Microsoft’s Xbox was already quite profitable despite selling the hardware at a loss. New documents from the Epic vs. Apple court case have revealed some numbers.
The last generation, Microsoft lost the crown for the best-selling console to Sony after they had success with the Xbox 360, but this doesn’t mean that Xbox was a failure for them. Their gaming division continued to generate record revenue and by 2020, they were making enough to surpass their Xbox 360 years.
Most of it is thanks to the sales of software and add-ons on their store from which they get a 30% cut, but as far as their hardware is concerned, Microsoft Xbox VP Lori Wright confirmed that they were selling it at a loss during the Epic vs. Apple trial.
Other documents that emerged during the trial have given a better idea of how much profit Xbox was generating. Although they cover 2019 and not the most recent years, they still give a good idea of the profit generated by Xbox. Some of the information, including Xbox profit, was redacted while others like the profit generated by Sony and Nintendo were shown.
Document from Apple vs Epic revealing profit for Publishers off games and services
Tencent – $6.3B
Apple – $5.2B
Sony – $4.1B
Google – $3.2B
Netease – $2.4B
Nintendo – $2.3B
Microsoft – ($1.6B – $2.3B range)
Activision / Blizzard – $1.6B
EA – $1.2B
Epic – $1.08B pic.twitter.com/aXneihwgc3
— Benji-Sales (@BenjiSales) May 5, 2021
Keep in mind that the profit listed above doesn’t include any losses offset for the hardware. This was explained by Niko Partner Analyst Daniel Ahmed.
To clarify the above. $2.2bn is not Microsoft's final profit on gaming. That's just gaming software and services profit.
You have to account for the loss that Microsoft takes on hardware, so the actual profit from Xbox would be much lower (or even negative)
— Daniel Ahmad (@ZhugeEX) May 5, 2021
This obviously applies to Sony and Nintendo as well, although, unlike Microsoft or Sony, Nintendo is not selling their hardware at a loss and generate a small amount of profit from it.
This puts in perspective how much each major console manufacturer is earning from their gaming business. Nintendo just had a record fiscal year with sales of the Nintendo Switch almost reaching 85 million units, making it their fastest-selling system since the Nintendo DS. Microsoft also continues to enjoy a boost in revenue thanks to the success of the Game Pass and the Xbox Series.