Microsoft Yusuf Mehdi spoke at the Citi Global Conference last Tuesday, telling the audience:
“The strategy will continue which is that we’re looking to be break even or low margin at worst on [Xbox One],” he explained, “and then make money selling additional games, the Xbox Live service and other capabilities on top.
“And as we can cost-reduce our box as we’ve done with 360, we’ll do that to continue to price reduce and get even more competitive with our offering.”
“You’ve seen us over the years constantly be focused on profitability and improving year over year,” Mehdi explained when asked about the profitability of the Xbox business and how it would weather the launch of the One. “There are different points in the cycle when you invest in new hardware.
“If you look at 360 that platform lasted for seven to eight years and it’s going to go for another three years. It’s incredibly profitable now in the tail.
“Some of these things take some time in the launch year in which you invest, and then they play out over time. We’re going to continue to invest in Xbox 360, and the two devices can work in concert. So it’s not like the day we ship Xbox One your 360 won’t work. We’ll continue to support it.”
“We’ve seen our Xbox Live subscription service continue to grow. We’re up to 48 million members now. We’re shipping more games than we’ve ever done before. Those are things I look to say, ‘hey we can grow not just top line revenue but also profitability.'”
Translation: We expect to make a profit on every device sold from Day 1. This is quite impressive, especially considering both Microsoft and Playstation were making a loss on their devices the last time the companies introduced their respective consoles.
Source: Games Industry