Quote:
Originally Posted by jamesdmanley
pretty much all video game consoles are sold at a loss. the profits are made back in licensing fees for the software. most printers are sold at a loss and the profits made back in the ink. this is far from an unsustainable business model
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Just thought I'd chime in just to mention that this statement isn't true. Nintendo has never sold a console at a loss and the XBox 360 sold at a loss only within the first year (now they make an average of $30-$50 per console, depending on which one you buy). In this generation of gaming consoles, only the PS3 is selling at a loss. Other than the Saturn and, possibly initially, the Dreamcast, most of Sega's consoles were also not sold at a loss.
I guess my point is usually in the gaming industry, some top performing consoles will be sold at a loss but usually become managable and profitable as manufacturing costs decrease where as other industry areas like printers or eBooks if this rumour is true, the items selling at a loss won't eventually be profitable themselves unless prices are raised.
You are correctly in how they make their money though. Licensing software and accessories is everything.