XBox 360 taps into accessory revenues in search of profits
Tags: Microsoft, Sony, Games, Gaming, XBox 360, Playstation 3, Marketing
CNET is reporting that Microsoft will require XBox 360 accessory makers to both pay for certification and a percentage of their profits. The article claims that this is similar to Apple's tapping into iPod accessory revenues, but there is a significant difference: XBox 360 hasn't launched yet, nor do any accessory makers have any clue as to what the actual market for their products will be. Why does that matter? Well, think if you were the maker of a cool controller that you think you might really do well on the next-generation gaming platforms. You have two choices (assuming you're not working with Nintendo):
The justification for this move? The article claims it is to ensure that the XBox product line makes a profit. While that makes good business sense, it seems this profit-seeking is a bit of a bolt out of the blue. After all, Microsoft is suspected to be planning to lose money on every console it sells (and that seems likely regardless of whether it gets accessory profits or not), in hopes of being able to subsidize the platform with game sales and later year profits. Does it really need to tap the little guys to add to its $50 billion in the bank?
The XBox 360 launch is looking riskier and riskier for everyone except slow-but-steady Sony.
CNET is reporting that Microsoft will require XBox 360 accessory makers to both pay for certification and a percentage of their profits. The article claims that this is similar to Apple's tapping into iPod accessory revenues, but there is a significant difference: XBox 360 hasn't launched yet, nor do any accessory makers have any clue as to what the actual market for their products will be. Why does that matter? Well, think if you were the maker of a cool controller that you think you might really do well on the next-generation gaming platforms. You have two choices (assuming you're not working with Nintendo):
- Pay to get certified by Microsoft, promise them a percentage of your revenue, and pray they gain market share this Christmas before Sony launches next spring, or
- Sign up to be a Sony partner and plan on participating in the bulk of the market (since Sony currently controls nearly 80% of the console market and is likely to retain much of that lead). Oh, and by the way, at the moment, Sony isn't requiring a percentage of profits, so you have more margin for things like marketing.
The justification for this move? The article claims it is to ensure that the XBox product line makes a profit. While that makes good business sense, it seems this profit-seeking is a bit of a bolt out of the blue. After all, Microsoft is suspected to be planning to lose money on every console it sells (and that seems likely regardless of whether it gets accessory profits or not), in hopes of being able to subsidize the platform with game sales and later year profits. Does it really need to tap the little guys to add to its $50 billion in the bank?
The XBox 360 launch is looking riskier and riskier for everyone except slow-but-steady Sony.
posted by Carl Howe at
3:36 PM
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