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View Full Version : xbox losing money? is that predatory pricing?


scm1001
03-30-2004, 06:03 AM
My understanding is that the xbox is losing money, even before the latest price cuts, but that microsoft is financing it as a long term venture. Given that, and given the resources that microsft has, is that legal? OK they are number 2 at the moment, but if sony are forced to cut their prices to the point where they are losing money and maybe have to drop the playstation, would that break some laws?

erislover
03-30-2004, 06:57 AM
I have heard a lot of contradictory talk on this subject. It seems MS is selling the XBox console at a loss, hoping to make it up in software sales. That's not unbelievable or especially predatory. I believe some printers are sold at or very near to cost, the thought being they can make it up on the outrageously priced ink. Even forgetting that speculation, many stores sell products at a loss. They call them "loss leaders", the idea being that you get people into the store to buy the super-cheap and they end up buying other things where you make your profit. Fast food restaraunts are good for this, actually. Many of their sandwiches generate almost zero or even negative profit, but they make it back in spades on drinks (most expensive part of the drink is the cup) and fries.

Since there are still three major competitors in the video game industry who are all very capable, it doesn't strike me as particularly predatory even if it were true. Sony owns a huge share of the market, and that isn't likely to change even if XBox2 takes first place. Nintendo has shown a willingness to break out of its "kids only" theme (even though it never truly adopted it, it did make that impression) and has been working hard to rekindle old friendships and secure deals with big name companies.

Rex Fenestrarum
03-30-2004, 07:13 AM
NEWSFLASH: Sony and Nintendo lose money on their console sales too. So did Sega back when they had the Dreamcast. It's standard operating procedure in teh video game market. Of course, with most new release games costing $49.99, it doesn't take very long for the companies to make a profit back from their loss. Even if MS or Sony doesn't make the game themselves, they make money due to licensing fees the game houses pay to put out the game on their platform(s).

scm1001
03-30-2004, 08:35 AM
tx for the info. Forgot about the licensing. Does that mean that if I want to develop an Xbox game I have to pay microsoft? (I think they should pay me as it is the games which sell the box). How much of each 49.99 game goes to MS?