All purpose sales and sales rumors/anecdotes thread next gen+

[Dave Baumann]

Presumably they would get something for selling it and company profit margins would go up.

Gross Margin percent will increase, gross margin dollars will decrease.

 

[Davros]

Can someone explain "cost of revenue" what sort of english is that ?

 

[Rangers]

Amazon or Google or any of the biggest MS competitors buying the Xbox brand is, needless to say, premature to even think about.

It's laughable anyway. None of those companies would really want the Xbox hardware nor should they.

If Xbox is going away it'll just go away, nobody is going to buy it. Perhaps the studios could be sold off piecemeal but even that is unlikely imo. Amazon is certainly not going to want expensive 150+ person studios for it's little Fire TV thing (isn't that thing already kind of a failure anyway?). Google's not much into hardware.

MS financial filing for their last fiscal year [ended on June 30]:
- "Xbox Platform revenue increased $1.7 billion or 34%, due mainly to sales of Xbox One"
- "Xbox Platform cost of revenue increased $2.1 billion or 72%, due mainly to higher volumes of consoles sold and higher costs associated with Xbox On"
http://www.neogaf.com/forum/showpost.php?p=124461899&postcount=1

So, $400 million lost on gross margin, that's without additional operating costs. Simply put, Xbone consoles are sold at significant loss for now.

First, your conclusion doesn't follow. We dont have enough information to reach your conclusion. The difference between revenue increase and cost of revenue increase does not mean it lost $400 million, you obviously cant just subtract the two figures and get net profit, I'm sure you're sophisticated enough to know that. Even the wording actually excludes that they are talking about Xbox One hardware (higher costs associated with Xbox One!=just hardware), even if you could just subtract the two. http://www.forbes.com/sites/insertc...he-xbox-one-will-break-even-or-make-a-profit/

September 5 2013

Many have wondered if Microsoft will have yet another change of heart and cut the price of the console ahead of launch, but new information says that’s probably unlikely. Xbox chief marketing officer Yusuf Mehdi spoke to GamesIndustry about the margins they’ll be making on the Xbox One at launch, and there’s little room for error.

“We’re looking to break even or low margin at worst,” he said. “As we can cost-reduce our box as we’ve done with 360, we’ll 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. 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.”

Basically Mehdi said in September they were aiming for break even or low profit on X1 hardware. Now unless you think removing Kinect and lopping off $100 made some major change to this paradigm (doubtful).

Has the Xbox brand lost money every year? I thought 360 was profitable in the end?

I stopped trying to keep up as much a couple years ago, but yes 360 likely was profitable as a whole project. I have some figures through 2011 that show a great increase in profit, and then the last years should be covered by Mehdi's statement. So yes, even after RROD 360 likely netted a billion or two profit. It lost a lot in the beginning, then made a lot at the end.

13% of Top Four revenue. 15% of the revenue of Office+OS+server. 10% of total revenue. That's certainly a notable piece of pie, although surely profitability is more important? What are the financials for each department's contribution to profit?

There must be some question about the worth of XBox, otherwise these calls for selling it wouldn't have started. Unless there are some really stupid investors out there who looked at the XBox division making nice profits and said they wanted it axed, there must be a decent financial argument for its removal. I suppose the argument could be that where the division is profitable, it'll drop in profitability going forwards but presently would command a decent price in a sale, so better to sell it while it's hot then when it's nearly defunct (if that's the prediction).

What investors are actually calling for this? Mostly I just see people on message boards doing it. An occasional armchair financial analyst at a Forbes blog or something is about the extent of it.

I just saw a blurb the MS has lost $1.7 billion on trying to make Surface a success. Xbox is probably the least of their problems, and I think it's probably about break even right now.

I think it's still pretty arguable why anybody except perhaps Nintendo (including Sony) is in the core gaming business. IMO it's pretty self contained and will never be hugely profitable (I recall Sony didn't net that much profit from PS2, obviously as successful as you could hope a console to be). Although, we know the old loss leading console model at least is over and these new mid range AMD boxes should be break even at first rather than big money losers like a PS2, PS3, or 360.

Can someone explain "cost of revenue" what sort of english is that ?

Financial English Seems pretty self explanatory to me. You get X revenue and it costs you Y to get that revenue. Y is cost of revenue. Basically just costs in a business, minus loan interest and tricky stuff like that.

 

[DuckThor Evil]

The numbers say that the Xbox platform went from:

$5.0B revenue
$2.92B cost of revenue

to

$6.7B revenue (34% increase)
$5.02B cost of revenue (72% increase)

It's not possible to gather from that, that One was sold at a loss. Evidence points out it wasn't, but margins have certainly taken a hit. That's not exactly news though.

 

[Dave Baumann]

Where is the source for this? Looks interesting....

MS's financial report. Its linked in the link that started this (again) pointless trail of discussion.

 

[Shortbread]

Amazon current 100 bestsellers (08/08/2014).

#1 PlayStation Store Gift Card
#4 Destiny Limited Edition PS4
#5 Destiny Limited Edition XB1
#6 Xbox Gift Card
#7 PS4 Game Console
#8 The Last of Us: Remastered PS4
#10 Mario Kart 8 Wii U
#12 Destiny XB1
#16* Diablo 3:Ultimate Evil PS4
#16* PS4 Destiny Bundle
#17 Destiny PS4
#18 WWE 2K15 Hulkamania Edition PS4
#32 Call of Duty: Ghost XB1 ($23)
#38 Assassin’s Creed: Black Flag XB1 ($24)
#39 XB1 Game Console (non-kinect sku)
#40 Madden NFL 15 PS4
#41 Diablo 3:Ultimate Evil XB1
#42 Halo: The Master Chief Collection XB1
#43 Hyrule Warriors Wii U
#55 Destiny Ghost Edition XB1
#56 Battlefield 4 XB1 ($27)
#59 Wii U 32GB Mario & Luigi Game Console
#66 WWE 2K15 Hulkamania Edition XB1
#69 Sleeping Dogs: Definitive Edition PS4
#80 Watch Dogs PS4
#82 Call of Duty PS4 ($39)
#85 Assassin’s Creed: Black Flag PS4 ($42)
#95 Madden NFL 15 XB1
#97 Assassin’s Creed Unity PS4

*Tied

Any takes (guesses) on next week’s NPD numbers?

 

[djskribbles]

Sure, why not.

PS4 - 215k
XB1 - 140k

TLoU:R - 280k

 

[Shortbread]

PS4 - >220k
XB1 - 115k
Wii U - 55K

 

[Silent_Buddha]

MS financial filing for their last fiscal year [ended on June 30]:
- "Xbox Platform revenue increased $1.7 billion or 34%, due mainly to sales of Xbox One"
- "Xbox Platform cost of revenue increased $2.1 billion or 72%, due mainly to higher volumes of consoles sold and higher costs associated with Xbox On"
http://www.neogaf.com/forum/showpost.php?p=124461899&postcount=1

So, $400 million lost on gross margin, that's without additional operating costs. Simply put, Xbone consoles are sold at significant loss for now.

A complete non-issue, see below. The XBO console isn't being sold at a loss (positive if slim margins).

Can someone explain "cost of revenue" what sort of english is that ?

In business there are two costs associated with products that are generally tracked.

Cost of Goods Sold and Cost of Revenue.

Cost of Good Sold (COGS) is the cost directly associated with production. So basically manufacturing (parts, fabrication, assembly, etc.). This is what most people think of when they think of how much it costs to make something.

Cost of Revenue is the more important value as that includes all costs associated with the sale of the product except for indirect costs like salaries. So this would include the above (COGS) plus things such as distribution, marketing, and anything else that directly impacts the cost of selling the product.

So, for example, Digitally Distributed software has virtually no COGS (hence being almost irrelevant) but does have a Cost of Revenue associated with it. Which is smaller than the Cost of Revenue associated with physical goods which includes a large chunk of COGS as well as larger distribution costs.

In the case of the XBO. It was the launch of a new product, hence a massive marketing campaign would have contributed significantly to the Cost of Revenue but doesn't impact the COGS. So lower margins combined with larger costs associated with launching the console = larger growth in Cost of Revenue versus Revenue.

As long as revenue is maintained, margins will increase as the costs associated with the launch shouldn't impact future Fiscal Year reports. Although it's possible there may be future marketing pushes, although unlikely to be as large an expenditure as that used for launch.

PS4 had something similar. If you'll remember, in Sony's Fiscal report it was mentioned that profit/margins were down significantly partially due to costs associated with the launch of the PS4. That was a reference to increased Cost of Revenue.

Regards,
SB

 

[DJ12]

I think with all the deals they've offered thus far to stimulate the market for the consoles, they will be selling at a loss overall.

Maybe at $499 with no games the Kinect version would sell for a profit. Titanfall Bundle was definitely sold at a loss, as were the temparary sales run on Amazon and the Microsoft store (among other places)

 

[DrJay24]

Any takes (guesses) on next week’s NPD numbers?

Basically 4/5*July with a bit taken out of the XB1 for the new SKU bump that will have faded.

PS4: 215k
XB1: 140k

Edit: Now I see I put the same thing as djskribbles!

 

[djskribbles]

Great minds think alike.

 

[Shortbread]

Rumor: TLoU Remastered sold 1.5 million within 24hrs

http://www.insiderp.com/the-last-of-us-remastered-day-1-sales.html

The Last of Us : Remastered has made a mega impact on sales based on just leaked SONY ledger for day 1 sales. The game has sold over 1.5 million copies worldwide in just 24 hours of its launch across the globe. This makes Last of Us :Remastered the highest sold day 1 game on next gen platforms. The leaked SONY ledger accounted for roughly 70% of the retailers worldwide, and we do not know if the consolidated actual number from digital and retail have surpassed 2 million copies on just the launch day ? Approximately 25% of the sales came from digital transactions over PSN. The game made some serious impact on hardware sales. Over 60,000 PS4 :Last of Us hardware bundles were sold across Europe, and approximately over 200,000 consoles were sold across North America and Europe between 31st July, 2014 to August 1st 2014. PS4, as of August 2nd ,2014, is just ~100,000 units shy of reaching the glorious 10m units sold worldwide.

Just as a reminder insiderp was the first to break Infamous Second Son sales, before Sony mentioned them, and they were right. But regardless, a pitch of salt with unofficial company statements.

 

[DieH@rd]

Interesting numbers. So far I choose to believe only those software numbers.

Sony Gamescom keynote is tomorrow at 19h CET, and they will most surely mention TLOU and PS4 sales numbers.

 

[London Geezer]

Interesting numbers. So far I choose to believe only those software numbers.

Sony Gamescom keynote is tomorrow at 19h CET, and they will most surely mention TLOU and PS4 sales numbers.

If it's true they're only 100k away from 10M consoles sold, I'm sure there will be a big announcement.

 

[Deleted member 86764]

If it's true they're only 100k away from 10M consoles sold, I'm sure there will be a big announcement.

That's also more than a million a month - quite astonishing really.

 

[ramr]

MS financial filing for their last fiscal year [ended on June 30]:
- "Xbox Platform revenue increased $1.7 billion or 34%, due mainly to sales of Xbox One"
- "Xbox Platform cost of revenue increased $2.1 billion or 72%, due mainly to higher volumes of consoles sold and higher costs associated with Xbox On"
http://www.neogaf.com/forum/showpost.php?p=124461899&postcount=1

So, $400 million lost on gross margin, that's without additional operating costs. Simply put, Xbone consoles are sold at significant loss for now.

your math is off.
1.7 / 0.34 + 1.7 = 6.7 Billion in revenue
2.1 / 0.74 + 2.1 = 4.93 billion in cost
therefore XBOX platform made 1.77 billion

 

[Globalisateur]

If it's true they're only 100k away from 10M consoles sold, I'm sure there will be a big announcement.

If true they should have hit the 10M consoles sold milestone just those last few days:

as of August 2nd, is just ~100,000 units shy of reaching the glorious 10m units sold worldwide.

But that 1.5 millions TLOUR figure (on the first day) seems a bit excessive to me, even accounting the bundles and strong digital sales.

 

[Shortbread]

If it's true they're only 100k away from 10M consoles sold, I'm sure there will be a big announcement.

If MS suspects or knows Sony has reached the 10 million mark, expect them to announce the EU XB1 price cut and the Xbox family number.

 

[Wynix]

A little early but my prediction(after seeing the "TLOU" news) is:

PS4 - 275K
XB1 - 150K