360 Loses $1.26Bn in 2006 Alone To Fight Sony

October 14th, 2006, 01:10 Posted By: wraggster

There's a fascinating article up on Next Generation that drops this tidbit: the Xbox 360 Division lost $1.26 billion in fiscal 2006.

Why is Microsoft willing to put up with this? Defense:

"Remember that Microsoft partly entered the game console business for defensive reasons," Rosoff said. "The company was concerned that a PlayStation successor would become the default gateway to networked entertainment in the home--Ken Kutaragi promised as much--and cut into consumer PC sales."
He continued, "It's very hard to calculate the worth of a defensive business. I personally think Sony will have a really hard time with the PS3--fewer games at launch, $200 price premium, and yet they're losing more money per console than Microsoft is on the 360. More long-term, imagine no PlayStation 4 and how Microsoft might profit from such an environment."

The 10 million number that Peter Moore keeps yakking about is apparently the magic number of consoles sold that guarantees third-party developers to choose you are their focus, guaranteeing heavy royalties. Great reading.

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