Xbox division revs down 11%, 5.2 million 360s sold in Q4

Microsoft quarterly earnings rise 60%, but Entertainment & Devices Division sees three-month revenues fall to $2.9 billion; Xbox unit sales down 13% despite price cut; Xbox Live now 23 million strong.

Less than 24 hours after Nintendo reported revenues for the last nine months of 2009, Microsoft announced its earnings for the October to December quarter of last year. Overall, the software giant saw record revenues of $19.02 billion, an increase of 14 percent. Net income--aka profit--was an impressive $6.66 billion for the quarter, a figure company officials credited to the rapid adoption of Windows 7 and brisk PC sales.

Despite being cheaper, holiday quarter Xbox 360 unit sales fell 13% to 5.2 million.

Unfortunately, Microsoft's overall success did not carry over to its Entertainment and Devices Division, which makes the Xbox 360 and Zune multimedia player. Year over year, the department's revenues fell 11 percent from $3.26 billion to $2.90 billion, with Xbox 360 and PC game revenue dropping by 12 percent, or $295 million. (Non-gaming revenue, including the Zune, fell 8 percent, or $59 million.) Part of the reason for the decline was the Xbox 360, which saw quarterly unit sales fall 13 percent to 5.2 million consoles despite price cuts to both its Elite (now $300) and Arcade (now $200) models.

Microsoft also repeatedly blamed the lower game earnings on unfavorable year-on-year comparisons "due primarily to the release of two significant games in the [holiday] quarter of the prior year." While never identified by name, the two titles were likely the first-party 360 exclusives Fable II and Gears of War 2, released in October and November of 2008. Major 360 exclusives for the 2009 holiday season included Forza Motorsport 3 and carryover sales of Halo 3: ODST, which launched in late September.

Microsoft also still claims its Xbox 360's software attach rate is an industry high of 8.8 games per Xbox 360. However, it conceded that "attach revenue declined [from Oct.-Dec.], given the challenging year-over-year comparison."

That said, Microsoft's report had some bright spots for the Xbox 360 platform. The company announced it decreased "cost of revenue" by 23 percent, or $478 million, mainly due to lower 360 production costs. That figure was somewhat offset by increased royalties to Xbox Live business partners, which were brought about in turn by a surge in popularity of the 360's online service. Some 23 million people have signed up for Xbox Live, an increase of 35 percent year over year, according to Microsoft. The company did not break out how many of the 23 million were paying Xbox Live Gold subscribers.

Speaking with analysts in a post-report conference call, Microsoft CFO Peter Klein said he expects Entertainment and Devices Division revenue "to trend with the rest of the game industry, and full [fiscal] year revenue should be roughly flat." Looking past the end of Microsoft's fiscal year on June 30, Klein said that the company is looking forward to the launch of Project Natal but offered no forecast of the motion-sensing system's financial impact.

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320 comments
kornogaphy93
kornogaphy93

Bill gates is the richest man alive.. why does he keep charging for online?stop being so greedy you jew.

KrazzyDJ
KrazzyDJ

Sony must be banking heavily on GT5 and its motion controller system, which is the area of gaming where I guess we're going to see some real competition between Sony and Microsoft !!

junor69
junor69

@vodoo mate weare do you live hear in Aus its $80 and the point is i have to buy $Xbox+Game + net and then gold and all it dose it lets me play with other players and thats all. yes its true millions are crary enough to pay for it and as long they do it MS will keep milking them if they stoped it would be free no wait you did pay for consol and the game and net. How about Ms starts charging Weekly fee for owning the game how about $10 its only $10 not a big deal. You see my point you buy some thing and then you have to pay again to use it. In the end it doesn’t mater if it cost $1 or $500 but it maters what you paying for when you already payed for it. Don't get me wrong MS and Sony are very good at ripping customers of they only want you money not your loyalty or support anyone thinking differently must be seriously naïve.

Vodoo
Vodoo

[This message was deleted at the request of a moderator or administrator]

Vodoo
Vodoo

@ junor69 There's MILLIONS of people "crazy enough" to pay for gold. It's $49.99 for a year. Less than the price of 1 game... for a YEAR!!! I don't think that makes people "crazy" to pay a small amount for a superior online service.

Shinkada
Shinkada

@maxsteel86 The 360 is well known for shooters, yes, but so is the PS3. It barely has any more RPGs than the 360 does. Though I am sure it has a lot of Japan-exclusive RPGs that I simply haven't heard of, if they were that big then the West would have at LEAST got wind of them (like how we're soon to get that White Knight game from Lv5.) And while a lot of the people who owned PS1/2 are the people buying 360's/PS3s (durp, PS2 owner speaking) I honestly believe a massive amount of those people went on to buy a Wii. The economoy could have something to do with it, but I don't think that much. It's made jobs /somewhat/ harder to find, and a few more people have lost their jobs, but for the most part it's not going to stop gamers from buying a new console. Another issue could be the fact that they're still releasing games for the PS2, which means it's still pushing hardware, and non-gamers who have one don't realize it's pretty much dead. Honestly, the idea of me being an MS rep made me lol pretty hard, I'll give you that. Why would an MS rep argue that the 360's potential fanbase, unless it somehow captures some of the casual market from the Wii, is almsot dry?

Shinkada
Shinkada

@HerbalVideogame The 360 is backwards compatible to around 95% of games, which is more than the PS3 can say. The 360 is also around the same size as the PS3 Slim, let alone the original which is, as we all know, the size of a fridge. Don't give a toss who you're talking to, buddy, if you say something dumb then I'm going to shoot it down.

junor69
junor69

I would like to see how many people are crazy enough to pay for gold. Pay for console +games + net connection and then pay to play you game. Thanks but no thanks

frazzle00
frazzle00

@HerbalVideogame LOL :) I always wondered what the Black Crows' album sounds like. Good? Sure you hate the Xbox 360. That's ok. You're entitled to hate what you hate. Unfortunately though you're missing out on some good gaming. Oh well that's your prerogative! And btw I'll take the 360 exclusives over the PS3 ones and yes I have both sets :).

HerbalVideogame
HerbalVideogame

@Shinkada I'm not your buddy. And what do you know about the stability of hell? The 360 does have a terrible design. It's based off of a Dell 7200 or something series tower. It's coding makes it unable to be shrunk in size without making it a completely different system and thus unable to make it backwards compatible. As IF you are NOT a fanboy calling me a fanboy. I am a fanboy, and I rock against crap, and that crap is the Xbox 360. Yeah, it's got GREAT exclusives i'd LOVE to play, but I don't touch junk. I wasn't even talking to you. Did you see @Shinkada on my last post??? NO. It was @frazzle00. You'll know when I'm talking to you because it will say @Shinkada.

maxsteel86
maxsteel86

@Shinkada, *sigh* you're not getting me. Firstly I'd like to point out I own 150 shares (thereabouts) in MS so of course I want the 360 to do well. So no, I dont have something against the 360. The games library you mention. When you hear the word "Xbox 360" what games jump to your mind? I'd say probably Halo and GTA4. That's the reason the 360 doesn't sell well in Japan. Its famous for its shooters (in general). People who bought the PS2 and PS1 are the same people who are buying the PS3 and Xbox 360. Therefore if they haven't sold around 100mil units yet, then no, the market is not saturated yet. You could blame the economy, that might be more true than saying everyone who wanted one has one already. Your listing of 360 games, put downs of the PS2's reliability (wasn't great but making it seem like half of all PS2s broke puts a dent in your credibility) amongst other things makes you sound like a die hard MS fan boy. Of course, maybe you just work for MS and want to put a positive spin on the whole thing. In that case, I guess I'll read your final comments in the next shareholders report. If everyone who wanted a 360 has one already, why hasn't MS shut down or at least slowed down 360 production?

falcOWNS
falcOWNS

13%!?! im surprised they r still selling these things! i thought by NOW everyone who wanted an xbox has one now, and those who couldnt afford it before now got one with the price drop. wat did u expect? everyone go buy a second xbox???

Shinkada
Shinkada

@maxsteel86, Blue Dragon, Infinite Undiscovery, Final Fantasy XIII, Lost Odyssey, Tales of Vesperia, Star Ocean, Magna Carta 2, The Last Remnant, Eternal Sonata, Enchanted Arms, Phantasy Star Universe. That's JUST j-rpgs, not mentioning other games that would appeal to them. Saying the 360 is nothing but shooters is pure evidence you DO have something against the 360. If you didn't you'd realize 90% of its games library is the exact same games as PS3; there's barely any exclusives anymore. Second point, I haven't looked at sales in ages since I don't really care. PS3 started finally selling? Good. Maybe MS will stop being lazy and go back to trying to secure good games for its console like when they first started dealing with Capcom. PS2 had a different userbase, yes. For one it had all of Japan, which probably would see the 360's sales almost double. Secondly it had the biggest library of casual games, which is now taken by the Wii. And finally, it had a lifespan of about 3-4 years, most of them broke by then and well past warranty, which means lots of people bought second or even third ones. I myself know several people on their second PS2's, one person on their third, and my own PS2 is approaching its final days. Again, nice try, but no cigar. @HerbalVideogame Break? Terrible design? That was fixed three years ago buddy, 360's are stable as hell now and that's still the only ammo you fanboys have.

Ozzie234
Ozzie234

Market saturation. Everyone that wanted an Xbox360 has got one now, and the sales are starting to show it. Completely natural.

HerbalVideogame
HerbalVideogame

@frazzle00 Consumerism is the only reason the Xbox 360 does well in the U.S. of @-holes. We buy and buy and buy, like there is NO TOMORROW, in fact, there might not be! I better go buy one! I've only got two hours left! I have to play Gears, Blue Dragon, Mass Effect, and all the other good exclusives before tomorrow, must spend my money, though I have to pay bills!! URGHHHH! Spend! Even tho it will probably break, I NEED ONE! Even tho it has a terrible design, I WANT ONE!...... And so all the CEO's of the gaming world make and make away, for all of the spendy spenders of the united middle class of America. It's AMORICA baby. AMORICA.

frazzle00
frazzle00

@maxsteel86 I think that nationalism does play a role here, although it's definitely not the only reason the 360 isn't doing well in Japan. Other contributing factors would be the games library (which you have pointed out) and brand name loyalty (which would explain why Sony is still more popular in the PAL territories). MS have done a lot to attract the Japanese gamer and whilst they still have a long ways to go they've definitely made some progress. The fact that they've already sold 39 million units of the 360 shows that they've made inroads into the general game market as well, and I think they'll regard this generation as a success for them, RROD issues notwithstanding.

maxsteel86
maxsteel86

@Shinkada, Here we go again with the nationalistic BS again. The reason the 360 sells poorly over there is simply cos of the type of games its loaded with. Its a well known fact that the Japanese aren't so big on shooters hence they wont really see a reason to buy it. So please, stop putting low sales down to nationalism. Second point, 360 is also regularly outsold by the PS3 in Europe. Unless your world exists solely between the Pacific and Atlantic oceans, that argument of yours is also wrong. Finally, you're saying that due to the different user bases, the 360 sales will be limited to near 30mil or so? Really?? Lets look at the previous generations: PS2 sales - 138mil PS1 sales - ~100mil Are you now gonna tell me that those consoles were aiming at completely different markets and audiences too?? If you're gonna reply, think long and hard next time and come up with some meaningful rebuttals. Or you could just do what I'm expecting you to do: "whatever" @everyone else, I got nothing against the 360. I just dont like dumb unfounded arguments

macwr
macwr

360,ps3 what ever!! Both systems are good. if ur a true gamer and love games u wouldn't be making a fuss about ur system is better than the other i own both systems and i love the games they have to offer. every time im in gamestop getting a game and i hear some 1 going on and on how this system is better than the other i just want to go and punch him/her in the face for being so IGNORANT!!!!!!!! And on the topic of this article MS didnt really loose much profit they all know they make some and loose some they will make up the difference in some other way (like jak up the price on xboxlive fees or charge u more for dlc and u will still pay for it cause u want to play games :) )

Shinkada
Shinkada

@maxsteel86, I never said the market was saturated. I'm saying a massive majority of people who actually want to own a 360 already have one. Why has the Wii sold 68m? There's a boatload of reasons, from Japan being nationalistic in their console choice - it's one of the only places in the world where the 360 is outsold by the PS3, let alone the Wii - to its incredibly broad potential userbase. On top of Nintendo fans, you also have hospitals who have bought into it, age care facilities, child care facilities, and a whole slew of other places with nary a gamer in sight. Saying the 360 isn't approaching its total sales because of the Wii's sales is like saying a book from a completely unknown non-fiction author isn't near its total sales because it isn't near Harry Potter's sales. Completely different audience, userbase, potential customers. Why did I even bother to reply to that? You think the Wii and 360 have the same potential userbase, you obviously don't have a clue. Try not being so aggressive as to call someone's comment 'idiotic' next time, or you may end up the one looking like an idiot when you're clearly wrong. Again.

grognard
grognard

@Darth_Slayer, Yep, that's the article. Thanks for not being as lazy as I am and looking it up! :)

maxsteel86
maxsteel86

@Shinkada, You're telling me that the market for Xbox360s is already saturated? How can that be? The Wii managed to sell 68mil units while the 360 is still around 20mil or so? Saturated market? Hardly. Considering the Wii is also more reliable. I'm no fan of the Wii but just wanted to point that out and destroy Shinkada's idiotic comment. Thanks

Shinkada
Shinkada

This article summarized: "Lots of people who bought a 360 are no longer buying a 360 due to owning a 360 which has caused the sales of 360s to go down."

Timmi245
Timmi245

Micro$oft has already taken $3105 away from me, they're not going to see a single penny from me again.

hatieshorrer
hatieshorrer

So MS only sold 5.2 million in the 4th quarter of 2009. MS probably sold about 10 million last year. Doesnt sound too bad to me.

Jaguar_Shade
Jaguar_Shade

I love news articles like these. It's a chance for idiots frothing at the mouth to come out into the light of day spewing abuse at each other. When will morons realize that something being 13% up or 13% down for a huge organization translates as NOTHING to you, the gamer. Unless you are a shareholder it impacts you about as much as pluto not being declared a planet. OH NOES!

BladeTrinity114
BladeTrinity114

@BigBacon87 This is so silly. You really need to just get a life and enjoy your console. Why bash 360? It's a great console, and so is PS3. Just stop whining and get on with what the consoles are for. GAMING.

snooker8th
snooker8th

Sad to see the 360 at its end so quickly. "Microsoft also repeatedly blamed the lower game earnings on unfavorable year-on-year comparisons "due primarily to the release of two significant games in the [holiday] quarter of the prior year." While never identified by name, the two titles were likely the first-party 360 exclusives Fable II and Gears of War 2, released in October and November of 2008. Major 360 exclusives for the 2009 holiday season included Forza Motorsport 3 and carryover sales of Halo 3: ODST, which launched in late September. " None of it significant enough unfortunately.

steelmouth
steelmouth

wow we really are making this guys rich ant we

flazzle
flazzle

23 million?! That means they are on their way to beat the Gamecube! Sweet!

danstar01
danstar01

the xbox sales fell cause everyone has an xbox seriously

EdibleFood
EdibleFood

@Zarkon nono i meant the article

zarkon9
zarkon9

@ediblefood i hope that was not directed at me. if so, i guess i will shutup now because i do realise i am making an *** of myself and somewhat a mockery of this discussion.

EdibleFood
EdibleFood

Well doesn't this just blow whale chode?

zarkon9
zarkon9

"tomorrow... ve vill decide which country ve vant to vuy!" bill gates should become prime minister of this country. can you imagine that... omg... this is $19,200,000,000 in figures for you all. where does that profit go? then, in the next sentence it has a figure which is $6,660,000,000... THE MARK OF THE BEAST! dah dah dummm...

zarkon9
zarkon9

@akijo i agree. this report actually convinces me more that there is this "global downturn" then after i can walk away from this computer and continue to ask myself whether there really is?

zarkon9
zarkon9

@grognard i have read that gamasutra report. i do think it was the same one you are referring to. it came across to me as more than "less slanted". that is a freakin' understatement.

zarkon9
zarkon9

it appears these comments have evolved into a hater match against afrosud12. i do not know exactly why this is but just drop it.

ebookerd1
ebookerd1

Well make more good exclusives and your profit will go up!! FTW!

grognard
grognard

Interesting how Gamespot wrote this article in such a negative light; conveniently ignoring that the gaming division TRIPLED profit in this quarter (read Gamasutra's take for a less slanted view on the financials).

blue_shift_91
blue_shift_91

[This message was deleted at the request of a moderator or administrator]

ricardo-sene
ricardo-sene

Comparing Microsoft with Sony, It's a fact that this momentum belongs to Sony... The financial results, the exclusives (Uncharted 2, God of War III, Demon Souls, Heavy Rain, White Knight Chronicles) and the two most award-winner-games of 2009 was exclusive from Sony (Demon Souls and Uncharted 2). But this year MS has some strong exclusives, like Mass Effect 2, Spliter cell, Halo: Reach and, specially, Alan Wake and Fable III. These last two games and the Natal are the reasons I'll buy a 360 Elite this year.

melty3219
melty3219

Microsoft will make up for it this year with Halo Reach, Mass Effect 2, Splinter Cell Conviction, Alan Wake, Project Natal and much much more...

Akijo
Akijo

OMG OMG, my favorite console did less money than the other console I don't have. There must be some logical information like I DONT GIVE A *bluh* ABOUT THAT! It's just their profit, that doesnt really mean anything, that doesnt make a console weaker or stronger, maybe some other time of the year Microsoft will be higher. And, for those who constantly says every consoles are the same, that's not true, and people are just debating on which console would be the best... exept they dont do it from Critical eye, and instead they just do the ol' school way (My daddy is stronger than yours). There ya go, you can continue to ''debate'' now ;)

Trmpt
Trmpt

Dang, 360 sales dropped 13 percent? If that keeps up, even with Reach and Natal launching this year, then a 2011 next gen will sound even more plausible than before.

Tremblay343
Tremblay343

"Oh no, not another fanoby fodder article from gamespot blah blah blah raging fanboys blah blah." They're a news website about video games. Strangely enough, that encompasses any earning reports that microsoft would put out. I mean they only manufacture the most popular OS's in the world and not to mention a console that more than a handful of you own. They have no control over how 13 year old boys prefer one console over another. To be honest, the people who complain about gamespot reporting news are just as stupid as those expressing their undying love for a corporation on some random articles comment section.

taylormadederek
taylormadederek

@ TripSe7en Yeah if PSN was better that would help to push me more in that direction. And I am a 360 believer as I think that it is much better........but the gap is closing. \ \ I don't really think that Sony can catch up in the online race this time.......MS really created a great community by shipping mics with every console. I find that when I go online there is next to no one to talk to. \ \ No one to talk to and the quality is crap.....and I am using the official headset. \ \ If Sony makes PSN better.......MS will really start to lose ground.... \ \ However $6 billion profit for a QUARTER....NOT YEAR......is a lot.....and I don't know if Sony can compete with that.