Ben Cousins, an industry veteran who has worked for video game companies like Sony, Electronic Arts and LIonhead, says that all major console manufacturers have lost vast amounts of money on the current generation of home devices.Speaking to Kotaku the former developer states, “Consoles like Xboxes, PlayStations & the Wii U are sold at a loss. It costs more to manufacture and distribute the device than it is sold for. Console manufacturers do this because they hope to make back the money from the license fee they charge for every game sold on the system.”
Cousins estimates that Microsoft has lost close to 3 billion dollars (2.285 billion Euro) because of the Xbox 360, while Sony has done even worse and spent 4.951 billion dollars (3.773 billion Euro) on the PlayStation 3.
Cousins believes that, in order to account for the big cost associated with hardware development and production, both companies sought to sell even more video games, which they have failed to do.
Even worse, many consoles were sold for a low price after serious hardware re-designs.
He adds, “Of those 70 million Xbox 360s sold, a large proportion (approx. 40%) were bought after the most recent price cut of August 2009. Of the 70 million PS3s sold, a large proportion (approx. 42%) were bought since the introduction of the PS3 Slim.”
Both Sony and Microsoft have always maintained that the current generation of consoles has been profitable for them when video games sales and accessories are taken into account.
Neither of them has yet announced information about the next generation of devices, which is expected to arrive later during the year.
A number of industry analysts believe that both the Xbox 720 and the PlayStation 4 will fail to find an audience and will generate huge losses for Microsoft and Sony.