Microsoft’s Technological Changes Directly Affect Its Gaming Brand
In what is likely to be a polarizing statement, Microsoft’s Xbox has never turned a profit. Respected technology journalist Paul Thurrott claimed as much after the company issued a new statement about revenue.
Emerging on NeoGaf, a new article seemingly counters Microsoft’s word regarding Xbox profit in 2017. The article is full of Thurrott’s own comments and analyses, a piece that subverts the success story painted by the company. Below you will find an excerpt, which reads as follows:
“One of the dirty little secrets of Microsoft’s Xbox/gaming business is that it has never actually turned a profit. So I was curious to hear Mr. Nadella utter these contorted words last night: “Our gaming business is now more than $9 billion, and growing profitably.” So. $9 billion is revenues, not profits. So growing means that revenues are growing. And growing profitably means … what? That the business is ‘becoming profitable’? Or is it just growing revenues positively? Was this a misstatement? What does that mean? Here’s my guess. He means usage and engagement are growing. Because I can state this with certainty: Microsoft’s gaming business is not profitable. In fact, it’s undergoing a digital transformation of its own.”
The “digital transformation” alludes to Microsoft and their revolving dance with Cloud-based technologies. They are currently in a transitional phase whereby they’re opting for newer tech over traditional software. And because they are at the forefront, this leaves the Xbox brand in a peculiar predicament. Hence, profitability refers to the console’s potential and not actual profits as a result of units and software sold. Not to say Microsoft is losing money, mind you.
The results of Microsoft’s digital transition may be witnessed in the highly anticipated Crackdown 3, coming later this year. As advertised, the game will rely on Cloud-based technologies to simulate high levels of destruction on the Xbox One. Whether the new technology is wholly beneficial to gaming will become apparent later down the line. Because of Microsoft’s switch, however, the console is in a bit of a limbo.