Microsoft on video games: "This is a space we believe in" despite losses
by Blake Snow 
{ Oct 9th 2006 at 12:45PM }
Dean Takahashi recently sat down with Microsoft COO Kevin Turner to discuss the company's Xbox strategy in addition to general operational strategies imposed by the world's largest software maker. When asked about Microsoft's $4 billion plus in losses on the first Xbox, Turner had this to say: "It's important for us to have multiple pillars for growth ... Steve [Ballmer, Microsoft CEO] reminds me it took seven, eight, or nine years before Windows was profitable. People forget that ... [the video game industry] is a space we believe in."The suit had this to say when asked if he knew anything about Halo: "At Microsoft, you have to know it's one of the highest-selling video games of all time in the history of the planet. Depending upon the circles you're in, you have to know something about Halo. At a high level, I do."
Takahashi also questioned the COO if the company merely follows where consumer demand is (i.e. where the money is) to which Turner denied the claim. The question made the concept sound inferior, but we don't think there's any denying that Microsoft is arguably the biggest and most profitable second-mover of all-time. Their video game effort obviously moves onward.
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Reader Comments (Page 1 of 1)
Adam @ Oct 9th 2006 1:13PM
Um, granted Halo is popular and highly overrated and the ONLY reason XBox is still around but I don't think it is one of the highest selling video games of all time. I don't think it made the top 20, I could be wrong about that.
But doing a quick search I found this http://forum.pcvsconsole.com/viewthread.php?tid=8655
and Halo isn't listed. :P
Mr. Khan @ Oct 9th 2006 4:40PM
These statements are just to placate investors, nervous about the fact that the 360 loses money on every console sold, and that Live is taking quite a bit of a loss as well (as far as i know)
Microsoft needs to roll out the massive Software sales or they're going to fry, no matter how many units are out on the market
(oh i wish...)
Frosty22 @ Oct 9th 2006 1:29PM
Yeah... I'd look at the date on that. Considering people are still purchasing it today...
Anyways Halo sales are around 6.5 million world wide and Halo 2 sales were over 7 million world wide, making those games the highest selling games for the Xbox. This probably wouldn't put them in the top 20 games sold of all time, but maybe top 30 or 40. Still pretty damn significant when you think about how many games have been created in the history of the PC, Sega, Sony, etc. And i must say, if Halo came out for the PS2, its sales would have been staggering.
aazzametalhead @ Oct 9th 2006 1:31PM
yer i think that is is either wrong or out of date by a long shot, zelda - ocarina of time anyone?
metal @ Oct 9th 2006 1:37PM
I dont know about super mario being on top of the list. It was bundled with the NES if I recall correctly. Its kind of hard to buy the
Nintendo and not buy Super Mario.
Ben @ Oct 9th 2006 1:46PM
list of top selling games: http://en.wikipedia.org/wiki/List_of_best_selling_computer_and_video_games
Hank @ Oct 9th 2006 1:50PM
It is my belief that Microsoft would be a strong contender this time around, even with the lack of support from Japan.
I believe that Sony will come out on top once again, due to the large amount of gamers that have practically grown up playing the games that Sony has had to offer for years.
The reason Sony is so strong is that there has not been no one that could go against the lineup of games that it has had to offer (in the past).
This time around it may be a little bit different, with two opposing systems costing less, Nintendo, having a fan base where even more players grew up playing games under the Nintendo brand, the advantage that Sony had may not be as extreme.
With everyone looking at pricing, which I believe will become a major factor in the outcome of this war, but more important than that, is the games.
Its all about the games, I can't wait to see whats going to happen next.
jabbertrack @ Oct 9th 2006 1:51PM
MS is the only large company right now that "gets" gamers. Nintendo LIKES gamers and wants to expand their audience but I'm not sure they understand the gaming loyal.
Sony just went crazy after their first console and people are just now realizing that fact.
Adam @ Oct 9th 2006 1:58PM
To the person at 1:51....
How does MS GET gamers? I look at their games and maybe a total of FOUR games look decent or interesting to play to me. Dead Rising (only cause I am a zombie buff), Lost Planet, MAYBE Gears of War, and it use to be the launch Criminal stories game or whatever it was called but Resident Evil 5 is the only other one.
That doesn't sound like they get them and I see countless articles about XBox not having any games to make their system worth it.
Sony has a bit more games but everyone can see those games being ported or what not. And Wii, I see a bunch of games that look good and a lot of them are just LAUNCH games, imagine ina year or two how much better they will be.
MS and Sony are just in it for the money, they do video games as a SIDE project, looking for money. Not to say Nintendo isn't but it is what they do, video games and they know how to.
Mabui @ Oct 9th 2006 2:19PM
9.. years before windows turned a proft...really now? Honestly? Even with all the cost savings they had on seemingly never bug testing the product before release and just jumble jamming code together at will!? And still no profit!?
Wow, thats pretty sad.
I'll give you that Microsoft understands their gamers pretty well, to their core audience nearly everything they touch is gold, which goes about the same for every platforms core audiennce.
They aren't really trying to make those inroads into expanding the market though, they are just seeming to relate more and more to the hardcore segmant, which is nice, since Nintendo has pretty well taken a huge step away from them!
jabbertrack @ Oct 9th 2006 2:16PM
adam step outside of your world for a second
I'm not talking about Microsoft's games, you seem to be talking about games... and not even MS's games at that. I'm talking about a gaming platform and community including online support and just the way that they listen to actual gamers.
The fact that they are spending loads of cash just to figure out what people want and taking a chance on a beefy console like the XBOX says that they are interested in giving the gaming consumer a value and a choice when it comes to console gaming.
If the games don't speak to you that's a seperate issue. In time developers will get on board as they are doing on the 360. Live Arcade is backlogged to hell with games in development and testing and there's some sick stuff coming out for 360 in all genres... MMO, FPS, RTS, "E" titles, sandbox games etc etc.
MS wasn't waiting for gamers to make Microsoft a success. As soon as they were done with XBOX they were commited to XBOX 360 because they wanted to be part of the space.
Making money will happen eventually but consider taking a LOSS on XBOX then saying "we still want your business so we are prepared to take a loss on 360 as well".
Ya I'm a fan of MS because they offer me value for my dollar. I came from PC gaming and my newegg.com order history makes me want to puke from the last 4 years.
Jerm @ Oct 9th 2006 2:24PM
Um, every company is in it for the money. If Sony and M$ didn't think they could eventually make money, do you think they would bother?
I don't think jabbertrack was trying to say that M$ is in it for the "gamers" we all know their ultimate goal of world domination. But, M$ seems to get what gamers want. That's not to say that they haven't made many mistakes and that every game coming out is a winner, and that doesn't take away from any of the games or advances Sony and Nintendo made either.
But if you look at what M$ has done over the last year and really with their X06 event and TGS, you can see that they seem to have their game plan together and are working at chipping away at Sony's lead. And Sony isn't doing itself any favors lately, with bad PR and production delays. And M$ has seemed to embrace the Podcast and Blog worlds. You can see it with Major Nelson of course and with the Zune.
Dominic @ Oct 9th 2006 2:26PM
@ 8
How can you honestly say that Microsoft and Sony are in it strictly for the money when NIntendo basically re-released the gamecube 1.5 with some new features for $250!
The key to your argument about xbox games is where you said, "I look at their games and maybe a total of FOUR games look decent or interesting to play to me." You should have taken the capslock off of the FOUR and put it on the "ME." So just because you don't like more than a handful of 360 games, we as consumers are just supposed to take your word for it.
Just because something doesn't interest you doesn't mean it doesn't interest the next 10 people. And if you don't think Nintendo is in this race for the money then you are sorely mistaken.
jabbertrack @ Oct 9th 2006 2:42PM
Jerm, the "M$" thing really needs to die. Do your part and stop internet cliches in their tracks.
agent864 @ Oct 9th 2006 3:31PM
The video game market is a profitable expanding market so its natural that it is constantly attracting new players.
Microsoft is in it, at least partially, to protect their 2 monopolies, Windows and Office. If people can use game consoles to surf the internet and email friends and manage photos and mp3s and play games then why do they need Windows. PS3 and Wii both run Linux. A PS3 is basically a $2000 spec PC for $500-$600 (plus cost of mouse/keyboard not included). Its not a huge threat, businesses aren't going to be installing PS3s, and IBM/Sony/Toshiba would welcome a Cell version of Windows. I've noticed that Sony dropped the low end RB series from their VAIO desktop line, much to my disappointment as I would recommend that system to friends. But it looks like the PS3 is filling in that space. Within the 1st year we will be seeing full linux distributions running on PS3 with office productivity suites -- multi PS3 households will soon develop to be used for both entertainment and productivity needs. This would be the worst outcome for Microsoft, I don't know if this is what Sony intends but technically its possible.
agent864 @ Oct 9th 2006 3:45PM
My tinfoil pointy hat theory is that if Microsoft perceives the console business as one that threatens either of its monopolies that its using the Xbox to poison the well of profitability of the games business to weaken its competitors and thus the threat to Windows/Office. Hence, the sucking up of game development resources into a money losing pit. However, to counter this theory, MS has made strides to make the hardware itself profitable (or at least lose less money) this generation around and basically dumped original Xbox production / support / development which were never going to be profitable. So for the industry's sake, I hope that Xbox is profitable by FY 2008 at the latest and that MS demonstrates its committment to the gaming audience.
John Lucas @ Oct 9th 2006 4:25PM
I think you guys need to read articles from this guy, Sean Malstrom.
http://thewiikly.zogdog.com/author.php?author=8
He explains Microsoft, Sony, Nintendo, gaming history, gaming future, & the business end all in a way that will shock you or at the very least enlighten you.
I never thought about why Microsoft was in the business other than a mere money-making opportunity. This guy put into clarity in a few of those articles he wrote.
I always considered that gaming audiences' tastes were caused by age generations. Just being born & experiencing different systems at different times.
It's more than that. This guy explains it in "Theory of Cycles".
He talks about the battle between Sony & Microsoft to be the first to become entertainment central in your living room. Another form of a frequently recurring phenomenon called "convergence".
And he shows through gaming history why this never pans out.
He details business theories & strategems to explain why certain things occured when they did.
The story of Trip Hawkins & EA BEFORE Madden.
Atari's demise. The mid-80's and how PC's almost became the central force in gaming.
Most of all he shows what my intuitions, instincts, knowledge about the gaming scene signal to me about the Wii project. Through his retellings of gaming history he shows you why Nintendo is on the right track in spite of the many doubters or cautious predictors.
Basically it's almost destiny at this point for Wii to blow away the competition. Not win but blow away. DOMINATE.
Read his stuff to get a picture of the game scene that most don't possess. Some of the best writings about the gaming scene I have ever seen. Put it on your favorites because he updates every week.
After reading his stuff Microsoft's role as this blogpiece details is MUCH clearer than before.
This guy has obviously been around since the earliest days of gaming. "Theory of Cycles" will show you evidence of this.
John Lucas
Jerm @ Oct 9th 2006 4:04PM
Jabber, I love Microsoft and I love "M$", I think it's great. It may have started as a internet cliche, but I use it more as a show of respect for the fact that one company can be so large as to have people hate them, simply because they are a large company. It's the ultimate oxymoron.
George @ Oct 9th 2006 4:34PM
#8 adam - i dont understand some of you people like post #8 adam. you say only 4 or 5 titles interest you for the xbox?? if thats all that interests you its really shame your so damn picky. i can think of tons of games i am looking forward to or that i already have. maybe you should broaden your tastes a little. heres a few that look great not counting most of what is out now that i am still playing.
FORZA 2
HALO 3
GEARS OF WAR
CALL OF DUTY 3
RAINBOW 6 LAS VEGAS
MASS EFFECT
NBA 2K7
ALAN WAKE
FEAR
aazzametalhead @ Oct 9th 2006 5:02PM
#18 - I agree fully, but i would add to that list "many many more", i bet ppl have forgotten dark sector, the first, if not one of the first announced 360 titles
Vein of Stars @ Oct 9th 2006 8:35PM
Didn't MS originally ask Sony if they wanted to use Windows for the PS2? And when Sony refused they decided to make their own console?
MS wants to take over our living room. And so does Sony. Both in a gaming and multimedia sense. MS wants everyone to have Windows Media Edition running their entire media platforms and Sony wants whatever proprietory stuff they create instead.
MS will never 'lose' in the console market. By that sense I mean, they will not give up. It's far too important to them. On the other hand, Sony can't afford to lose it. It far too important to them. They've dropped a fair number of loss-making sectors (such as their robot department) because they can't sustain them.
Now I know, of course, that their are 3 companies in this race. But Nintendo are kinda different from the other two. They are a gaming company - I'm not suggesting that that makes them 'better', in fact I've been fairly dissappointed with Nintendo recently (after the initial amazement of the Wiis controls I've been a bit suspicious - after the launch titles, what else is there to look forward to at the mo?) - whereas MS and Sony have other profitable departments.
So of course all 3 companies 'believe' in this space. MS want it so they can take over house (not just your PS). Sony want it because it's their most profitable sector. Nintendo want it because, well, that's all they do.
Vein of Stars @ Oct 9th 2006 8:37PM
[Edit]MS want it so they can take over our homes (not just your PC)[/Edit]
Nate Graves @ Oct 10th 2006 5:22AM
If you're going to write M$, you may as well write $ony too. I can't add a monetary character substitution in Nintendo, since I don't know the character for the euro but you can pretend. All companies are out to make profit. I hope that everyone can agree on this, and no one is stupid or naive enough to argue it.
I stupidly and irrationally opposed to the X-Box prior to its release, and afterward refused to pick one up simply based on the company...until I finally did get one a few years later and wondered all along what the hell had been wrong with me.
Rant all you like about the original X-Box controllers, but those were based off of gamer feedback and opinion. When it turned out most people didn't like the grandes, they changed them. Eight foot cables? Breakaway? The hard drive. The 360 has downloadable demos, arcade games, provides you with ways to talk to, play with and connect with your friends...the list is two buttons away at all times. These are things that are so intuitive and convienant that I seriously wonder why no one else is doing it.
These are the kinds of extras you ACTUALLY WANT in a system. Say what you will about their game lineup or whatever, but when it comes to making a system and providing features that gamers will actually use and appreciate...MS has got this shit on lockdown.
Nate Graves @ Oct 10th 2006 5:23AM
"If people can use game consoles to surf the internet and email friends and manage photos and mp3s and play games then why do they need Windows."
....the 360 does all that stuff, more or less. I don't use it to surf the internet, and you can't anyway, but it's a GAME CONSOLE. I message my friends, send them pictures of my nipples (via the camera), listen to music and...oh yeah, play games.
So is Microsoft sabotoging themselves?
The whole PS3-as-a-media-center idea will just never work. No one wanted the PS2X or whatever it was called, because it was a shitload of money for stuff they just didn't need.
The PS3 is the same thing, only more integrated...but it's still a game console, and that's what people are going to want it to do. If it does other stuff...cool, but Joe Consumer isn't buying it for those reasons and that will probably always be the case.