The Six Billion Dollar Machine

Just FYI, I no longer care about Xbox One VS. Playstation 4, as that battle has gotten pretty boring. I'm far more interested in watching Microsoft's gaming division crash and burn all on its own. For example, let's take a look at how much money they have invested into the system already, not even counting the cost of the system itself, months before launch:

$400 million on an exclusive NFL deal

$700 million billion in data center/cloud support

$1 billion in investments for development of first party/exclusives (this includes paying for timed exclusivity on Titanfall)

$3 billion for the partnership project with AMD

And a marketing campaign "significantly larger" than the Kinect campaign, so that's half a billion at least.

That's almost 6 billion dollars without even touching the manufacturing costs, packaging and shipping. That's fine and all, the invisible hand of free market capitalism strikes again and all that, but what exactly is their end goal here? To make a successful console obviously, but they must be redefining “successful” since in addition to their recent marketing and PR blunders there is no way the Xbox One can be a financial “success”. Let's look at some numbers, we’ll use $6 billion as a starting point as the amount of money this console needs to make in order to at least get into the black. $6 billion divided by $500 a console is 12 million units; I know the numbers aren't that simple but for the sake of argument let’s say they are.

Does Microsoft really expect to sell 12 million consoles right out of the gate? It took almost two full years to get those numbers out of the Xbox 360, and it had the advantages of beating their competition to the market by a full year and offering a number of unique games thanks to recent acquisitions like Rare.

The Xbox One on the other hand has to deal with the WiiU which has had a year to build up a user base and has a number of big titles scheduled for the holiday season, and it has to go head to head with the Playstation 4, which is not only $100 cheaper out of the box but also offers 90% of the same games at launch. What exactly is Microsoft’s plan if this thing doesn't hit that 12 million mark? What if it takes two or three years? Not even counting the additional expenses over that time, that is a massive financial hurdle to overcome for a console, especially one that has had so much trouble getting off the ground at all.

The next few months will be interesting to watch, to say the least.

Also, I’m really done talking about the Xbone this time, I swear (unless Microsoft comes out and does something monumentally stupid again).