In the court proceedings between Apple and Epic Games, Xbox vice president Lori Wright was asked to testify. In her testimony, Epic Games lawyer Wes Earnhardt asked Wright about Xbox’s overall profit model. Wright revealed that he has never made a profit on selling Xbox consoles.
Although this does not seem to be a good business model, Wright revealed that Xbox is profitable by selling software and subscriptions. Wright’s testimony is intended to establish that game companies need to charge publishers 30% to sell their games, while smartphone companies such as Apple do not.
This is actually not uncommon in the video game industry. In February of this year, “Forbes” reported that although game profits hit a new high, PlayStation 5 was selling at a loss.
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Not all video game consoles have been selling at a loss in history, on Twitter, Niko Partners senior analyst Daniel Ahmed said that the current sales of Nintendo Switch are profitable for Nintendo. Under normal circumstances, in the continuous update of game consoles, the value of losses will be reduced, and sometimes manufacturers will eventually realize hardware profits.
However, Wright did not disclose how much Xbox is losing each generation, especially when it comes to the Xbox Series X era. Of course, this generation of consoles has Xbox Game Pass, which can help the company increase profits. According to reports, last month, the service had more than 23 million subscribers.
