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Microsoft's Xbox 360 Division Sees $1.32 Billion Profit For Fiscal Year 2011
Microsoft's Xbox 360 Division Sees $1.32 Billion Profit For Fiscal Year 2011
July 21, 2011 | By Tom Curtis

July 21, 2011 | By Tom Curtis
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The Entertainment and Devices Division of Microsoft, which includes the Xbox 360, PC games, and Windows Phone, took in a profit of $32 million on top of revenues of $1.49 billion for the final quarter of the fiscal year quarter, alongside record revenues of $17.37 billion for the company as a whole for that period.

Microsoft reports that revenue for the Entertainment and Devices Division grew 30 percent for the fourth quarter 2011, and 45 percent for the full fiscal year ended June 30, 2011, with the increase in revenue primarily indicating money brought in from the Xbox 360 and its related products.

The company noted that the division's operating revenue of $32 million was offset in part by increased costs relating to manufacturing, marketing, and distribution.

These internal costs increased 15 percent to $118 million thanks to higher Xbox 360 sales and production, and increased royalty costs from improved sales of digital content on Xbox Live.

During the full fiscal year, the company took in a profit of $1.32 billion, up from $618 million in 2010. The division also saw an overall revenue increase, again reflecting higher Xbox 360 platform revenue.

For the full year, Xbox 360 revenue grew by $2.7 billion, or 48 percent, led by increased sales of Xbox 360 consoles and Kinect sensors, and higher Xbox Live revenue, said Microsoft. In the fourth quarter, Xbox 360 growth was $293 million, or 29 percent.

Also for the fiscal year 2011, the company said research and development expenses increased $119 million, or 12 percent, primarily reflecting higher headcount-related costs. Sales and marketing expenses grew by $90 million, largely indicating increased marketing for the Xbox 360.

Microsoft shipped 1.7 million Xbox 360 consoles during the fourth quarter, up from 1.5 million consoles during the same period last year, and 13.7 million Xbox 360 consoles during fiscal year 2011, up from 10.3 million in 2010.

The Entertainment and Devices Division covers the company's IPTV software Mediaroom in addition to Windows Phone and Xbox 360 products.

Microsoft at large saw revenue of $17.37 billion for the quarter ended June 30, 2011, an 8 percent increase from the same period of the prior year, and profit of $5.87 billion, up roughly 30 percent from the same period in 2010.


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Comments


Glenn Sturgeon
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Raising the price of XBL gold didn't hurt thier profits any. I'd say that helped a bit for the last quarter.

I've personaly only spent $20. towards my 360 in the past year. (1 platinum hits title)

Jamie Mann
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The headline for this article - and the article itself - needs to be rewritten, as there's a lot of confusion between the terms revenue and profit - as well as confusion between where the revenue and profit should be assigned.



Microsoft overall revenue:

$17,370,000,000



Microsoft overall profit:

$1,320,000,000 (7.48% of overall revenue)



ED division revenue:

$1,490,000,000

ED division profit:

$32,000,000 (2% of division revenue)



In other words, the EDD is responsible for roughly 10% of Microsoft's overall revenue. However, the division managed to generate just 2% profits on it's revenue: far, far below the overall profit/revenue average for the company.



I'm also mildly confused by statements like this:

"These internal costs increased 15 percent to $118 million thanks to higher Xbox 360 sales and production, and increased royalty costs from improved sales of digital content on Xbox Live."



Higher throughput = higher costs: that's pretty much a given. But unless Microsoft is selling the hardware and software at a loss (and given that economies of scale should also come into effect), surely higher throughput = higher profit, too?



All told, either the production and operating margins for the Xbox 360 are razor-thin, or there's something else in the division acting as a money-sink - the note on increased head-count is interesting. Unfortunately, since we don't get a break-down of the division's internal cost-centers (which include several non-Xbox products and services), it's impossible to tell...

Harlan Sumgui
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yeah, terribly written and inaccurate. MS has always obfuscated the gaming division numbers because they know they are bad. They have this idea that the xbox will be the entertainment centre of people's living rooms in the coming years. They didn't realize that smartTVs are the next wave. However, roi on MS stock is still very good, so holders dont really care that much.

Chris Valdez
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Headline is "Microsoft's Xbox 360 Division Sees $1.32 Billion Profit For Fiscal Year 2011 " but the story says "the company took in a profit of $1.32 billion." Shouldn't the headline be changed?



The division that houses Xbox 360 only took in $32m.

Matt Ployhar
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Jamie hits the nail on the head here; and in my opinion should have written this article.



The current title is misleading to anyone who doesn't pay attention to the fine print. From the sounds of it... it should have read.

ED, generated $32 million in profits on $1.49b in revenue.



ED largely consists of XBox, Kinect, etc. The margin story here is prety sad.


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