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The next-generation of gaming is extremely anticipated by everyone, but they are going to be entering with major debit leftover from their predecessors.
According to a report from VG24/7 yesterday, former EA and Lionhead employee Ben Cousins said most consoles are sold at loss and then its up to the system's licenses to make up the red area on the balance sheet.
"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.
"In order to offset the huge cost of hardware production, distribution, R&D and marketing, a hardware platform holder must sell vast quantities of hardware, and even bigger quantities of software.
"So much needs to be sold, in fact, that the data points to PS3 and Xbox 360 having made huge losses, despite having sold 70+ million units of hardware each.
"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," Cousins said.
The Xbox 360 and PlayStation 3 have apparently lost a combined $8 billion over the years.
Cousins went on to predict what two segments of gaming will be left when it's all said and done.
"In the future, I see gaming as having two main markets: mobile devices like smartphones and tablets will serve the biggest market—covering kids, casual gamers and the mainstream console people.
"The core and ultra-core gamers would be served by PC gaming, which will be smaller than mobile, but that will continue to grow.
"Many of the old-school PC gamers I know that moved to playing games on Xbox over the last 10 years are coming back to PC because of free-to-play and indie games, controller and TV support, as well as incredible digital distribution on platforms like Steam," Cousins said.
