - like we've seen with Splinter Cell and CoD, and Def Jam - why ? It's a Sony!

    The Church of Sony!
    Edited by 1 at 20/04/07 @ 18:14

  • TRUTH #101 5 years ago

    muftak:
    "Microsoft are winning. "

    bullshit they are .

    A: a one year lead

    b:flooding the market with poorly made consoles.

    c:Nintendo are doing way better at this present time in terms of time vs ratio sales.

    How many games on Wii in Europe & USA hit the top 10 - None! except Zelda...The games are not selling so well on Wii; probably because most are crap to average at best...XB360 seems to always hit the top 10 fairly often, both in EU & USA - where the console is selling well and as are the games: Gears Of War, Dead Or Alive 4, Dead Rising, Lost Planet, Project Gotham, Elder Scrolls, Fight Night 3, Call Of Duty, Ghost Recon, Rainbow Six etc etc all 1m or 1m+ sellers...And with recent releases eg: Crackdown, NBA Homecourt, Guitar Hero also selling well too...So pleeeease; if possible, name me 1 GC tiltle that has sold well (not Zelda) ?

    A point that you might like to know is that XB360 has the best ratio game sale. I hope you haven't forgotten the Gamecube: sold plenty, not enough decent games, not enough good games, not enough excluisves, support dried up! - didn't end a winner, did it!

    Also don't forget major games coming to 360: Forza 2, Blue Dragon, Bioshock, Alan Wake, Too Human, Mass Effect, Halo 3, Overlord (Codemaster rts/adv game)Fable 2, Lost Oddysee...all games that push forward in game play, graphics, ideas in playing, sound, physics, A.I etc - so much more then absolutely anything the Wii is possible of. Oh lets not forget Half Life 2 this year too.

  • mysteryfaceuk #102 5 years ago

    But Half Life 2 is also on the PS3. And let's not forget it's several years old. Converting that is as daft as Microsoft converting Halo 2 now to run on Vista. Oh, wait. They have!

  • JediMasterMalik #103 5 years ago

    Jesus this place disgusts me sometimes.

    None of this should effect anyone, fanboys of any system should not care how much money a company makes or doesn't. If they put out crap games and make loads of money, who cares, don't buy If they make great games but lose loads of money, who cares, just buy.

    I'm getting sick of the whole popular line that because something sells better it is better, or that if something is not gonna sell like Halo it should not be made. I would much rather have LBP than Halo 3. I guarantee it will not sell as well.

  • Benzino #104 5 years ago

    I have to agree and disagree with Roger Ehrenberg. First of all, MS please dont go and copy Nintendo, they are a disatereous game company, i feel like they have been releasing the same games for the last 15 years, i mean how many Mario games have there been?

    But back onto the topic, i see what he is talking about in terms of money, MS have f***ed up. I don't think they truly understood the games market when they released the Xbox. You got that feeling that they thought if they released the best console in terms of hardware, that it would sell by its self. Of course that is not true, its the games that sell the console.

    Before everyone starts jumping in saying thats what Sony have done with the PS3, well its not. You see MS didnt seem to have a long term plan with the Xbox, and if they did they soon abandoned it. There is nothing wrong with releasing a console with top of the range technology, as long as it'll outlast the competition. You take the PS2 for example, out about a year before the Xbox, was less powerful but yet is still been supported to this day, with games coming out for it every month. Was the PS2 value for money? Hell yeah. Now look at the Xbox, MS stopped supporting it over a year ago, afaik, why? So they could release the 360 before the PS3 and get previous Xbox owners to buy it. Was the Xbox value for money? No.

    With the Xbox, people's excuses seem to be that they had to change people's mindsets about MS. Bulls**t, all they had to do was release a console with good games, better than games on the PS2, and they didn't. Lets not forget, Sony entered the console market against gaming giants such as Nintendo and Sega, who not as rich, had huge fan bases, and blew them out of the water with their very first console, the playstation, making a profit as well. So you dont need two or three attempts to release a profitable console. MS just messed up.

    @ Smelly: You are joking about LittleBigPLanet right? Of course its gonna sell. IMHO anyone who has an interest in games would like to be able to make a game or level themselves. LittleBigPlanet allows you to do that in a simple way, and if you dont like making the levels, you can just play them. And if you say that doesn't look like fun, then you are a) A MS fanboy b) A MS fanboy c) A MS fanboy :p
    Edited by 2 at 20/04/07 @ 18:31

  • TRUTH #105 5 years ago

    But the innovation is in 360's exclusives: Mass Effect, Alan Wake, Lost Oddysee, Bioshock, Fable, Overlord, Too Human...Mass Effect & Bioshock where both praised at E3, Overlord gave everyone a smile with excitement...MGS 4 has been hinted again it could come to 360, though the next Splinter Cell is an exclusive to 360.

    PS2 came out with no compietion, it had dvd which was a major selling point back then...but know the things have changed. Sony's market has continuesly shrunk, this inc it's gaming section. The PSP has not been the major blow to DS, this is due software not selling to well on PSP, right now the PS3 is more hype then anything - http://uk .xbox360.ign.com/articles/617/6... - The long term build up for PS3 is very risky. It has taken almost 5yrs to get the best of the PS2. It will probably take longer and more expensive to get the best for Ps3, thought i personally can't see an major jump in the system as Sony have claimed. PS3 too pricey, too less quality exclusives, not a major leap Sony have claimed, not selling to hot, looks ugly, not many games at present.
    Edited by 2 at 20/04/07 @ 18:39

  • miiiguel #106 5 years ago

    Halo is a flop! It's only played by a couple hardcore gamers: Major Nelson and Phil Harrison!

    They are thinking of not releasing it anymore, such are the losses of the previous verisons.

  • L0cky #107 5 years ago

    'I'm getting sick of the whole popular line that because something sells better it is better'

    C'mon, the Spice Girls album was legend!

  • miiiguel #108 5 years ago

    getting confused again...
    selling more is good or bad? I mean if it's Halo is bad, if it's MGS is good? Am I getting it ?
    Edited by 1 at 20/04/07 @ 18:25

  • Kbone #109 5 years ago

    Miiiguel, you clearly dont have a brain or youre just trolling.
    The consoles sold are loss leaders, the software attach rate is where the money is made. Selling more consoles means more software sold.

    Youre an idiot.

  • JediMasterMalik #110 5 years ago

    @Wonga - I was making a point. Or does the fact that I hold a PS3 game over a 360 game bother you? We all have our preferences, but this thread is more then preference, it's downright idiotic. From any side of the argument.

  • miiiguel #111 5 years ago

    I confess I'm in troll-mode right now.

  • The-Bodybuilder #112 5 years ago

    >"Would we have been better served by returning the extra cash to shareholders"

    Translating to...

    I need more millions.

  • miiiguel #113 5 years ago

    this whole buisness confuses me: why there are dozens and dozens of 360 games beeing announced every week when the console is such a flop?
    Why don't they contract us, the fanboys, to run their buisness... we know better.
    Capcom would be Sony exclusive for eva, end eva and eva... and eva.
    Edited by 1 at 20/04/07 @ 18:35

  • wired009 #114 5 years ago

    Any company's financials matter terribly. Remember the Dreamcast! R.I.P. DC.

  • miiiguel #115 5 years ago

    yeah, yeah, and Sega is much bigger than MS... so expecto 360 to die soon.
    Sony is cashing millions upon millions with PS3. It's crazy out there, everyone is rushing to get a PS3, it's a cash cow! users are happier and happier!
    PS3 will rule!
    Edited by 4 at 20/04/07 @ 18:52

  • smelly #116 5 years ago

    "Smelly: You are joking about LittleBigPLanet right? "

    Nope. It'll be another katamari/ico. Think, who does it appeal to?

    The casual gamers are alienated becuase it's different to what they're used to (racing/shooting & sports games), so they wont buy it.

    The "hardcore" gamers wont buy it because it's "kiddy", and they want to feel like grown ups while playing their toys.

    The only people it'll appeal to are hardcore clued up gamers who dont mind their games being "kiddy". And those people are more likely to own a nintendo.

    Those types of games are like arthouse movies. Those in the know, know they're better movies, but they never do very well. As the majority of people dont want good movies, they want the latest no brainer action movie.

  • Qbert2k #117 5 years ago

    Wonga wrote :"Yes but the xbox came out what, 5 years ago? It's made HUGE losses. It'll have to do a MAJOR turn around to start bringing in profits, so maybe 10 years into the future with the xbox 5 - everyone will have one... It then might start going into profit "

    That's just how much it costs to launch into the console business against Sony, who were in their prime. It was never going to be easy, but they've got the metal to go through it. Quitting the games industry now when things are improving for them would be dumb, that would just be throwing all of that money away. Instead, They can see it through until it becomes profitable, there's not many companies who can take that, but Microsoft are not like most companies are they?

    Yes, I agree. That's why I laugh when people talk about Apple or Sega re-entering the console market. MS are probably the only company with the vested interest and enough billions in cash reserves to seriously contend with Sony and that was for last gen. What it would cost to try and enter at this stage? Much more than $4billion I bet.
    Edited by 1 at 20/04/07 @ 19:03

  • The-Bodybuilder #118 5 years ago

    >"Any company's financials matter terribly. Remember the Dreamcast! R.I.P. DC. "

    It took YEARS for sega to get in that position.
    MS has already made a better strategy in it's second console.

    Oh, and I wonder, would smelly think the same as littlbigplanet if it were on the wii?

  • dolphan #119 5 years ago

    "and if you look right at the numbers you'll see that selling 3 millions it's actually better that 10 millions, because with 10 millions you'll have more loss as MS is selling 360 loosing money in each unit, as Sony is, so it's better to sell less."

    This is sarcasm right? Bad sarcasm, but it's got to be sarcasm. Because otherwise I just lost faith in the human intellect.

  • DUFFKING #120 5 years ago

    Who gives a shit if it's a failure, I quite like my Xbox 360 and have no intention of getting any other console for a long time.

  • smelly #121 5 years ago

    >Who gives a shit if it's a failure, I quite like my Xbox 360

    Ditto to that.

    I dont see why this kinda thing worries people (or makes them happy).

    He's purely talking from an investment pov anyhow. He's not a gamer/developer.

    The 360 and ps3 are so close together powerwise, that regardless which one "wins" the other will get pretty much every game from the other converted to it anyhow. So who cares?

  • smelly #122 5 years ago

    "Oh, and I wonder, would smelly think the same as littlbigplanet if it were on the wii?"

    *Sigh*.. how comes you cant say anything without the fankids thinking you're slagging off their machines.

    Nope. I'm NOT saying it looks crap. I think it looks good.. READ MY WORDS.

    I just dont think it'd sell for the same reasons that katamari, ico, or indeed pikmin (all of which were great games) werent exactly system sellers.

  • miiiguel #123 5 years ago

    dolphan: bad sarcasm + making bad jokes of esoteric brand support + friday night work + 360 changed my life.

    By the way, google the name of the guy, he hits MS in every field not only gaming, he hates MS for some reason, or he maybe right, duno...
    Edited by 1 at 20/04/07 @ 19:25

  • Overlush #124 5 years ago

    As much as I like the Xbox, 5.4Bn loss is bad...period

  • miiiguel #125 5 years ago

    What the heck are you talking about?
    Esoteric brand support, that's what...

  • DUFFKING #126 5 years ago

    You're on an internet gaming site, and you weren't expecting an all out fanboy war, in every single comment section?

    Tisk tisk.

    ;)

  • orcane #127 5 years ago

    >>"Would we have been better served by returning the extra cash to shareholders"
    >
    >Translating to...
    >
    >I need more millions.

    QFE

    why do people rather troll and fling mud at each other in annoying console fanboy forum wars, instead of commenting on stuff like that?

  • smoothn00dle #128 5 years ago

    Roger Ehrenberg, this guy has a point.

    "after five years and over $21 billion invested all they've got to show for it is $5.4 billion of cumulative operating losses"
    Edited by 1 at 21/04/07 @ 04:13

  • immateriaux #129 5 years ago

    The XBox 360, going by current sales trends, will sell less than the Xbox (as will the PS3 of course, sell less than the PS2). So, what sensible business would continue to make losses just so they could, in turn, sell less products? The investor guy is essentially right, it's a borked business plan born from the arrogance of Redmond's "Loads of Money" brashness.

    It will do nobody any good, ultimately, bar perhaps the egos in Microsoft, if they finally do win the day and leave consumers with no choice what platform to play on.

    Though at least Nintendo is proving that may not be the case at all, thankfully.

  • bonker #130 5 years ago

    I read quickly through most of this thread while formulating my eventual post in my head but there's so much fucking shite been spoken that I can't be arsed ...

    No school tomorrow, huh?
    Edited by 1 at 20/04/07 @ 20:13

  • immateriaux #131 5 years ago

    Dobbie, the facts don't back that up. Simply.

    (edit: Actually, now that I think on your comment a bit more ... you're not making any sense at all ... you have it reversed!)
    Edited by 1 at 20/04/07 @ 21:21

  • Ginko #132 5 years ago

    The XBox 360, going by current sales trends, will sell less than the Xbox (as will the PS3 of course, sell less than the PS2). So, what sensible business would continue to make losses just so they could, in turn, sell less products? The investor guy is essentially right, it's a borked business plan born from the arrogance of Redmond's "Loads of Money" brashness.



    LOL. You need to go look up the Xbox's sales in 17 months compared to the 360's. The 360 is way, way ahead. Nevermind the original Xbox had a $100 price-drop only 6 months after launch.

    The developers probably LOVE the current 5.7 software attach rate. The 360 has had 14 million seller games thus far, and it's not even two years old! That's like a dinner bell for developers/publishers.

    360 will be fine. Microsoft will be more than fine.
    Edited by 1 at 20/04/07 @ 21:25

  • Harrihotpants #133 5 years ago

    I wish Capcom would bring Resi Umbrella Chronicles out for the 360 to reverse it's fortunes.....

  • mysteryfaceuk #134 5 years ago

    Halo 3 won't boost 360 sales the way the first game did. That was a truly groundbreaking game when it was launched and the reason I bought an Xbox. As it was a launch game it was bound to sell a lot of units. Although Halo 2 was a big smash it probably didn't boost sales of the Xbox as most people who would want to buy that game already had the machine. The same will be true to a lesser degree with Halo 3. It will sell units - no doubt about that - and maybe even convince people like me torn between getting a PS3 or 360 to get the latter - but there are several PS3 exclusives coming out around the same time that may damper its machine selling power.

  • Ginko #135 5 years ago

    360 is exactly neck and neck with Xbox sales after 17 months at this point.

    However, 360 hasn't had a Halo yet.



    As of December, they had shipped 10.4 million 360's. That's 14 months.

    Looking at VGCharts.com, MS shipped 8.62 million by March 2003. That's seventeen months.

    As I said, they're ahead of the Xbox.

  • Calgon #136 5 years ago

    First off this guy isnt worth reporting about...

    I skimmed through some cringe worthy quotes, but second: he said the Entertainment division as a whole not just Xbox hardware sales.

    This could include XNA, any other dev tools, peripherals, Xbox Live(you know, that thing that cost them around 2billion to get it going?), Zune ect.

    Third they broke even at the asking price for the 360 hardware some time ago so they arent loosing money on each one sold, if anything they are making profit and now I can see why they arent so eager for a price drop(I dont blame them... but they will do it when they have to).

    Its FUD, the Xbox brand is on the UP... theres no denying that. If not 1st then a close 2nd place at the very least this gen is where I see MS heading... 360 is just too strong(already sold enough to make publishers comfortable, people are noticing its actually a really good machine with some great games... looking more favourably compared to its competitors at this point). One thing MS need to do now is make sure reliability stays back on track from now on, other than that I have faith in MS' ability to entertain the most to make 360 my console of choice this gen. Wii still has to prove itself to me, PS3 Im not so interested in.
    Edited by 1 at 20/04/07 @ 21:52

  • Ginko #137 5 years ago

    Ginko, shipped figures are worthless. This article even points to channel stuffing.


    The channel stuffing article was written by the same guy. It was a blog, and actually speaking to people who work in retail say it's unfounded.



    "Software giant Microsoft has announced its financial results for the quarter and financial year ended June 31, revealing firm figures for the global installed base of Xbox and its targets for the coming year.

    By the end of the financial year, Microsoft had sold 9.4 million Xbox consoles worldwide - far, far lower than some estimates recently, which had put the figure well north of the 10 million mark, with one piece of research suggesting that it was as high as 13 million."

    [link url=http://www.theregister.com/2003/07/19/latest_ xbox_figures_revealed/
    ]http://ww w.theregister.com/2003/07/19/la...[/link]

    That's after 20 months on the market, and they were at 9.4 million sold according to Microsoft. Microsoft has always used shipped to retailer (sold in to retail) figure. Seeing as how they hit 10.4 million 360's in 14 months...again, they're ahead.

    Edited by 1 at 20/04/07 @ 22:26

  • Les #138 5 years ago

    Quite a reasonable analysis me thinks. Especially with its other sources of revenue under pressure, MS can't afford loosing money like this on a sustainable basis. It's been long since it's been the investors' sweetheart. After years of analysts saying Apple should become like MS, it turns out it's the other way around, oh the irony!

  • smelly #139 5 years ago

    Why are people quoting console sales figures? That makes no difference to the point the bloke was making.

  • captain-future #140 5 years ago

    Shane Kim (the financinator) to the rescue!

    Yes they "invest" in their strategy, but if they get the "Lufthoheit" over the living room then they simply win the whole pie.

    What if in the NEXT next-generation consoles Sony makes the hardware, Microsoft delivers the OS and Nintendo makes the games? Scary, ain't it?

  • Ginko #141 5 years ago

    Why are people quoting console sales figures? That makes no difference to the point the bloke was making.



    The point he was making had been refuted already, and people moved in another direction in attempt to spread FUD. Bottom line: the 360 is in fact doing better than the original Xbox, bringing in far more revenue, having sold more in same amount of time, and the upward trend looks to continue.

    Ehenberg, or whatever, is trying to say that the 360 is a failure. Failing ventures don't see year after year growth, or account for 2.96 billion in revenues. Japan is NOT as big a player as the author wants you to believe.

  • Vic #142 5 years ago

    Funny, I'm sure it didnt take Ninty or Sony 10 years to become profitable.

    All those people spouting crap about "investments" seem like they're pursuing an exercise in damage-limitation. Ultimately, MS is responsible to its shareholders.

  • Xerx3s #143 5 years ago

    I don't understand why someone who calls himself marketing analyst can spawn 4 pages. Did we ever do this before? Tjesus.

  • smelly #144 5 years ago

    "Ultimately, MS is responsible to its shareholders."

    Havent you read anything on this thread? Of course they're not.. they're responsible to the fanboys who post on forums... (apparently) :-)

  • Xerx3s #145 5 years ago

    God some of this stuff is just sad. Complete essays with a near zealot undertone even.

  • Ginko #146 5 years ago

    All those people spouting crap about "investments" seem like they're pursuing an exercise in damage-limitation. Ultimately, MS is responsible to its shareholders.



    Microsoft's stock price is fine so long as they turn a profit. Seeing as how they made billions of dollars last year despite the loss, I'd say their stockholders are fine. Also, their stockholders are probably excited to see the amount of growth the division experiences every fiscal year. They can obviously see where its going and know that it will pay off long-term. Sonyphiles need not apply.

  • immateriaux #147 5 years ago

    The 10 million sold in December is projected, by Microsoft themselves, to be only 12 million in June - that's a fair drop off in sales. It may pick up at Christmas but there will be real competition then with the PS3 too to consider - nevermind the real winner on the current market, the Wii. And post Christmas it's just going to plummet again anyway.

    Last time round there was sustained buying on the Xbox, it was the last released, the "newest". That's not true this time, it's the "oldest" already and there's apparently a massive drop off in sales occurring which points to the ultimate possibility that the 360 will not match the over all sales of the XBox.

    Personally, I don't really care about this as Willy waving graphic excess is not my thing, always been concerned more about innovation and gameplay which neither the 360 nor the PS3 has done much to extend or enhance so far. Certainly, yet another version of Halo isn't a step in that direction.

  • The-Bodybuilder #148 5 years ago

    I'll be honest smelly, I just wanted to see if I was on your ignore list. :-)

  • The-Bodybuilder #149 5 years ago

    I hope people are aware that immateriaux is a ninty fanboy? Not exactly trustworthy, now is he?

  • immateriaux #150 5 years ago

    I'm a ninty fanboy???? Given that I don't own neither a gamecube nor a wii, I'd say I was a bit of a shite Nintendo fanboy really. Where do you get your info from? Got a link???

  • Vic #151 5 years ago

    @ Smelly

    Lol! But the games are great...I think the point is lost on some.

    @ Wonga

    Is the 360 doing that much relative to the Xbox though? It was released ahead of the competition unlike the original Xbox, which is its main advantage. However, over the first year, the original Xbox actually sold better than the 360, and it also had a high attach rate like the 360. 10.4m sold in 18 months is far from spectacular. 360 is only selling well in the US. Its flopped in Japan, and is merely selling OK in Europe. To me, the only significant step MS has made is designing a console that can be scaled down more easily in terms of production costs.

    The question is, can MS move beyond the hardcore? People keep mentioning Viva Pinata, but it was a commercial flop. Will Mass Effect sell that well to the MS's hardcore userbase? Thats debateable.

    What I wonder is how the 360 will sell when Wii and PS3 actually have some quality games. Ninty is famed for delivering AAA titles, and Sony has more first-party games in development than Ninty and MS put together.

  • Vic #152 5 years ago

    @ Ginko

    Microsoft's stock price is fine so long as they turn a profit. Seeing as how they made billions of dollars last year despite the loss, I'd say their stockholders are fine. Also, their stockholders are probably excited to see the amount of growth the division experiences every fiscal year. They can obviously see where its going and know that it will pay off long-term. Sonyphiles need not apply.

    This argument is retarded, because it ignores the fact that MS's stock price would be higher if it wasnt for the games division hemorrhaging money. You dont think investors would prefer more valuable stock, to seeing MS selling some consoles and creating 'mindshare' but not actually making money? Their patience will only last so long.

    Whats funny is that all the people saying that 'MS have a bottomless pit of money so share price isnt important', arent investors and immediately sweep aside such concerns, because they couldnt give a shit. Why dont they give a shit? Its because they dont own the shares themselves...

  • Vandrius #153 5 years ago

    I tell ya one thing though, I think the decider between Sony and MS will come down to home entertainment prospects. They'll both have good exclusives and all that, its a given.

    A family friend was recently asking me what blu-ray player he should buy, and I told him to get a PS3 because its cheaper than any other player (plus keeps the kids happy).

    I also have friends who use the 360 to stream content to their tv.

    I gotta ask though, which extra "Home Entertainment" functionality of the above 2 examples is most open to the general Joe Bloggs Technophobe?

  • smelly #154 5 years ago

    @vic : (quote) "Lol! But the games are great...I think the point is lost on some. "

    Reet.. Im a shareholder..

    tell me how "great" your games are.. and therefor why its "okay" im loosing money.

    Put it another way.. nintendo have been making great games (and imho the BEST games ever made)... But yet.. the cube.. investing in that wouldve been moronic...


    see?

  • AOFanboi #155 5 years ago

    "PS2 came out with no compietion"

    What, is this "Bash the Dreamcast Day"? The DC famously launched on 9.9.99 aqnd by the time the PS2 launched had great titles like Soul Calibur and Crazy Taxi. What it didn't have, and which killed it, was backward compatibility and DVD playback.

  • ChoedanKal #156 5 years ago

    I agree with AOFanboi. The Dreamcast was definitely competition for the PS2,
    but the bigger reason why Dreamcast failed was because of the lack of financial muscle at SEGA. SEGA nearly went bankrupt because of the Dreamcast. Peoples awareness of the Dreamcast wasn't very good because SEGA couldn't market it enough due to a lack of money. Meanwhile SONY was rolling out the Hype-machine, heavilly promoting the PS2. Many people didn't even know there existed a Dreamcast.

  • Nithron #157 5 years ago

    Who cares about shareholders?
    I mean, *really*?

  • bugmenot #158 5 years ago

    Long term startegy or not, this guy has a point: MS is still losing heabily on games division (by the billions, /not/ chump change), and at the same time, Sony is still raking profits (see their latest results, they're gaining more money than ever), despite a (supposedly) heavier subsidies on their next gen platform.
    Add to that that their "last gen" platform, the PS/2, is still outselling every other home console (Wii included for March), and notably outselling the 360 two to one, also keep in mind that PS/2 is still the console pushing the most game sells, and it's clear that MS has a problem with their strategy.

    Sure 360 is still doing well against 360, but that's a battle for the hardcore rich gamers, the mainstream market is owned by Nintendo and Sony, MS isn't even a player there. Now look a few years down the road, and what do you see? A cheaper PS3, and hundreds of millions of PS2 users "upgrading" to it (along with more than a few 360 owners getting one).
    That's no good.

    Finally, add to this that PS3 has completely killed the MS Media Center market 'which wasn't going strong, granted), and with BluRay wiining the HD wars things look bleak for MS (Walmart just announced a $300 bluray player, that combined with bluray already outselling HDDVD by a fair marging, the outcome is obvious).

    For investors, what you have is something that looks like a failure waiting to happen, and they probably think that using all those billions to outright buy Nintendo f.i. would have been a much better investment (Sony's too big, but all the money spent on the XBoxes could have bought Nintendo).

  • Harrihotpants #159 5 years ago

    nintendo's recently finished fiscal year is showing sales of £4.1bn and as always exceptional profitability, so the losses ms have suffered wouldn't even get close to an acceptable buying price, even if nintendo were for sale.

    interesting idea though, would certainly get ms into the handheld market quickly...

  • immateriaux #160 5 years ago

    @dobbie. I didn't say your facts were wrong, I said they do not support your conclusion.

    @bcolter. If the shop next door had a PS3, a Wii and an 360, which would I pick? Yes, maybe the Wii - it's the only one offering me something that I can't already do and it's easily the best value package overall at this point. However, it does need more games so I remain ambivalent.

  • TRUTH #161 5 years ago

    But the innovation is in 360's exclusives: Mass Effect, Alan Wake, Lost Oddysee, Bioshock, Fable, Overlord, Too Human...Mass Effect & Bioshock where both praised at E3, Overlord gave everyone a smile with excitement...MGS 4 has been hinted again it could come to 360, though the next Splinter Cell is an exclusive to 360.

    PS2 came out with no compietion, it had dvd which was a major selling point back then...but know the things have changed. Sony's market has continuesly shrunk, this inc it's gaming section. The PSP has not been the major blow to DS, this is due software not selling to well on PSP, right now the PS3 is more hype then anything - http://uk .xbox360.ign.com/articles/617/6... - The long term build up for PS3 is very risky. It has taken almost 5yrs to get the best of the PS2. It will probably take longer and more expensive to get the best for Ps3, thought i personally can't see an major jump in the system as Sony have claimed. PS3 too pricey, too less quality exclusives, not a major leap Sony have claimed, not selling to hot, looks ugly, not many games at present.

  • kangarootoo #162 5 years ago

    @Nithron

    "Who cares about shareholders?
    I mean, *really*?"

    You do, and I do, and everyone on here does. Its just that most of the time we don't understand the system well enough to realise it.

    If games don't make money shareholder are unhappy, so they don't invest, which means there is less money with which to make games, which means there are less games and/or the production quality drops, which means gamers are upset.

    I know as gamers we continue to hold this idea that the primary purpose of a game is to entertain the eager fans, and that somehow that saintly goal should come above all else. But this is real life, where profits are an absolute requisite and quality, frankly, is optional.

  • Khanivor #163 5 years ago

    bugmenot theories aren't based on conjecture but fantasy. If you can't even manage to read websites correctly and hence note that it's a $300 HDDVD drive that Wallmart are rumored to be releasing in Q4 then don't be annoyed when the rest of your post is viewed with incredible scepticism.

  • Scientist #164 5 years ago

    "God some of this stuff is just sad. Complete essays with a near zealot undertone even."

    Imagine having to sit in a pub with these people. Most childish, ill-informed nonsense ever.

  • Lacero #165 5 years ago

    ""Who cares about shareholders?
    I mean, *really*?"

    You do, and I do, and everyone on here does. Its just that most of the time we don't understand the system well enough to realise it."

    Add to that everyone old enough to have a pension, or equity investments.
    Edited by 1 at 21/04/07 @ 15:31

  • immateriaux #166 5 years ago

    dobbie, I can't believe you are sticking to your point: the current market is completely different to the market the original XBox found itself in after 12 months, you cannot seriously make a direct comparison with sales of the XBox, which was competing only with the highly successful PS2 and needing to play catch up (hence aggressive pricing) with the 360 which had a head start on the competition, making it's original price point less relevant (given there was no other 3rd gen competition).

    And are you making an index related comparison even? What two prices are you comparing and for which packages?

    Irrespective of that, anyhow, at this point the 360 is receiving competition, not entering competition, from two (not one) consoles. Further, the PS2 popularised consoles dramatically, reaching new markets and the XBox claimed it was technically superior... now, the 360 is the technically inferior one to the newly launched PS3 (be it marginally so or not, that's the perception) and the market is in general, anyway, less enthusiastic with either console (given both Sony and MS have lowered their sales projections recently) - it's the "two and a half" gen Wii that is the one capturing the "general" market's imagination. And "Halo", that OLD game, is no way going to have the same impact on the console - everybody's played it by now that wants to. A third version of it is hardly as exciting now is it? Add in too the fact that people are still buying the original XBox, as they are PS2s, the market is being split five ways now. It's conceivable to even add the DS lite to that too.

    And so on and so on. It makes no sense to claim that because the 360 is twice the price of the old Xbox it will, de facto, ultimately sell more. Completely different playing field now compared to what was then.
    Edited by 1 at 21/04/07 @ 16:23

  • Ginko #167 5 years ago

    you people feeling for the investors keep overlooking one glaring fact, that the revenues of the Home and Entertainment division has grown year after year, the most recent fiscal year experiencing 76% growth. That's HUGE. The revenues accounted for 24% of all Microsoft revenues. Again, HUGE. Costs going down are inevitable, and revenues are set on an upward trend as the userbase grows. Anyone want to guess what the end result is going to be?

  • L0cky #168 5 years ago

    'If games don't make money shareholder are unhappy, so they don't invest, which means there is less money with which to make games, which means there are less games and/or the production quality drops, which means gamers are upset. '

    Yet the article is about an investor saying that MS appear to be flying in the face of the shareholders. It's the gamer who would benefit.

    Obviously if games on the whole don't make an ROI then it's gamers who lose out, however, as Ginko pointed out games as an idustry makes massive (and growing) returns; the choices of individual publishers and investors is moot, other than the chaff they choose to produce.

    99.9% of shareholders are not an informed group with direct involvement in games. They are in a completely different system and looking only for their ROI. Sometimes a moron like Roger Ehrenberg will wonder why he's not making billions instead of millions, take a small peek at the industry he invested in and then jump the gun with the kind of comments he made in the article.

    This is why I don't care about the shareholders.

    Besides, the stock market as a whole is a terrible system that's run away with itself; which is a massive topic and massively off topic, so no more references to pensions and equities please :p

  • immateriaux #169 5 years ago

    you're missing the point ginko - no one is ignoring the fact that MS has a revenue stream, the article is saying investing 21 billion to make a 5 billion loss is indicative that MS is not targeted at realising fully realistic potential revenues, which may make investors impatient etc. especially now that MS stock is not as attractive, in itself, as it once was.

  • Carrybagma #170 5 years ago

    Fish fingers or sausages?

  • Les #171 5 years ago

    "Microsoft's stock price is fine so long as they turn a profit. Seeing as how they made billions of dollars last year despite the loss, I'd say their stockholders are fine."

    Sorry, but that's bullshit. Investors don't care about "profit" as it's in the past, it's accountant terminology. Investors care about future cash flow. MS's future cash flows are under pressure, that's why their stock doesn't perform as well as it used to.

    MS's biggest problem with 360 is that they haven't managed to attract new people to the video game market, they just took customers from Sony and Nintendo. That's not enough for healthy cash flows in the long run.

  • The-Bodybuilder #172 5 years ago

    >"Fish fingers or sausages? "

    That depends on what the shareholders think.

  • The-Bodybuilder #173 5 years ago

    >"Thats less games, and less innovation for the end user to enjoy.

    Understand?"

    /Looks at 2006 list of games for all platforms.

    Nope. I don't get it. 2006 is looking to be one of the best year of games releases for all consoles (unless you're a wii owner living in Europe).
    I can't see where all the pessemism is coming from.

    Oh well.

    /goes to play VT3 online.

  • Ginko #174 5 years ago

    "Sorry, but that's bullshit. Investors don't care about "profit" as it's in the past, it's accountant terminology. Investors care about future cash flow. MS's future cash flows are under pressure, that's why their stock doesn't perform as well as it used to."

    And Microsoft said from the very beginning that it was a long-term investment. Bach reiterated that point very recently when he said it wouldn't be until June 2008 when they finally turn a profit. In other words, Microsoft has a good idea when they will see a return on their investment, and seeing as how they're still in the game then I'd say they're pretty confident of that return.


    "you're missing the point ginko - no one is ignoring the fact that MS has a revenue stream, the article is saying investing 21 billion to make a 5 billion loss is indicative that MS is not targeted at realising fully realistic potential revenues, which may make investors impatient etc. especially now that MS stock is not as attractive, in itself, as it once was."

    No, you're missing the point that the revenue stream is growing. It's becoming a viable business and a significant form of revenue for Microsoft. Nobody will argue they lost a lot on the original project (6 billion), but it seems they've gone to certain measures to curtail that loss seeing as how we're already 17 months in to the 360 and that loss hasn't budged much. In other words, they're on the verge of a turn around...short sighted analysts can't see around the bend, however.

    Anyone who knows how Microsoft works will know their investors understand long-term investments. Research it sometime, and learn something.

    Edited by 1 at 21/04/07 @ 19:20

  • Ginko #175 5 years ago

    ---------------------------------
    The reason I wrote that the Xbox was a disaster for the games industry as a whole was simply this:

    If a platform holder loses money hand over fist (the way that Microsoft was on Xbox), so do almost all of the developers/publishers serving that platform.

    The console business works on the basis that the platform holder makes money by licensing software for their machine, every unit sold = revenue for them regardless of who publishes it.

    Yes, MS took a hefty loss on the hardware, BUT, if overall software sales were high enough in overall volume that wouldn't have been a major problem.

    They weren't though. Literally a handful of Xbox titles shifted 7 figures unit counts over its lifetime. The vast majority sold south of 50k. NPD figures showed what a bloodbath it was.

    Everybody along the publishing/development chain lost money. And as many of the companies involved didn't have the war-chest of cash that Microsoft had, they went to the wall.

    The Xbox was a nice machine, don't get me wrong, but the way that Microsoft bullied their way into the market was appallingly destructive to the industry as a whole. They could always "take the hit" in terms of overall losses, but the same couldnt be said for many of their partners.

    The end result is an industry reduced to a cluster of super-publishers who are more risk averse than ever.

    Thats less games, and less innovation for the end user to enjoy.

    Understand?
    ------------------------------------------------------------ -------------


    Why is it that you are basically ignoring the measures Microsoft has done with the 360? You mention the Xbox, and no one can argue it cost Microsoft a lot of money, but what of the current business strategy?

    Wouldn't someone in the financial sector refer to the original Xbox as sunk costs, that is the cost of getting established? Most all business have start up costs that they don't see a return on immediately, and it varies on the endeavor undertaken. The ambtion of strong-arming their way in to the seeminly crowded video game market was bound to cost money, especially against a juggernaut such as Sony and long time contender Nintendo. Nevermind the investment in Xbox Live (some 2 billion was it, and growing no doubt), buying up studios (Bungie, Rare, Lionhead), buying in marketing sectors (Massive (400 million was it?)), and now the Zune is part of the Home and Entertainment division as well.

    I don't care to dive in any further, but I have to ask you what the long-term outlook is? Where do you see Microsoft's Home & Entertainment division in the next 5-10 years given their CURRENT circumstances?

  • immateriaux #176 5 years ago

    @ginko, your highly simplistic, one dimensional, understanding of what is happening at Microsoft really points to the fact that it is you that needs to do some research here.

    @dobbie, don't start being even more stupid, I made no claim that entering early would doom sales of the 360. I pointed out (among some other points you've ignored) that it's a different playing field now - is it too complex for you to understand that?
    Edited by 1 at 21/04/07 @ 22:09

  • Foxclose #177 5 years ago

    This article has got nothing to do with games and their development.
    213 comments of pure BS people pretending to be business experts, if you ask me.

    Article should stay on gamesindustry.biz.
    Edited by 1 at 22/04/07 @ 00:13

  • smoothn00dle #178 5 years ago

    @Foxclose

    This is a business issues, not about games. If people think games will get any console companies out of trouble, they shouldn't work for a console company. For example: Xbox360 fav game Gear of War wasn't exclusive to Xbox360 at the beginning. It was money and business reason that persuade Epic to land Gear of War on Xbox360.

    M$ offer Epic
    M$ paid for all marketing cost, at least million
    Free royalties for Gear of War and next Epic game
    Free development support and tools
    Edited by 1 at 22/04/07 @ 05:24

  • wayn3h #179 5 years ago

    Foxclose, I agree totally. Some of the comments are truly cringeworthy.


    Speculate and talk bullshit more plz??!

  • kangarootoo #180 5 years ago

    @Foxclose

    +1

  • chupachups #181 5 years ago

    "you people feeling for the investors keep overlooking one glaring fact, that the revenues of the Home and Entertainment division has grown year after year, the most recent fiscal year experiencing 76% growth. That's HUGE. The revenues accounted for 24% of all Microsoft revenues. Again, HUGE."

    Growth is easy when you start from zero. All it tells you is how much larger the company is now compared to a year ago, so if it didn't exist a year ago then that's technically an infinite growth percentagewise.

    And revenues are different from profits. Revenue is just how much money you're taking in, whereas profits are how much money you get to keep.

    Anyone can generate huge revenues by virtually giving away expensive hardware, which is what Microsoft did after heavily cutting the price of the original Xbox. The problem with that approach is that it means you don't make any profits, in fact you make huge losses.

    Size isn't anywhere near as important as profitability, which was the moral of the whole South Park "underpant gnomes" thing: unless you have a plausible way to make profits, a big business is pointless and unsustainable.
    Edited by 1 at 22/04/07 @ 12:59

  • immateriaux #182 5 years ago

    @dobbie, :yawn: , no I didn't - I made a point about comparison of original price points ... anyhow, this is indeed getting silly. It's a different playing field now but we can, according to you, make direct, non-index linked comparisons anyhow. Just try staying away from anything to do with economics when you grow up, for everybody's sake.


    @chupachups, well said.

  • Glitch #183 5 years ago

    FUCK SAKE! A MS investor talking to the press about Microsoft gaming a "disaster", ROFL he must be a proper thick cunt, probably got money off his "daddy" to invest in something he read off the back of a milk carton, no one listen to the prick as he obviously has no idea that MS is beating PS3.

  • Les #184 5 years ago

    "In other words, Microsoft has a good idea when they will see a return on their investment, and seeing as how they're still in the game then I'd say they're pretty confident of that return."

    I think they are indeed, but I fear they're only kidding themselves...

  • Ginko #185 5 years ago

    You people can talk this down all you want. Microsoft is here to stay, and it won't be long before they start to make a profit. Those who can't see but five feet in front of themselves need not apply.

    I didn't need the revenues versus profit talk, I'm a business major afterall. I know the differnce and pointed it out several times in this thread.

    Immatueurix, you haven't contributed one thing, and you haven't backed up your opinion with any reason other than because you say so.



    "Growth is easy when you start from zero. All it tells you is how much larger the company is now compared to a year ago, so if it didn't exist a year ago then that's technically an infinite growth percentagewise."

    That figure wasn't from zero or when the Xbox project started, it was over the previous financial period. Do some research.

  • Les #186 5 years ago

    "You people can talk this down all you want. Microsoft is here to stay, and it won't be long before they start to make a profit. Those who can't see but five feet in front of themselves need not apply."

    First, no company is "here to stay": most companies exist for a short period, other remain a little longer, none remain forever.

    But nobody is questioning that MS will stay in the console business. What the analyst is saying is that if they ever want to make the xbox into something profitable, they should focus on a broader demographic than just the hardcore gamer. Doesn't sound too ridiculous IMHO.

  • Scientist #187 5 years ago

    "I didn't need the revenues versus profit talk, I'm a business major afterall."

    Business major. What an embarrassing term.
    Not smart enough to study a real subject?

  • immateriaux #188 5 years ago

    :D I knew it was easy to get "business" qualifications these days, just didn't realise they were handing them out on XBox live???

  • smelly #189 5 years ago

    "Business major. What an embarrassing term.
    Not smart enough to study a real subject?"


    Erm.. you do realise that people with mba's tend to be the highest paid people?

    What's a "real" subject anyhow?

  • Scientist #190 5 years ago

    "you do realise that people with mba's tend to be the highest paid people?"

    Since when did salary equate to intelligence?

    Edited by 1 at 23/04/07 @ 07:34

  • miiiguel #191 5 years ago

    MS please get these guys on your payroll, they know the buisness like you don't. If you have them you'll quit that 360, maybe you quit everything...!
    It's funny that Sony fanvoys keep talking about the success of... Wii...! PS3 is doing great isn't it? oh... of course... the "TBA" games..., allways the "next year" shit!

    Do you realize you do sound a bit (just a bit...) ridicule, in particular my m8 Les - MS get this guy!!!
    Edited by 2 at 23/04/07 @ 11:04

  • Les #192 5 years ago

    miiiguel,

    This thread isn't (or shouldn't be) about silly fanboy affiliation. It's a fact xbox isn't generating positive cash flows, so financially it's a disaster. That’s the point of the analyst and it’s quite hard to argue with that. What he doesn’t say however is that the 360 is a poor machine or that Live sucks. That would be stupid. So how exactly your little MS fanboy heart can be hurt by this news is beyond me.

  • miiiguel #193 5 years ago

    My m8 Les, I like u, I really do..., what I find funny is this "MS hate" thing, and I know what I'm talking about, I used to be a Linux freak, I still use but SuSE at home, but soon have to install Win, just bought a Zune. By the way guys, I got so excited by the chance of getting one (gf went to US) that I forgot to check on the compat issues of the service here in Europe, do you know if I can get away with it?
    But back to the point, "MS hate": MS is evil because it makes a lotta money, and MS sucks because they sell 360 too cheap, so there's no real reason is it (as you all agree 360 IS a good product/service), but a "skin issue towards MS", isn't it ?
    I use to be in that "thing", but then I thought, what the heck am I doing? Am I going not to have a blast with a 360 because of politics? better leave that stuff to the voting booths...

    About the "doom squad": theres a portuguese saying that goes (no offense please):
    "the dogs bark, but the train keeps rollin..."

    Later.

  • d9930380 #194 5 years ago

    All this talk about the reasons why game developers going to the wall was because of MS is BS. I worked at one that went to the wall and reason was simple, as consoles became more powerful, it allowed "talented" people to really shine. Those that didn't have those people in either management, design, art and technology found it difficult to compete where only games rated 90% or over made any money.

    The difference between premier league and division one became VERY apparent. Therefore you get games like GTA making obscene amounts of money and most games not selling at all.

    I think that now the XBox and PS2 are being fased out. There will be alot more people buying 360s and PS3s. I think the big change is when they do, they will probably be more likely to choose a 360 over a PS3 due to the games that are on it.

    I know PS3 is technically superior however in a world where game developers aim at the lowest common denominator, most developers won't put in the time to produce the best the PS3 can offer so then it comes down to price, exclusive content and online functionality. 360 is the best in all these categories. What Sony had where it's following and perception that the best games where on Playstation, I think that's gone now. That's the main problem for them. The truth is Sony don't make good games where MS Game Studios have snapped up all best US/UK studios. This and the Japanese developers are moving over to multi-platform.

    The other thing is, can Sony survive a disastorious PS3 cycle, sony relied on PS profits.

  • d9930380 #195 5 years ago

    BTW - I'm not totally sure that MS isn't glad the Wii exists. The people who buy those consoles buy alot less games and Nintendo is happy no matter what because they make a profit on hardware.

    Think about it if you make a loss on the machine but break even after the person buys 4 games. Would you not prefer to sell no consoles (and therefore leave it to Wii) to the people who only buy 2 or 3 games total? MS's audience is the hardcore, that's the audience it wants because they buy ALOT of games and therefore they recoup their losses on the hardware.

    Nintendo have effectively created a two tiered market as Wii is really last-gen hardware. MS might reap the rewards of this later by maybe in a few years when 360 is cheaper to produce and someone has released a Wii-like controller then it can move into the consumer market and hold that provding a pure profit revenue stream.

  • d9930380 #196 5 years ago

    I wish people would stop the PC vs Consoles debate. They are two entirely different markets.

    Some people like sitting at a desk alone with a monitor/keyboard and mouse. Others prefer the Big TV, Surround Sound, Sofa, Joypad experience.

    It doesn't matter how similar the hardware is inside the box, that will never change and therefore they won't impact on each other. If PC sales of Halo where going to impact the sales of 360 to any large degree, do you think MS would allow it?

  • miiiguel #197 5 years ago

    me loves 360, not because of the HW but because of the service (games and mainly Live), that's the real next-gen to me - the services!

  • miiiguel #198 5 years ago

    does anyone have an answer to me regarding the Zune issue ?

  • Les #199 5 years ago

    Throw it in the bin and get an iPod...

    Now that's an anti-MS statement. Saying they don't make money, when they don't has nothing to do with sentiments. Hope eventually you'll be able to tell the difference...

  • Penguinzoot #200 5 years ago

    miiiguel - Les' suggestion notwithstanding, I don't know anyone that owns a Zune. You could try creating/posting a thread in the main fourm. Perhaps someone there will know.

  • miiiguel #201 5 years ago

    Les: in my point of view I wish they sold the 360's for 100Eur, I couldn't care less if Bill Gates cessed to be the richest man on the planet.
    Penguinzoot: don't know the meaning of "notwithstanding"..., about u'r sugestion, k... I'll try it.

  • miiiguel #202 5 years ago

    Penguinzoot: I learnt the meaning it's something like "nevertheless". Anyway, my gf has an iPod, it wouldn't be a new thing... you know what I mean..., thrilless.
    Maybe I'll fell sorry for cashing out 200Eur, and I know that bitter taste... I bought a PSP.
    Edited by 1 at 23/04/07 @ 17:22

  • miiiguel #203 5 years ago

    bcolter: is not just that (alltough gf wouldn't allow any more cables and stuff on the living room), but the "insert DVD / sit on couch / play - thing" after 10 hours in front of a PC at work.

  • Lov3 #204 5 years ago

    He's right. When exactly is the Microsoft Gaming team going to start earning money? And even if when they do, how long until they break even?

  • chavatar #205 5 years ago

    "you do realise that people with mba's tend to be the highest paid people?"

    Since when did salary equate to intelligence?

    Since when are the most intelligent people the most successful? Priorities.

    At least that's what the marketing dept's ppt slides told me
    Edited by 1 at 23/04/07 @ 20:50